View more photos

Challenges of Agricultural Value Chain Development in Nigeria

3 min read Article by Donald Yakumbur | Programme Management and Value Chain Expert

Introduction
Agriculture plays a vital role in Nigeria’s economy, contributing approximately 25% to GDP and employing over 60% of the population (NBS, 2023). Despite its significance, the sector faces major challenges in developing efficient and sustainable agricultural value chains. These inefficiencies affect productivity, market access, and overall economic growth (FMARD, 2023).
This document examines key agricultural value chains in Nigeria, the challenges they face, ongoing initiatives, and recommendations for strengthening these value chains.
Key Agricultural Value Chains in Nigeria
Several agricultural commodities dominate Nigeria’s agricultural landscape. Each of these crops plays a crucial role in food security, employment, and economic growth.
Rice
Rice is a staple food in Nigeria, yet the country remains highly dependent on imports. Domestic production is estimated at 5–6 million metric tons of milled rice annually, contributing less than 1% of global rice production (FAO, 2022). To meet domestic demand, Nigeria imports 2–2.4 million metric tons of rice annually, despite government interventions such as the Anchor Borrowers' Programme (CBN, 2022).
Cassava
Nigeria is the world’s largest producer of cassava, with an annual production capacity of 50–60 million metric tons (FAO, 2022). Nevertheless, its full economic potential is hindered by poor processing infrastructure, weak market linkages, and a lack of value-added products such as cassava flour, starch, and ethanol (FMARD, 2023).
Tomatoes
Nigeria ranks among the top tomato producers in Africa, with 3.9 million metric tons produced annually (NBS, 2023). However, post-harvest losses exceed 50%, primarily due to inadequate cold storage, poor transportation networks, and insufficient processing facilities. As a result, Nigeria imports large quantities of processed tomato products (FAO, 2022).
Cocoa
Nigeria produces 330,000–350,000 metric tons of cocoa beans annually, making it a leading producer (FMARD, 2023). Conversely, the sector faces declining competitiveness due to aging plantations, outdated farming techniques, and limited local processing capacity. Over 80% of cocoa is exported as raw beans, rather than processed into cocoa butter, powder, or chocolate (WTO, 2021).
Maize & Soybeans
Maize production stands at 10–11 million metric tons per year, but fluctuating market prices and low seed quality hinder growth (NBS, 2023). Soybean production is 700,000–800,000 metric tons, yet Nigeria still imports about 52,000 tons of soybeans and 4,500 tons of soybean oil annually to meet processing needs (FAO, 2022).
Challenges Facing Agricultural Value Chains in Nigeria
Despite Nigeria's vast agricultural potential, several structural and systemic issues hinder the efficiency and growth of agricultural value chains.
Weak Infrastructure
Poor rural roads and inadequate transportation networks result in high post-harvest losses, particularly for perishable crops like tomatoes (NEMA, 2022). The lack of cold storage facilities and processing centers exacerbates spoilage. Additionally, inadequate irrigation systems lead to decreased productivity in drought-prone areas (FMARD, 2023).
Limited Access to Finance
Smallholder farmers and agribusinesses face difficulties in accessing credit (CBN, 2022). Although initiatives like the Anchor Borrowers' Programme exist, many farmers remain excluded due to stringent collateral requirements. Weak financial literacy and a lack of credit infrastructure also limit investments in modern agricultural practices (WTO, 2021).
Inconsistent Policies and Regulatory Bottlenecks
Frequent policy changes create an unstable investment climate. For example, the 2019 border closure, intended to boost local rice production, led to short-term price hikes and increased smuggling (WTO, 2021). Bureaucratic inefficiencies and inconsistent regulations further impede agribusiness development (FMARD, 2023).
High Post-Harvest Losses
Nigeria loses over $9 billion annually due to post-harvest losses resulting from poor storage, inefficient supply chains, and inadequate processing facilities (FAO, 2022). Crops such as tomatoes, maize, and yams suffer the highest losses (NEMA, 2022).
Limited Market Access and Value Addition
Most agricultural produce is sold raw with minimal processing. For example, over 80% of Nigeria’s cocoa is exported as raw beans rather than being processed locally (WTO, 2021). Low investments in agro-processing industries hinder value addition and limit economic benefits for farmers (FMARD, 2023).
Climate Change and Environmental Challenges
Erratic rainfall patterns, desertification, and flooding threaten agricultural productivity. The 2022 floods affected over 33 states, leading to massive crop losses (NEMA, 2022). Soil degradation and declining fertility also contribute to low yields (FAO, 2022).
Security Concerns
Farmer-herder conflicts, banditry, and insurgency disrupt agricultural activities, particularly in states such as Benue, Kaduna, and Zamfara (World Bank, 2023). The displacement of farming communities reduces agricultural output and discourages investment in the sector (NEMA, 2022).
Case Studies on Value Chain Development Projects
Despite these challenges, several initiatives have been introduced to improve Nigeria’s agricultural value chains.
Value Chain Development Programme (VCDP)
Funded by IFAD, the VCDP focuses on improving rice and cassava value chains in states such as Benue, Niger, and Ogun (IFAD, 2023). Key achievements include:

• Enhancing market linkages between farmers and agro-industries.
• Improving processing facilities for cassava and rice.
• Training farmers on best agronomic practices.

