The Rising Food Prices

Traders in Nigerian food markets have raised concern over the continuous increase in food prices which currently makes purchasing power weaker.

The National Bureau of Statistics (NBS) has also said that the constant increase in food prices was largely responsible for the upsurge in inflation figures. The NBS, in a report in July, stated that the composite Consumer Price Index which measures inflation rose to 12.90% year-on-year in June 2012, from 12.70% recorded in May. It said, “The year-on-year change could be partly attributed to persistent increase in the prices of some farm produce.”

The Bureau further added that the level of composite Food Index in June was higher than the corresponding level a year ago by 12.00%. “Compared with May 2012, average monthly food prices rose in June 2012 by 0.50%,” the NBS noted, attributing the rise in food index mainly to “increase in the prices of some cereals, meat, fish, cooking oils and tubers.”

Some food dealers believe that the fluctuations in weather and the security crisis in one of the nation’s main contributor to food chain, the Northern part of Nigeria, contributed to the high prices of food, since demand for food increases without corresponding supply especially from the Northern region, thereby forcing the prices of food to go up.

However, some market analysts say apart from the insecurity issue in the north, the high cost of importation, foreign exchange rate, global climatic change, and government’s deliberate neglect of the agricultural sector have further compounded the woes in the food market. They said increase in food prices was also expected as the Central Bank Governor Lamido Sanusi had predicted that inflation could rise to about 14-15% during the year, due to the partial removal of fuel subsidies witnessed early in the year.

At the end of 2012 first quarter, data from the NBS revealed that Nigeria's food consumer index, in March, rose to 11.80% year-on-year in comparison with February’s 9.70% year-on-year. Sadly, two months after, prices of food stuff continued to increase with May food inflation at 12.90% from the 11.20% decline recorded in April. This further reduces confidence that food prices would stabilise in the coming months.

By the end of the year’s second quarter, the NBS’s report put June inflation at 12.90% year-on-year against 12.70% in May. The core inflation also rose to a 5-year high at 15.20% from 14.90% in May. However, food inflation was at 12.00%, from the 12.90% recorded in May.

Although food prices came down in the first two months of 2012, the trend did not continue for long as prices went up in the following months.

Food Basket
A market survey conducted recently in some major food markets across the country revealed that prices of most food items have skyrocketed when compared with the prices at which they were sold earlier in the year, making it more difficult for the poor to survive.

In Lagos for instance, findings show that the prices of staple foods in Mile 12, Mushin, and Oyingbo markets indicated sharp increase in the prices of foods items such as rice, garri, yam, onions, and cooking oil.

At the popular Mile 12, notable as a food market, a bag of 50kg rice which used to sell for N6,000 now sells between N10,000 and N12,000 depending on the brand. The Caprice brand of rice remained at N11,000, while other brands such as Special, Mama Gold, and Mama Africa remained at between N9,000 and N10,000. Rice is mainly imported into Nigeria as the quantity of the locally grown species cannot take care of the population demanding for the product.

A basket of tomatoes which was selling for N8,000 early this year has increased to N12,000 or N14,000 as occasion demands. A big sack of onions, which used to sell for N36,000 now sells for N42,000; while eight big pieces were sold for N500 as against N300.
At the Mushin market, the price of palm oil had also gone up in the last six months. Earlier in the year, a 25-litre gallon of palm oil was sold for N6,000 while it was currently sold for N8,500. A 25-litre gallon of groundnut oil was sold for N9,500 as against the former price of N8,000. A bag of beans is now said to go for N27,000, from N18,000.

A meat seller, Amedu Bala, complained that a big cow which went for N150,000 about six months ago, now goes for N200,000.
At the Oyingbo market, famous as a wholesale and direct farm-to-market food centre, a basket of fresh tomatoes now sells at N13,000 as against N5,000 at which it sold till first quarter of the year. The small portion for family cooking which used to sell for N100, now sells for N250-N300 in the market depending on customers’ bargaining power. At the rice section of the market, a bag of rice currently costs between N9,000 and N12,000.

A moderate tuber of yam from the North which sold earlier in the year for N150 presently costs between N350 and N400; although there are other species grown in the East and West, which are a bit cheaper.

At the Oba market in Benin, Edo State, a moderate bunch of plantain, which was sold at N1,500 two months ago, now sells for N3,000. Traders also attributed swings in the season of plantation and harvest as the cause for the price increase.

Traders’ Plight
Explaining the increase in food prices, Olowoye Idowu, a trader in Mile 12, said the insurgence security threat in the North is affecting food prices as majority of farmers and foodstuff dealers in the North have left their businesses to seek for safety. “The current situation in the North is seriously bad that is why we don’t get enough supply from there again. Because of unexpected attack from the Islamic sect, farmers left their farms and traders are therefore out of business since there is little or nothing to sell and transport. Those who are still managing to do business despite the insecurity issues know that they are risking their lives,” Mr. Idowu said.

Tope Ilori, a palm oil seller at Oyingbo market, said that the prices of palm oil and groundnut oil had to increase because the commodities being supplied by the Nigerian producers are not enough. “We now go as far as Cotonou in Benin Republic to buy palm oil and groundnut oil. And since we are in business to make profit, we must add the cost of transport to our selling price,” she said.

Meanwhile, Alhaji Abdul Dawuda, a food dealer and one of the market leaders in Lagos, explained that the changes in prices of goods could be attributed to the rainy and dry seasons. He said the type of tomatoes grown in Kano, Katsina and Gombe states were planted using irrigation. He said whenever it rains it becomes difficult to farm because the farmers will not plant until the rains had gone.

Alhaji Dawuda added that the increase in the price of rice could be attributed to the reported flood in Thailand and Brazil, which are major rice markets for Nigeria.

