Food inflation in Nigeria rises by 100% in 10 years

Food inflation is defined as a change in prices of food items over a period of time

  

Food inflation in Nigeria has risen by almost 100 per cent in the last 10 years, moving from 9.62 per cent in November 2011 to 18.34 per cent in October 2021.

Food inflation is defined as a change in prices of food items over a period of time.

The rising rate of food inflation is evidenced in the rising prices of food items such as rice, beans, bread, yam, vegetables, fruits and eggs which have all gone up by at least 100 per cent between 2011 and the current year.

The rising food inflation has consigned many Nigerians into poverty as the rising price gets out of the reach of the average Nigerian.

Confirming this in a publication titled COVID-19 in Nigeria: Frontline Data and Pathways for Policy released last, the World Bank, said the rising prices of food items, especially the one witnessed between June 2020 and June 2021, could push another 6 million Nigerians into poverty. The bank also noted that Nigeria’s economic growth was being hindered by food inflation.

The bank stated, “In April 2021, the year-on-year inflation rate was the highest in four years, and food prices accounted for over 60 per cent of the total increase in inflation. Indeed, in 2020 and 2021, Nigeria witnessed its highest surge in food-price inflation in almost two decades. This inflationary pressure stems from both supply and demand factors, many of which are directly linked to the COVID-19 crisis. On the supply side, food production and market access may have been affected by the pandemic and by lockdown measures, compounding the effects of restrictive trade policies, including the closure of Nigeria’s land border in August 2019. On the demand side, firms and households expect prices to rise during economic shocks and thus incorporate these expectations into their investment and consumption decisions.”

This is even as Nigeria is ranked 103rd in the 2021 Global Hunger Index (GHI) out of 116 countries. GHI says with a score of 28.3, Nigeria has a level of hunger that is serious.

GHI warns that unless urgent steps are taken, serious hunger could result in child stunting, child wasting and child mortality.

According to data sourced from the National Bureau of Statistics (NBS), food inflation rose from 9.62 per cent in November 2011 to 11.01 in December of the year and 13.2 per cent in January 2012.

By December 2012, food inflation stood at 10.23 per cent, slid to 10.05 per cent in January 2013 and came down to 9.28 per cent in December 2013. The rate remained 9.28 per cent in January 2014, slid to 9.21 per cent in February, rose to 9.27 in March and stood at 9.17 per cent in December 2014.

Food inflation rate was 9.20 per cent in January 2015, rose to 10.60 per cent in December 2015 which was retained for January 2016 but rose to 17.40 in December 2016. The rate was 17.82 in January 2017 but rose to 19.42 per cent in December of the year. The rate cascaded to 18.92 per cent in January 2018 and went further down to 13.56 in December of the year.

The rate slid further to 13.51 per cent in January 2019 but went up by 1.16 per cent to 14.67 per cent in December of that year. However, the rate went up by 0.08 per cent in January 2020 to 14.85 per cent and climbed up to 19.56 per cent by December of the year.

In January this year, food inflation was 20.57 per cent. It went up to 21.79 per cent in February, 22.95 per cent in March, dropped by 0.73 per cent to 22.72 per cent in April and slid further to 22.28 per cent in May.

The rate was 21.83 per cent in June, 21.03 per cent in July, 20.30 per cent in August, came down to 19.57 per cent in September and 18.34 per cent in October.

In the 10-year period, food inflation was highest in March, April and May 2021 at 22.95 per cent, 22.72 per cent and 22.28 per cent respectively.

The rising food inflation in the country is contrary to expectations given the interventions of the Federal Government in agriculture through the Central Bank of Nigeria (CBN) and the Federal Ministry of Agriculture and Rural Development.

The CBN came up with the Anchor Borrowers Programme (ABP) to create a linkage between anchor companies involved in the processing of food items and small holder farmers (SHFs) of the required key agricultural commodities. The focus of ABP is the provision of farm inputs for small holder farmers to boost production of their commodities, stabilize inputs supply to agro processors and address the country’s negative balance of payments on food. At harvest, the SHF supplies his/her produce to the agro-processor (Anchor) who pays the cash equivalent to the farmer’s account.

The CBN Governor, Mr. Godwin Emefiele, has said repeatedly that the apex bank is concerned about the huge foreign exchange spent by Nigeria in importing food items that could be produced locally.

Emefiele is of the belief that allocation of foreign exchange to the importation of items that could be produced locally had contributed immensely to the depletion of the nation’s foreign reserves.

He said the rising unemployment and escalating food imports prompted the CBN to shift from concentrating only on price, monetary, and financial system stability to act as a financial catalyst in specific sectors of the economy particularly agriculture, in an effort to create jobs on a mass scale, improve local food production, and conserve scarce foreign reserves.

Similarly, the Federal Ministry of Agriculture and Rural Development has come up with a number of programmes to facilitate increased agricultural output. Among these programmes is the Agro-Processing, Agricultural Productivity Enhancement and Livelihood Improvement Support (APPEALS).

