Investor confidence lifts agro-sector to N30.5tn output

Infographic illustrating Nigeria’s growth in the agricultural sector. Chart: Arinze Nwafor

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Nigeria’s agricultural sector grew 3.79 per cent in the third quarter of 2025 due to improving investor confidence. Stakeholders maintain that the Federal Government must ensure timely policy implementation, fair market conditions and sustained investment to sustain the momentum, ARINZE NWAFOR writes

The agricultural sector contributed N30.5tn, in nominal terms, to the Gross Domestic Product in the third quarter of 2025. Crop production drove the agro-sector’s growth performance, which stakeholders attributed to improving investor confidence.

The figure from the National Bureau of Statistics represents one of the sector’s strongest quarterly showings in recent years, with crop production alone accounting for N20.13tn or 65.99 per cent. Livestock followed with N7.8tn, while forestry and fishing contributed N1.63tn and N943.77bn respectively.

When compared to the corresponding quarter in 2024, the agricultural sector generated N29.56tn and outperformed the N21.19tn posted in Q2 2025, reflecting improved activity across the subsectors. The sector also posted a real GDP growth rate of 3.79 per cent year-on-year, surpassing its Q3 2024 performance of 2.55 per cent by 1.24 percentage points, and outperforming its 2.82 per cent growth in Q2 2025 by 0.97 points. On a quarter-on-quarter basis, real sector growth stood at 32.87 per cent.

Agriculture’s real contribution to aggregate GDP stood at 31.21 per cent, slightly lower than the 31.27 per cent recorded in Q3 2024, but significantly higher than the 26.17 per cent recorded in Q2 2025. In nominal terms, the sector accounted for 26.85 per cent of total output, lower than the 30.74 per cent in Q3 2024 but higher than the 21.04 per cent recorded in Q2.

The data reinforced agriculture’s role as the backbone of the economy. In separate phone interviews, stakeholders told The PUNCH that the performance reflects rising investor confidence, driven by renewed government policy attention. However, they warned that sustaining the momentum requires policy execution, fair pricing for farmers, lower logistics costs and the introduction of a Buyer of Last Resort scheme to stabilise strategic crops.

Growth due to growing investor confidence

Stakeholders in the agricultural value chain attributed the improvement in the sector’s Q3 performance to rising investor confidence, which they linked to the government’s recent interest in the industry and growing private-sector activity. Yet, they warned that unless the government executes key interventions, including the recapitalisation of the Bank of Agriculture, the gains may weaken in subsequent quarters.

The President of the All Farmers Association of Nigeria, Mohammed Magaji, said the Q3 growth was partly the result of targeted government interventions under the National Agricultural Growth Scheme – Agro-Pocket Programme funded by the African Development Bank. He said the supply of agro-inputs under the programme strengthened production and supported the sector’s overall output.

He also explained that seasonal patterns supported harvest volumes. Magaji said, “Q3 is the peak of the dry season farming harvest and the commencement of the rainy season cropping harvest. That is why food prices normally start to drop from August to December.” He added that adequate rainfall across the country further boosted yields in the quarter.

However, Magaji insisted that the growth came at a cost to farmers, who sold their produce at a loss. He argued that despite the appearance of improved output, farmers faced an unfair pricing environment.

“The agricultural growth was at the expense of the farmers because they were selling at below their production cost. Food prices cannot be dropping when the cost of inputs is very high. That is an unfair price, and it is not sustainable,” he said.

The AFAN president acknowledged the existing government interventions but maintained that they remain “not enough”. He said farmers continue to face a market structure that pressures them to sell at a low price while contending with high costs and increased competition from imported food.

“For now, it is the buyers’ market because Nigerians want cheap food, and the government responds by relaxing the importation of food. That is not sustainable,” he said.

Magaji argued that fair pricing remains critical for sustainability. “A fair price is a win-win for everybody if the government can bring down the cost of inputs.” To protect domestic production and stabilise prices during periods of volatility, he urged the government to introduce a Buyer of Last Resort price mechanism for strategic crops such as maize, soybeans, rice and sorghum.

He said, “To discourage importation at the time of high food prices, government at all levels should introduce a Buyer of Last Resort price for our strategic crops.”

His comments come as the latest inflation report from the National Bureau of Statistics shows a significant moderation in the food inflation rate after the change in the base year. Food inflation settled at 13.12 per cent in October 2025, down from 39.16 per cent in October 2024. While the annual figure recorded a sharp decline, the month-on-month rate rose slightly from –1.57 per cent in September 2025 to –0.37 per cent in October 2025.

Despite these improvements, farmers insist that the fundamentals of pricing, input costs and access to finance require urgent attention to avoid undermining productivity.

Boom in agro-processing driving output

The Chairman of the Lagos Chamber of Commerce and Industry’s Agriculture and Allied Group, Tunde Banjoko, stated that the sector’s performance reflects rising investor interest triggered by the government’s policy posture. He noted that while many of the policies have yet to be implemented, the government’s willingness to engage with the private sector has boosted investor confidence.