Nigeria currently spends a significant amount on the importation of wheat and rice among other food commodities. Although President Goodluck Jonathan had indicated his intention to stop the importation of some staple foods, including rice and sugar by 2015, public opinion seeks to know what survival strategies would be put in place to forestall a scarcity.

In Abuja, prices of foodstuff like yam and other perishable crops across some markets have also inched up, as traders complain about low patronage.

At the regular Karmo Tuesday market, a heap of yam which used be sold for between N14,000 and N18,000 now goes for N25,000 to N30,000 depending on the size while a basket of tomatoes now cost N4,500 for the big size while the medium size sells for N3,000.
Mallam Aminu who sells yam said prices went up because of the sudden change in weather. “Late last year I used to sell five tubers of yams for N1,200 but it is now N2,500 while the medium size now goes for N1,000 and N1,200,” he said.

At a market in Garki II, perishables like tomatoes and peppers are also experiencing hike in prices. A big basket of tomatoes which was initially sold for N4,000 now sells between N5,500 and N6,000 while small basket which was initially sold for N350 and N500 is now N600 or N700. A big basket of onions is now N7,500 as against the initial price of N5,000 while a small basket goes for N550 as against the initial price of N350.

Ayodeji Ajayeoba of the Centre for Democracy Development in West Africa, said food scarcity and the continuous increase in the prices of the available ones will persist unless the government takes drastic steps to address problems facing agriculture in the country.
He observed that with the country’s rich arable land, it is sad that Nigeria remains among the world’s poorest countries due to government’s failure and neglect of the agricultural sector following the discovery of crude oil.

The NBS had reported that about 112.52million Nigerians live in relative poverty, a staggering estimate of 163million population. It noted that the dollar-per-day measuring parameter puts Nigeria’ poverty rate at 61.20%; while the subjective poverty measure puts the nation at 93.90% poverty level.

Mr. Ajayeoba said, “Things changed dramatically for the worse following the global economic crisis that hit developing countries beginning from the late 1970’s onward. The discovery of crude oil and rising revenue from the country’s petroleum sector further encouraged official neglect of the agricultural sector and turned Nigeria into a net importer of food.  By 2009 for example, the Federal Ministry of Agriculture estimated that Nigeria was spending over $32billion annually on food imports.”

According to him, despite the huge role agriculture is playing, contributing about 42% of the nation’s GDP and also creating jobs for more than 60% of the populace, the sector receives less than 10% of the annual budgetary allocations.

“Underfunding in this regard is central to the crisis of food production, and food security in Nigeria. It explains the persistence of poverty. The loss of food sovereignty and the dependence on food importation is also making the country quite susceptible to fluctuations in global food crisis. This is why Nigeria was also strongly affected by the global food crisis in 2007/2008,” he said.
The United Nations Development Programme (UNDP) said in its annual Africa Human Development Report that while drought and crop failure often trigger food crises in Africa, the actual causes of food insecurity goes much deeper.

The UN agency said in its 2012 report, titled, ‘Towards a Food Secure Future,’ that factors such as low agricultural productivity, which curtails the availability of food, leading to trade imbalances and a reliance on imports and humanitarian aid and extreme poverty makes getting enough food expensive and inaccessible for the poor.

Experts have maintained that what Nigeria needs to change its agricultural fortune and stop food scarcity will involved a more comprehensive and pragmatic approach. They recommended huge investment in agriculture as what is been allocated in the budget is not enough to cater for the agricultural needs.

They said that the government should also ensure strict implementation of agricultural policies while ensuring that the annual agriculture growth rate be sustained at no less than 9.50%. Experts say there is also the need to support small scale firms, as well as check the growing insecurity in the north, adding that agriculture should be given its rightful place as a major income earner to maximise capacities in food production.

They said it is high time the government increased focus on mechanised farming, and provide the right incentives for farming equipments to be affordable, maintaining that government should lead by example and spend more in agricultural development in the country just like what President Goodluck Jonathan is doing with the cassava bread project.

Speaking on the urgency for an agricultural revolution in the country, Kemi Kale, the Statistician General of the NBS, said, “It remains a paradox that despite the fact that the Nigerian economy is growing, the proportion of Nigerians living in poverty is increasing every year.”

This Mr. Kale attributed to the neglect of the agricultural sector. He said, “Economic growth is not development. If you look at our GDP numbers, you will see that agriculture, wholesale & retail trade, and oil & gas constitute over 70% of that growth. How many people can those three sectors employ? Not many,” adding that “agriculture is largely subsistence in nature because the local farmer is not looking at employing people and it is when agriculture is commercialised that it will be employment generating and poverty reducing.”

Late last year, the Minister of Agriculture, Dr. Akinwumi Adesina, at a meeting with members of the House of Representatives Committee on Agriculture, warned that Nigeria could experience food shortage as exporting countries had scaled down exports to address internal shortages.

He said some Asian countries, which Nigeria relied upon for the importation of rice and wheat, were cutting exports in the wake of dwindling agricultural productivity. The minister named some of the countries as Thailand, India and Vietnam.

According to Dr. Adesina, Nigeria’s food import bill is exceptionally high, saying imports consume over N1trillion in foreign exchange every year. “Nigeria’s food imports are growing at an unsustainable rate of 11% per annum,” the minister warned, adding: “To address the issue, the Federal Government is now working with other tiers of government to reposition the agricultural sector.”
The chairman of the House committee, Tahir Monguno, said the House would study government’s blueprint for agriculture to be in a position to pass an enabling legislation to help the transformation of the sector

Meanwhile, as part of initiative to boost the agricultural sector, the Federal Government introduced a new policy of having 40% cassava flour input in bread made and consumed in the country. The new policy which came into operation July 1, 2012, proposes that bread made in the country will comprise 60% wheat and 40% processed cassava flour.