Market Report, "Nigeria Agribusiness Report Q1 2014", published

Cocoa continues to be the sector we see with the most potential for growth over the short- and medium-term, especially as we take a bullish view on prices, but also thanks to government and private sector investment which is helping Nigeria to gain some ground on competitors. Dairy is also showing promise with developments in the processing sector vital for allowing domestic producers to benefit from surging consumer demand. The long term damage to corn production from the floods of autumn 2012 is still being felt, and we have once again downgraded our production forecasts. This is having a knock on effect on the poultry sector which is highly dependent on corn as a feed grain. Security continues to be an issue as the government's counterinsurgency against Boko Haram drags on: this is an important factor in the low growth which we are forecasting for wheat, as the grain is grown mainly in northern states where the rebels have their strongholds.

Full Report Details at
- http://www.fastmr.com/prod/754609_nigeria_agribusiness_report_q1_2014.aspx?afid=303

Key Forecasts

* Cocoa production growth to 2017/18: 64.5% to 362,000 tonnes. Higher global prices due to the struggles of other West African producers will provide stimulus to production growth supported by burgeoning investment.
* Milk consumption growth to 2018: 62.6% to 3.0mn tonnes. Rising incomes and a fast-growing population, including a large proportion of young children, will see burgeoning growth in demand for milk.
* BMI universe agribusiness market value: 3.7% year-on-year (y-o-y) increase to US$6.5bn in 2014; forecast to grow by an average of around 6% a year from 2014-18.
* Real GDP growth 2014: 7.2% y-o-y, (up from 6.7% in 2013).
* Unemployment rate 2014: 22.9% (down from 23.6% in 2013).
* Inflation (annual average, % chg y-o-y) 2014: 8.4% (down from 9.1% in 2013).

Key Revisions To Forecasts

* Corn forecast for 2013/14: revised down to 7.7mn tonnes (from a previous forecast of 8mn tonnes). Farmers are struggling to recover from the impact of 2012's flooding on their finances and seed stocks.

Industry Developments

Our expectations for Nigeria's cocoa sector have been raised in line with the higher cocoa prices we see persisting out to 2017. While Nigeria suffered from the same problems as its West African rivals Ghana and Cote d'Ivoire relating to weather and disease in 2011/12 and 2012/13, Nigeria is better placed to bounce back and take advantage of the more favourable market conditions, thanks to government commitment to support investment and improve inputs. We have revised our forecasts upward, and now see LIFFE cocoa prices averaging GBP1,750/tonne in 2014 before averaging higher the subsequent years. This compares with our previous forecast for an average price of GBP1,550/tonne in 2014.

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