He said, “There’s been a bit of government interest, policies that are probably giving investors confidence. The policies are beginning to give investors confidence, not that most of them have been executed, but there seems to be a willingness to interact with investors.”

Banjoko explained that the shift from dependence on oil to non-oil sectors has prompted many investors to turn to agriculture, which continues to offer opportunities across production and processing.

He said indigenous agribusiness firms have also expanded operations in recent years, which has bolstered the sector’s growth. “Most of them have been scaling up their activities, and when processing is being scaled up, it also impacts production because raw materials have to be supplied.”

He cited the strong performance of major players such as Okomu Oil, Presco, PZ Wilmar, Leventis, and others, noting that their expansion has attracted new investors and strengthened value chains.

Banjoko explained, “Everybody seems to want to have a stake in the agri-industry now more than ever before.” He noted that the rising interest is likely to keep the sector’s numbers strong, with the improvements expected to be reflected in market prices of commodities over time.

FG urged to recapitalise Bank of Agriculture

Despite acknowledging the government’s improved engagement with the sector, Banjoko warned that the sustainability of the Q3 gains depends on the actual execution of policies. He cited the government’s announcement earlier in the year that it would recapitalise the Bank of Agriculture with N1.5tn, a commitment that has yet to materialise.

The PUNCH reported in August that President Bola Tinubu approved the recapitalisation of the Bank of Agriculture with N1.5tn, approximately $1bn, marking the most significant boost to agricultural finance in Nigeria’s history.

The Ministry of Agriculture and Food Security in The PUNCH said, “The recapitalisation would reposition BOA as a dynamic development finance institution, with deliberate targeting of youth and women-led agribusinesses through accessible credit and capacity development support.” Stakeholders say they have not seen the execution of President Tinubu’s policy.

The LCCI Agriculture Group chairman said, “One thing is to give policies to excite investors; the other is not to execute the policies. As we speak now, the Bank of Agriculture has not been recapitalised.”

He noted that although the bank has appointed a board and launched digital platforms after years of operating manually, it still lacks the capital required to support production financing. He argued that the Bank of Agriculture remains the only institution capable of funding large-scale production because commercial banks lack interest in the sector.

“If we want to sustain this growth, one of the key policies should be: Bank of Agriculture, get your money. They can then support medium and smallholder farmers to produce enough to sustain factories,” he said.

He also called for a review of the tax regime on agricultural products, noting that operators still contend with produce taxes, local government levies and state taxes that raise costs. He said the multiple taxation structure undermines competitiveness and discourages investment.

On logistics, Banjoko criticised the government’s continued support for fuel importation, arguing that the cost of fuel has become a major deterrent to production. He urged support for local refineries to reduce pressure on logistics and ease the costs for producers.

His hope, he said, is that “in the new year, an average person can feed without breaking the bank.”

AfCFTA opportunities, CAADP framework

The President of the Nigeria Agribusiness Group, Kabir Ibrahim, linked the sector’s positive third-quarter performance to improved awareness among investors about the long-term sustainability of agribusiness. He said the sector’s abundance of arable land, large population and regional market integration under the African Continental Free Trade Area have strengthened investor appetite.

He said, “The boost in agribusiness in the third quarter comes from the realisation that it is more sustainable to be in agribusiness with the obvious advantages of a great deal of arable land and a large population, as well as the prospects of all of Africa becoming one large market through AfCFTA.”

Ibrahim added that the administration’s commitment to implementing the Kampala CAADP Declaration 2026–2035 has further improved investor optimism. The declaration forms the backbone of the new 10-year strategy for African agriculture and food systems, adopted at the CAADP Kampala Summit in January 2025.

He explained that multiple development windows introduced by the government are beginning to show results. “This is really a work in progress, and the obvious deliverables are fast rearing their heads, especially through the hand-in-hand investment window of $3.14bn from the United Nations, German Corporation, Nigeria’s private sector, public sector and the new generation.”

He said the investment windows focus on scaling value chains, including dairy, cassava, cocoa, maize, rice and tomato, all of which contributed to the stronger third-quarter numbers.

Policy execution, fair pricing

Although stakeholders agree that investor confidence is rising, they maintain that the government must accelerate policy implementation to sustain the momentum recorded in Q3. Their key demands include implementing announced policies, introducing a buyer of last resort scheme, reducing input and logistics costs, fair pricing for farmers, and strengthening private-sector partnerships.

Stakeholders emphasised that policy proclamations without execution undermine investor confidence. They urged the government to begin the implementation of the recapitalisation of the Bank of Agriculture and other promised interventions.

The AFAN president, Magaji, insisted that a guaranteed minimum price for strategic crops will stabilise markets, protect producers against losses and discourage imports during peak harvest periods.

Farmers and processors maintained that high input costs, high fuel prices and logistics bottlenecks continue to erode margins. They called for support for local refining, streamlined taxation, and better transport infrastructure.

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