.png)
Nigerian Agricultural Producers face margin destruction if the government reverses economic reforms, particularly fuel subsidy restoration, with sector growth at only 2.2% in 2025 against 3% population growth. The country's Economic Summit Group (NESG) — a private sector policy advisory body — warns that policy reversal could trigger economic collapse and return growth to crisis levels of 2-3%. Fertilizer costs have already surged 41% to ₦50,000 per 50kg bag following the 2023 fuel subsidy removal, while Brent crude trades at $95.20/barrel, creating a volatile input cost environment that makes further policy disruption potentially catastrophic.
Fuel subsidy restoration would force the government back to borrowing for consumption rather than development, according to NESG economists who note that "We were borrowing to pay for subsidies, with no resources left for development projects". Consider a mid-sized cassava producer operating 100 hectares in Ogun State. Before subsidy removal, diesel costs for irrigation and processing averaged ₦300 per litre. At current prices of roughly ₜN750 per litre, the same operation now costs ₦450 more per litre — approximately ₦2.25 million additional annually for a 5,000-litre operation. Combined with fertilizer price increases and storage deficits that caused ₦2 billion post-harvest losses in tomato value chains alone, margins have compressed beyond viability for many operators.
Nigeria's growth pattern remains narrow, driven by finance, ICT, and occasionally oil and gas, while "critical sectors with high job creation potential, including agriculture and manufacturing, have continued to underperform". On the buy side: Large integrated agribusiness groups (Dangote Group, BUA Foods) with derivatives access can hedge input costs through forward fuel contracts and bulk fertilizer procurement agreements, maintaining margins through operational scale. The agricultural sector attracted $167.25 million in capital inflows during 2025, with quarterly volatility ranging from $24.15 million in Q1 to $67.24 million in Q2, indicating investor uncertainty about policy direction.
On the sell side: Smallholder farmers — comprising 70% of Nigeria's agricultural workforce — face input cost inflation without access to hedging instruments or bulk purchasing power. A typical maize farmer in Kaduna State managing 5 hectares now spends 60% more on combined fuel and fertilizer inputs compared to 2022 levels. Seed prices nearly doubled in 2025, while transportation costs for moving produce to urban markets increased proportionally with fuel prices. The UN World Food Programme projects 35 million Nigerians may face food insecurity in 2026 unless government policy actively mitigates high input costs, climate volatility, and insecurity.
NESG data shows debt service obligations increased 60.7% while capital expenditure declined 70%, creating fiscal stress that "must be addressed if we are to sustain growth". For observers: Monitor the Central Bank of Nigeria's monetary policy decisions through May 2026 — any deviation from the current 27% policy rate signals potential accommodation of fiscal expansion that could precede subsidy restoration. Under sustained reform scenarios, NESG projects 5.5% growth by short-term, rising to 8.5% by 2029 with three million jobs created annually, but policy reversal could drop growth to 2-3% with rising fiscal deficits and worsening poverty.