Livestock Productivity and Resilience Support Project (LPRES)
Funded by the World Bank, LPRES focuses on strengthening the livestock sector (World Bank, 2023). Key interventions include:

• Addressing farmer-herder conflicts through dialogue and mediation.
• Introducing climate-smart livestock management strategies.
• Establishing pasture and grazing reserves.

Nigerian Agribusiness and Agro-Industry Development Initiative (NAADI)
NAADI facilitates public-private partnerships to enhance agribusiness investments (FMARD, 2023). It supports the processing and marketing of key crops such as soybeans and maize and aims to increase private-sector participation in value chain development.
Conclusion and Recommendations
Addressing Nigeria’s agricultural value chain challenges requires coordinated action from government, private sector, and development partners. By making strategic investments in infrastructure, finance, and policy stability, Nigeria can unlock its agricultural potential, achieve food security, boost economic diversification, and improve rural livelihoods.

1. Invest in Infrastructure: Improve roads, cold storage, and processing facilities.
2. Enhance Access to Finance: Strengthen microfinance options and develop innovative funding models.
3. Ensure Policy Stability: Maintain consistent agricultural policies to encourage investment.
4. Promote Climate-Smart Agriculture: Implement early warning systems and sustainable farming practices.
5. Strengthen Security & Conflict Resolution: Address farmer-herder conflicts through policy dialogue and land-use planning.

For more information, contact:
Phone number: +2348038945237
Email: d.yakumbur@changemakersconsultingltd.org 
For more reading, visit:

• CBN (2022) Anchor Borrowers' Programme. Available at: https://www.cbn.gov.ng/Documents/anchorborrowers.asp (Accessed: 18th February 2025).
• FAO (2022) Nigeria Agricultural Statistics. Available at: https://www.fao.org/nigeria/fao-in-nigeria/nigeria-at-a-glance/en/ (Accessed: 18th February 2025).
• FMARD (2023) Federal Ministry of Agriculture and Rural Development Annual Report. Available at: https://agriculture.gov.ng/wp-content/uploads/2024/06/National-Agricultural-Technology-and-Innovation-Policy-NATIP-2022-2027.pdf (Accessed: 18th February 2025).
• IFAD (2023) Value Chain Development Programme Progress Report. Available at: https://www.ifad.org/en/w/news/ifad-annual-report-2023-steady-progress-and-innovation-in-rural-development-amid-a-challenging-global-context (Accessed: 18th February 2025).
• NBS (2023) Nigeria Bureau of Statistics Agricultural Output Survey. Available at: https://www.nigerianstat.gov.ng/ (Accessed: 18th February 2025).
• NEMA (2022) National Emergency Management Agency Flood Impact Assessment. Available at: https://nema.gov.ng/ (Accessed: 18th February 2025).
• World Bank (2023) LPRES Project Appraisal Document. Available at: https://projects.worldbank.org/en/projects-operations/procurement-detail/OP00261701 (Accessed: 18th February 2025).
• WTO (2021) Trade Policy Review for Nigeria. Available at: https://www.wto.org/english/tratop_e/tpr_e/tp393_e.htm (Accessed: 18th February 2025).

 
 

Read 175 times Share on Share on Share on

Author:

Donald Yakumbur | Programme Management and Value Chain Expert

---

Donald has successfully conducted field consultations, stakeholder engagements, and data-driven assessments to enhance agricultural productivity, food security, and sustainable value chain development. His expertise spans across smallholder farmer inclusion, SME growth, market linkages, and policy implementation, making him a strong asset for the Baseline Study on Grains Production in Nigeria.
Donald has led field studies, household surveys, and qualitative research in rural communities, applying Key Informant Interviews (KIIs), Focus Group Discussions (FGDs), and geospatial analysis to assess agricultural trends. His field experience includes working in fragile states such as Bauchi, Borno, Jigawa, Kano, Katsina, Kebbi, Sokoto, Yobe, and Zamfara for IFAD and AFD’s Value Chain Programme in Northern Nigeria (VCN) program where he conducted Value Chain Assessments covering rice, maize, millet, cowpea, sorghum, groundnuts, vegetables and small ruminants. On the same VCN programme he also conducted a Gender Fragility and Conflict Assessment in Kebbi, Sokoto, and Zamfara states.
He is proficient in survey design, data collection frameworks, and statistical analysis using tools such as Kobo toolbox and Excel. His ability to synthesize findings into actionable insights has informed key agricultural development strategies and policy reforms.
Donald has played a critical role in multi-stakeholder coordination for agricultural projects, engaging government agencies, farmer organizations, private sector actors, and development partners. In addition to the VCN, he has supported other IFAD interventions in the Livelihood Improvement Family Enterprises Project for the Niger Delta (LIFE-ND), Value Chain Development Programme (VCDP) and Special Agro-Industrial Processing Zones (SAPZ IFAD cofinanced with AfDB and IsDB) programs been implemented in Abia, Anambra, Bayelsa, Benue, Cross River, Delta, Ebonyi, Edo, Enugu, Kogi, Nasarawa, Niger, Ogun, Ondo, and Taraba states providing technical advisory, progress reporting, supervisions, implementation support and validation of research findings.
His contributions to the 2024–2029 IFAD Country Strategic Opportunities Programme (COSOP) highlight his policy expertise, particularly in financial inclusion, market access, and gender-responsive agricultural development.