The essence of APPEALS is to enhance agricultural productivity of small and medium scale farmers and improve value addition along priority value chains in the participating states.

There are five components in the project. These are production and productivity enhancement, primary processing, infrastructure support to agri-business clusters, technical assistance, knowledge management and communication to build capacity of the project staff and project management and coordination.

But in his comment on why there seems to be no respite with respect to the rising prices of food items despite the federal government’s interventions, the National President of All Farmers Progressive Association (AFPA), Ogbo Joseph Douglas, said it is due to the lack of sincerity on the part of those executing the government’s interventions.

He said the money purportedly given out to support farmers doesn’t get to practising farmers but is shared between those handling the projects and their proxies who parade as farmers.

According to him, “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. How do you explain a module of beans that sold for N250 last year now going for N1000, or a module of garri that was selling for N100 now selling for N500?”

In a chat with Nigerian Tribune, a poultry and fish farmer, who operates in Ogun State, Mr Femi Agbabiaka, put the blame of the seeming consistent rise in the prices of food items on a number of factors such as the foreign exchange policy of the apex bank, insecurity and energy cost.

According to him, “In Nigeria, everything rises and falls on the dollar. For a while now, our local currency has been fighting a difficult battle against the dollar. This affects virtually everything because we are largely an-import dependent country. So, when the dollar exchange rate is high it will affect the price of local items.”

He added that the issue of untamed insecurity has scared many farmers off their farms, noting that this has resulted in a decline of farm produce.

“When there is a shortage in supply even when demand remains constant, there will still be a hike in price because what is available is not enough to go round. This is an economic principle. Insecurity is a major cause of the rise in prices of food items.”

Agbabiaka said his poultry farm runs on generator most of the time.

“With the cost of diesel on a consistent rise, there is no way it would not affect the cost of production and eventually, the prices of eggs and similar farm produce,” he said.

In his own submission, Sebastian Ugwu, a Lagos-based economist, said that food prices are rising is indicative of the fact that there is a shortage in supply or that the cost of production is on the rise. He urged the government to look at these two factors as a way of bringing down the rising prices of food items.

But according to President Muhammadu Buhari, middlemen and COVID-19 are mainly responsible for the rise in food prices.

In a statement issued by his Senior Special Assistant, Garba Shehu, President Buhari said, “Apart from the destruction caused to rice farms by floods, middlemen have also taken advantage of the local rice production to exploit fellow Nigerians, thereby undermining our goal of supporting local food production at affordable prices.”

The President added, “COVID-19 pandemic has taken a heavy toll on the economies of all countries, including Nigeria, in addition to the fact that floods have caused large scale destruction to agricultural farmlands, thereby impacting negatively on our efforts to boost local production in line with our policy to drastically reduce food importation.

“No government in our recent history has invested as heavily as we are doing to promote local production of about 20 other commodities, through the provision of loans and several other forms of support to our farmers.”

However, the International Monetary Fund (IMF), in a statement, said rising food inflation is a global trend, and not just a Nigerian problem.

According to the body, four factors are responsible for the worrying trend. The first is the African swine fever that hit China in 2018, wiping out much of China’s hog herd, which represents more than 50 percent of the world’s hogs. It added that this was compounded by the introduction of Chinese import tariffs on US pork and soybeans during the US-China trade dispute.

IMF also stated that the early lockdown measures and supply chain disruptions at the wake of COVID-19 pandemic induced a spike in consumer food prices. The third factor is the soaring shipping and transport costs and the fact that global food producer prices have rallied reaching multi-year highs.

But while speaking on what the government should do to arrest the development, Mr Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria (MAN), counseled the government to come up with consumer price stabilization measures that would stimulate growth in agricultural output.

He also said, “Government should sensitise citizens to patronise and consume locally produced goods, imbibe the benefit of consuming local goods and government should set a good example by patronising local products in all government purchases.”

According to Ugwu, not much progress could be made about bringing down food inflation unless the government is determined to address the issue of insecurity that has drastically reduced crop production.

“For food prices to come down, the farmers in Benue, Nasarawa, Oke-Ogun in Oyo State and other parts of the country must be able to go fully back to the farm without any fear of harassment,” he said.

A paper, What Determines Food Price Inflation? Evidence From Nigeria, written by Egwuma, H., Ojeleye, O. A. and Adeola S. S, which was published in FUOYE Journal of Agriculture and Human Ecology, submitted that since real GDP has a positive impact on food inflation by inducing an increase in the volume of food demand, policies in favour of the agricultural sector should be adopted in order to stimulate agricultural production as a way of keeping food inflation low.

According to the paper, such policies could be in the form of provision of credit, modern farm machinery, pesticides and other inputs to small-scale farmers that will enhance productivity and control rising food prices.

It, however, added that for such policies to be effective and sustainable, increased food supplies must be absorbed by increased demand and a rise in demand must be met by increased supplies, else food prices will rise and reverse any benefit.”

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