VZCZCXRO7786
PP RUEHMA RUEHPA
DE RUEHUJA #2302/01 3291035
ZNR UUUUU ZZH
P 241035Z NOV 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 4528
INFO RUEHOS/AMCONSUL LAGOS 0314
RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 03 ABUJA 002302 
 
SIPDIS 
 
DEPARTMENT FOR EE/TPP/ABT/ATP SPECK 
DEPT PASS TO USTR-AGAMA 
TREASURY FOR PETERS AND HALL 
DOC FOR 3317/ITA/OA/BURRESS AND 3130/USFC/OIO/ ANESA/HARRIS 
USDA/FAS FOR MCKINNELL, VERDONK 
 
E.O. 12958:  N/A 
TAGS: EAGR ECON ETRD EAID EFIN PGOV NI
SUBJECT: NIGERIA: OPPORTUNITIES FOR US AG PRODUCT EXPORTS 
 
REF: A. ABUJA 2169 
 ¶B. ABUJA 2126 
 ¶C. ABUJA 1925 
 
¶1. Summary: Following the September 25, 2008 release of the 
2008-2012 Nigerian government tariff book, a number of major import 
bans were eliminated and some tariffs were significantly reduced 
(reftel C).  A review of the tariff book demonstrates that in 
several products there may be significant opportunities for U.S. 
products.  Exports bans have been removed on corn, crude vegetable 
oil, sorghum, biscuits, sugar confectionaries, flour and fresh/dried 
fruits, while tariffs have been reduced on products such as rice. 
Due to Nigeria's decrepit infrastructure imported U.S. products may 
have an advantage over domestically produced products.  This cable 
is one of two cables that will describe in detail trade policy 
changes and the areas where U.S. companies may take advantage. 
 
CORN BAN LIFTED 
--------------- 
 
¶2. (U) Corn imports were banned since 2005, but this ban has now 
been removed.  The corn importation tariff rate is 5%.  This removal 
opens an opportunity for exports of U.S. corn, primarily for use by 
the Nigerian poultry industry.  Potential U.S. corn buyers include 
major commercial feed millers, who have their own port facilities 
and can handle larger vessels, as well as large scale poultry 
farmers who typically operate their own feed mills. 
 
3 (U) U.S. import prospects are strong despite Nigerian production 
of both white and yellow corn.  Local domestic corn production 
remains constrained by limited fertilizer availability, as well as a 
lack of high-quality seeds (reftel A).  As a result, yields are very 
low, averaging about 1.7 metric tons (mt) per hectare, compared to 
nearly 10 mt per hectare in the United States.  In addition, nearly 
all of the corn is still planted and harvested by hand because there 
is almost no mechanized production.  This has led to very high 
production costs, thereby increasing domestic corn prices far above 
international prices.  Concomitantly, a lack of storage facilities 
in the key corn growing areas results in high post harvest losses 
and negatively impacts grain quality (reftel B). 
 
¶4. (SBU) Poultry operators have expressed a strong desire to import 
U.S. corn and the Poultry Association of Nigeria (PAN) lobbied the 
government to eliminate the import ban.  The location of the poultry 
industry makes it beneficial to import corn, as about 80% of poultry 
production is located in the southwestern part of Nigeria, close to 
the major seaport of Lagos but a substantial distance from the corn 
growing areas of Nigeria. 
 
¶5. (U) Although the domestic poultry industry is developed in 
Nigeria and expanding very rapidly, poultry production is still 
unable to keep pace with demand (Note: Poultry imports into Nigeria 
remain banned. End Note).  This demand is driven by changing 
demographics, urbanization, economic development and the rapid 
expansion in fast food restaurants in Nigeria, such as Chicken 
Republic, Tastee Fried Chicken, Drumstix, etc. 
 
RICE TARIFF REDUCED 
------------------- 
 
¶6. (U) The rice duty was reduced from 109% to 5% for seed, paddy and 
brown rice, while the duty on semi and wholly milled rice was 
reduced to 30%.  Nigeria is the second largest rice importer in the 
world, and large rice imports are expected to continue, despite 
efforts by the GON to achieve self-sufficiency in rice production. 
Rice is produced in the country largely by resource-poor, 
subsistence, and small-scale farmers and the bulk of this locally 
produced rice is consumed by the farmers and does not enter the 
market chain.  Domestic production remains far below demand.  At 
present, rice is either imported bulk and bagged upon arrival or 
pre-bagged in 25 and 50 kilogram bags.  Thailand and India are the 
leading suppliers to the market accounting for approximately 60% and 
30% respectively in 2007.  The lower duty for paddy and brown rice 
is a GON incentive to increase domestic milling capacity.  Most of 
the major rice importers in Nigeria have built local milling 
facilities and are eager to shift from imports of wholly milled rice 
to paddy and brown rice, largely because of this duty advantage. 
This opens up a market for U.S. supplies. 
 
