Why Nigeria’s Food Price Hike will Worsen in 2022
The last few years have seen an astronomic rise in food prices in Nigeria, but experts have predicted that the worse is yet to come.
In 2015, Nigeria’s inflation rate hovered between 7.7 per cent, and 8.5 per cent and many analysts and consumers were complaining that it was too high.
Fast-forward to 2021, food prices in Nigeria became worse as inflation shot up to 18.17 per cent in December, the highest in over four years, pushing millions of households into acute malnutrition and starvation.
Sadly, things are not about to get any better just yet, because the World Bank has warned that 2022 may unleash a worse nightmare scenario on consumers in the country.
Nigeria is projected to have one of the highest inflation rates globally and the seventh highest in Sub-Saharan Africa. At the last check, Nigeria’s February inflation figure stood at 15.4per cent, a marginal reduction from 15.8 per cent recorded the month prior.
If the double-figure persists throughout 2022, the World Bank stated that it would hurt the government’s consumption, investment, and saving decisions.
The households and firms will also be impacted, while long term borrowing and lending will slow down.
“Over time, the disproportionate impact of inflation on lower-income households and those working in sectors with low savings (e.g, agriculture) will exacerbate inequality,” the World Bank said.
“Ultimately, inflation will not only negatively affect incomes but also economic productivity and job creation, further constraining the recovery.”
Meanwhile, efforts by the government to pull the country from the rubbles of the last two economic recessions, which the covid-19 pandemic exacerbated, has been unsuccessful so far.
Part of the reason for that is the skyrocketing inflation which has eroded the purchasing power of consumers and diminished the welfare of Nigerian households.
But while there has been a general price hike across the board, food prices have been most affected.
A 2021 report by SBI Intelligence, a geopolitical research agency, reported that food prices have risen by 400% in more than 12 years, further putting pressure on consumers.
But while food inflation has been on a steady rise, household income has almost stagnated or, in some cases, declined.
“This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetables, fish and fats,” the National Bureau of Statistics (NBS) said.
The real implication of this report is that bread which sold for N100 in 2009, rose to N500 in 2021.
And garri, which used to be regarded as the food for the poor has more than tripled prices since 2015, pushing it almost out of the reach of the poor.
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Why are food prices rising?
Stakeholders in the agric sector blame this on several factors, including rising insecurity in northern Nigeria, improper management of government funds to farmers, and poor implementation of the government’s agricultural policies and programmes.
Other causes include a high level of extortion at checkpoints by security agencies and multiple taxations by government agencies.
Although to curb the rising food prices in Nigeria, the federal government has initiated a series of policy changes, including cutting down on import duties on tractors and mass transit vehicles – to force down the cost of transportation of farm produce.
The Muhammadu Buhari-led administration also invested in the revamping of the rail sector. Yet, all these have not yielded the desired results. The food prices in Nigeria are skyrocketing instead.
Farmers in the North, which produce most of the country’s food, are compelled to bribe herders and bandits to gain access to their farms or protect their farmlands from being trampled upon by cattle.
“The hike in food prices is not our making. At every level of production, we have to bribe bandits to have hitch-free farming and harvesting,” a farmer who was not named told Guardian.
“Aside from bribing bandits during production, we have to also settle the bandits and security officials, while transporting the produce. All this goes into the cost of production, which we transfer to the end consumers.”
According to reports, most farmers from Borno, Taraba, Plateau, Katsina and other states have fled their farms to escape attacks by Boko Haram and the herders.
Farmers in Borno used to cultivate about 504, 000 metric tonnes of food crops since 2015. Their farming endeavour used to result in 1.5 metric tonnes of grains per hectare.
But since 2015, all that has been lost to the insurgency and insecurity. In Borno State alone, more than 1.5 million farmers have been affected by the insecurity in the North.
Many of them now seek refuge in Internally Displaced Peoples camps, where they depend on handouts for survival.
Abubakar Sugun, a 52-year-old farmer from Kukawa Local Government Area taking refuge at Gubio IDP camp, lamented losing his farmland and family.
“Boko Haram insurgents not only killed my relations and friends, but they also torched our houses and farmlands with crops yet to be harvested.
“We had to flee for safety in 2014 with my wife and five children to Maiduguri IDPs camp,” he said. Sugun decried that he could not return to Kukawa to cultivate his eight-acre (approximately 2.5 hectares).
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It is important to stress that Borno State, the epicentre of the war against terrorism, is a major base for agricultural production. The effect of the crisis is the recent hike in food prices in Nigeria.
Livestock farming thrives in the state. The major livestock reared in the state includes sheep, goats, camels and cattle. Fishing activities take place around Lake Chad.
In Taraba State, over 16000 farmers are sheltered in various IDP camps. The state has reportedly lost over 80 of its farmers to the crisis, which has had a telling effect on the country’s rice production output as Taraba is a major hub for rice production.
One cannot but recognise that the Buhari government has been bullish on agriculture. Since the administration’s inception, various intervention programmes have been launched to encourage farmers and boost productivity.
One of such initiatives includes National Young Farmers Club, designed to spur youth interest in farming.
The flagship of the administration’s agricultural intervention policy is the Anchor Borrowers Programme which has reportedly supported close to 5 million smallholder farmers to boost the production of 23 commodities.
The selected commodities include maize, rice, palm oil, cocoa, cotton, cassava, tomatoes and livestock.
Under the programme, loans are distributed to farmers through Deposit Money Bank (DMB) Development Finance Institution (DFIs) and Microfinance banks.
The most remarkable success story of the six-year programme is that Nigeria, which was heavily dependent on imports for its rice consumption needs, now produces 7.5million metric tonnes of the commodity locally, saving the country billions in foreign exchange earnings.
The current rice output is at least a 200 per cent increase in production in 2015. Intriguingly, more rice production has not resulted in lower prices in the market. The commodity is a lot more expensive today than it was in 2015.
Resettling displaced farmers
Though the government has made efforts to resettle the farmers and other IDPs in their villages and communities to revive the agricultural sector, it has yielded few results so far, as many of them are reluctant to go back home.
In recent times, the government has stepped up the onslaught against the bandits and insurgents through acquiring arms and other sophisticated military hardware.
Although some successes have been recorded, it’s not enough to guarantee safety for the displaced farmers.
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A few of them have been resettled in their community, but a large majority do not feel it is safe enough to return.
In January, Borno State Governor Professor Babangana Zulum revealed that up to 50,000 farmers had been resettled out of over a million displaced.
But it is not just enough to resettle the farmers; they also need humanitarian support to enable them to get back to their everyday life. That is one area the government is struggling with.
The government also made plans to mobilise security agents to stand guard while the farmers work, but that too has failed.
What needs to be done
Some stakeholders have admonished the government to negotiate with the aggressors, especially the bandits and herdsmen because the military might appear inadequate.
Experts have also lamented that the government’s intervention (loan/subsidies) often do not get to the actual farmer.
They are circumvented by greedy middlemen and corrupt government officials charged with implementation.
So it is not enough for the government to devote funds to agricultural projects. There must also be a mechanism in place to monitor implementation.
The National President of All Farmers Progressive Association, Ogbo Joseph Douglas, buttressed this point.
“That is why most of what government is doing is not commensurate with expectations. If what the government is spending on agriculture is reaching farmers, food prices should have gone down by now,” Ogbo said.
He urged the government to educate farmers on the need to embrace organic fertilisers instead of chemical fertilisers, as the former yield better and faster.
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