Nigeria’s food processing sub-sector is responsible for at least half of all manufacturing jobs in the country, a new report by the FAO says.
The report released in September by the Food and Agriculture Organization of The United Nations (FAO) said many of the jobs are in micro, small and medium-sized enterprises in the informal economy.
The report titled “The State of Agricultural Commodity Markets” covers analyses on agricultural markets and sustainable development, global value chains, smallholder farmers, and digital innovations.
The report makes an important contribution to the argument on how well-functioning markets can contribute to inclusive economic growth and sustainable development. It says in West Africa, the food processing sector is the largest manufacturing sub‑sector in terms of employment.
“It accounts for only 5 percent of employment in the total agri‑food economy but represents an average of 30 percent of total secondary sector employment,” the report says.
Food processing implies the processing of clean and harvested crops into marketable and edible products. Looking at the huge market potentials surrounding the sector, the food processing sector remains less developed in Nigeria, according to experts.
On June 3, the Minister of Information, Lai Mohammed, alongside the Agriculture and Rural Development Minister, Sab Nanono, said the Nigerian government has set up plans to establish 142 agro-processing centres across the country, with one centre in each senatorial district of the six geo-political zones.
The plans came a few months after the African Development Bank (AFDB), in collaboration with the Federal Ministry of Agriculture and Rural Development, promised to spend $300,000 million to develop Special Agro-Industrial Processing Zone (SAPZS) across the country.
This is aimed at boosting food security, creating jobs, reducing food imports and enabling food producers, processors and distributors to operate within one vicinity.
According to experts, the food processing sector has the capacity to reduce unemployment rate in the country.
In the recent report of Nigeria’s unemployment rate released by the National Bureau of Statistics for the second quarter of 2020 (Q2 2020), the unemployment rose from 23.1 per cent that was last released in the third quarter of 2018 to 27.1 per cent, showing about 4 per cent increase from the previous rate.
With the growing rate of demand of food processing activities, the report identifies unreliable supply of raw materials and quality inconsistency as possible challenges.
“To improve the reliable and steady supply of agricultural commodities, food processors have started shifting from sourcing from spot markets to engaging in more formal contracts with farms,” the report said.
The report also identifies that many other developing countries are experiencing this transformation in the food processing sector.
“Today, midstream segments can form 30 to 40 percent of the value-added in food value chains in developing countries. For example, in Bangladesh, the People’s Republic of China and India, the share of the midstream segments in total marketing margins in rice value chains was found to average around 32 percent, while it was estimated at 42 percent for potato value chains,” the report said.