Agric sector shrank in January on rising input costs, insecurity

Nigeria’s agriculture sector shrank in January 2026, as rising input costs, insecurity and weak financing conditions weighed heavily on farming and agro-allied businesses, according to the latest Business Confidence Monitor (BCM) released by the Nigerian Economic Summit Group (NESG).

The BCM is a survey-based report that presents qualitative information on current business sentiment in the Nigerian economy and gauges expectations for short-term economic activity.

Africa’s most populous nation’s agricultural Business Performance Index fell sharply to 99.5 points in January 2026, down from 112.9 points in December 2025, marking the sector’s weakest performance since August 2025.

“This performance represents the weakest level since August 2025, primarily driven by a contraction in livestock and agro-allied sub-sectors, as well as muted performance in crop production,” the report notes, adding that performance across the five agricultural sub-sectors remained mixed.

According to the report, an index reading below 100 indicates contraction.

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The report shows that the nosedive was driven largely by contractions in livestock and agro-allied sub-sectors, both of which fell to 97.9 points, reversing a brief recovery recorded in December.

The decline occurred even as Nigeria’s overall business environment remained in expansion territory, reflecting agriculture’s growing vulnerability within the economy. While manufacturing, services and non-manufacturing sectors stayed above the 100-point threshold, agriculture joined trade as the only sectors to contract during the month.

Crop production also slowed, while forestry hovered around the neutral threshold. Only the fishing sub-sector remained in expansion, though at a weaker level of 103.2 points.

NESG attributed the sector’s subdued performance to a combination of insecurity across farming communities, constrained access to finance, unreliable electricity supply and persistent infrastructure gaps, all of which disrupted activities along agricultural value chains.

The BCM’s cost-of-doing-business index surged to 90.5 points from 54.7 points in December 2025, while input prices climbed to 96.9 points from 68.9 points, reflecting the combined impact of fuel price adjustments, tax reforms and lingering inflationary pressures.

For agriculture, which remains heavily dependent on energy, transport, and importation, these costs further squeezed margins and dampened investors and players confidence.

Read also: Agric sector leads Nigeria’s growth as business confidence rises

Looking ahead, the report notes that the outlook for the agric sector remains cautious.

The NESG Future Business Expectation Index for agriculture stood at 110.2 points, signalling weak optimism compared to other sectors such as manufacturing and non-manufacturing, which recorded much stronger confidence levels at 155 and 140 points, respectively.

While businesses across the economy are counting on currency stability, supportive policies and rising export demand to sustain growth, NESG warned that election-related uncertainties and inconsistent policies could deter investment and stall recovery in vulnerable sectors like agriculture.

Analysts at the policy firm say the contraction highlights the urgency of targeted interventions to stabilise food production, subsidise farm input costs, and strengthen rural security, especially as agriculture remains vital to employment and Nigeria’s food security goal.

Feyishola Jaiyesimi covers agriculture and environment trends at BusinessDay, Nigeria’s leading daily newspaper focused on economy and finance. Her stories draw on investigative journalism, and she has been selected for professional training by the US Embassy, Lagos, and Dataphyte. Feyishola holds a bachelor’s degree in Zoology and Environmental Biology from Ekiti State University.

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