CRUDE VEGETABLE OIL BAN REMOVED 
------------------------------- 
 
¶7. (U) Beginning in 2001, the GON implemented an import ban on bulk 
 
ABUJA 00002302  002 OF 003 
 
 
vegetable oil to support local producers.  Branded and 
consumer-ready vegetable oil was also banned in 2005.  The GON has 
removed the import ban on crude vegetable oil and the import duty is 
now 35%.  Refined vegetable oil import remains banned.  Palm oil, 
and to a lesser extent soybean and peanut oil, is produced in 
Nigeria; however, domestic vegetable oil production has not kept 
pace with rising demand.  Nigerians are becoming more familiar with 
the higher quality and health benefits of soybean oil and one major 
domestic oilseed crusher/oil refiner has indicated that he has 
shifted production significantly away from peanut oil and to soybean 
oil due to the much higher demand for this product.  Rising demand 
and insufficient local production has caused local prices to rise to 
nearly double international price levels.  Removing the ban on crude 
vegetable oil has opened market opportunities for U.S. exports of 
crude vegetable oil, primarily for refining into edible oil. 
 
SORGHUM BAN REMOVED 
------------------- 
 
¶8. (U) The ban on sorghum import was removed, and the tariff is now 
5%.  Nigeria is the world's largest producer of sorghum, and it is 
the primary food crop in virtually all parts of northern Nigeria. 
Sorghum is used extensively in brewing, and industrial demand for 
sorghum by beer manufacturers is rising steadily.  It is estimated 
that 150,000 tons of sorghum is used each year for brewing. 
Although Nigeria is a large sorghum producer, high domestic sorghum 
prices could provide opportunities for U.S. sorghum exporters to 
sell to the brewing industry.  These major breweries are located 
near the Lagos port, and more that 500 miles from key growing areas. 
 Due to Nigeria's poor infrastructure imported sorghum has a 
transportation advantage compared to domestic sorghum. 
 
WHEAT FLOUR BAN REMOVED 
----------------------- 
 
¶9. (U) The ban on flour import was removed, and the tariff is now 
35%.  Nigeria has a large and well developed milling industry, and 
is one of the world's largest importers of U.S. wheat.  Due to the 
milling industry's excess capacity it is unlikely that U.S. 
exporters will export large quantities of flour.  However, there 
could be opportunities for U.S. exports of specialty flours in small 
volumes.  The major mills typically only produce two types of flour 
and higher-end restaurants and hotels, have demand for specialty 
flours for creating different products. 
 
BISCUITS BAN REMOVED 
-------------------- 
 
¶10. (SBU) The 2003 instituted ban on biscuits was removed, and the 
tariff is now 25%.  Biscuit consumption in Nigeria, which includes 
cookies, crackers and biscuits, has grown by 15% per year since 
¶2003.  According to industry sources, Nigeria's per capita biscuit 
consumption is 600,000 mt per annum; however, production has 
declined due to very high production costs due to infrastructure 
problems and mounting energy costs.  All manufactures report that 
they must use generators most of the time due to epileptic 
electricity supply.  This combination makes many domestic products 
non-competitive compared to imported products. 
 
¶11. (U) Moreover, most local processors continue to manufacture 
primarily inexpensive, low-quality products for the low-income mass 
market and school-age children.  As a result, few domestic products 
meet the quality and tastes of Nigeria's growing middle-income 
consumers and significant opportunities exist for U.S. exports of 
high-quality biscuits, cookies and crackers for this market segment. 
 
 
SUGAR CONFECTIONERIES BAN REMOVED 
--------------------------------- 
 
¶12. (U) The 2003 instituted ban on sugar confectioneries was 
removed, and the tariff is now 35%.  Nigeria's confectionery sector 
comprises hard candy (50%), bubble gum (30%) and toffees/other 
products (20%).  Similar to biscuits, Nigeria's domestic production 
of confectionery products has grown but infrastructure and high 
energy costs limit production.  In addition, input costs are high as 
all of the sugar used is imported, primarily from Brazil.  Domestic 
confectioneries products are mostly low quality, low-price products 
targeted at mass markets. Due to the low quality available in 
Nigeria and the confectionary market's rapid growth in demand (20% 
per year), there are opportunities for U.S. exports of these 
products. 
 
 
ABUJA 00002302  003 OF 003 
 
 
FRESH AND DRIED FRUIT BAN REMOVED 
--------------------------------- 
 
¶13. (SBU) The ban on fresh and dried fruit was removed, and the 
tariff is now 20%.  Nigerian farmers produce millions of tons of 
seasonal fresh fruits and vegetables; however, the farmers suffer 
from very high post-harvest losses due to inadequate storage and 
processing facilities, and high transportation costs.  There is 
strong local demand for fruits not grown widely in Nigeria, 
especially apples and grapes, which during the ban had been smuggled 
into the country in very large quantities.  This ban removal should 
provide access to U.S. fresh and dried fruits exports. 
 
COMMENT 
------- 
 
¶14. (U) The Nigerian government's 2008-2012 tariff book presents 
several opportunities for U.S. exporters to become more heavily 
involved in trade with Nigeria and increase U.S. exports.  The 
government's new policies should allow potential U.S. exporters to 
focus on corn, crude vegetable oil, sorghum, biscuits, sugar 
confectionaries, flour, fresh/dried fruits, and rice. 
 
¶15. (U) This message was coordinated with ConGen Lagos. 
 
SANDERS