Bringing down food prices is a task that must be done
If the economic recession has been unsparing in its effects on businesses and households across the board, one of the more noticeable fallout of the crisis – ironically – was the phenomenal increases in food prices for the most part of last year. At a time of soar-away inflation which the National Bureau of Statistics (NBS) puts at an unprecedented 18.3 per cent as at November, the findings of a local commodity index – the Novus Agro Commodity Index – that prices of some agricultural commodities in some cases tripled over the course of the outgone year, while alarming, obviously goes beyond deniability.
Among others, they found that the price of a 25-litre keg of locally produced palm oil actually tripled from the January 2016 price of N6,190 to N18,390 in December; that a bag of 100kg bag of maize, which sold for N6,000 rose to N17,515 during the same period – a rise of 192 per cent. Ditto for gari, the staple for the poor whose 60kg bag recorded a 123 per cent rise from N5,940 to N13,240.
For rice, they found that the price of the 50kg bag imported variety rose from N9,400 in January to peak at N18,275 in November, only to fall slightly to N17,710 in December. The same is true of the 100kg bag of beans which sold for N20,165 in January 2016 but went as high as N33,475 by December. Others are the 25-litre vegetable oil whose price during the period rose from N6,800 to N16,500 – a 143 per cent increase; egg from N900 to N1,300. Nigerians would readily testify that the findings are closer to reality than anything else.
We are certainly not surprised at the findings. If the Nigerian economy was ill-prepared to absorb the shocks from the global slump in oil prices, it was even more terribly ill-equipped to deal with its aftermath nearly two years after its onset. The result was the mishmash of policies that not only tended to exacerbate the situation, but left little room for citizens’ manoeuvre – at least in the short term.
One of such was the hike in petrol price from N86 per litre to N145 – a measure whose effect would be both swift and dramatic with reverberations across all sectors of the economy. For a country whose transportation infrastructure is not only wobbly but palpably inadequate, the immediate effect was to raise the transportation costs – and hence the prices of goods, including essentials like food.
Another was the removal of the forex cap under which the naira had been pegged at N197 to the United States dollar. The result was an unprecedented plunge in the value of the naira to N480 to the US dollar in the parallel market. The measure, although well-intentioned, could only have been catastrophic in a country that had long relied on imports for a substantial portion of its food requirement. Then of course were the reported cases of bird flu and tomato Ebola, both of which wreaked havoc in some parts of the country in the course of the past year.
It is heart-warming that governments across all levels not only recognise the challenge, but are already tackling them headlong. The collaboration between Lagos and Kebbi states in rice production deserves special mention in this regard; so is the initiative being undertaken by Ebonyi State government to boost its ‘Abakaliki Rice’. Indeed, so are other initiatives being championed by the Central Bank of Nigeria (CBN) to address the food security challenge. For the good of the nation, we urge more states as indeed corporate bodies to come on board to raise the momentum in agricultural production.
However, boosting production is only one half of the equation; as we have seen over the years, the other half is overhauling the sector’s value chain not only to guarantee its sustainability but also to optimise its business potentials. More than ever before, the sector requires massive investments in transportation infrastructure, storage and processing to reduce post-harvest losses and to bring the level of wastages to the barest minimum.
With such investments, food prices will ultimately come down; so will the business become truly self-sustaining. Ultimately, what is needed is a new attitude on the part of all: from the lenders, a new attitude towards agricultural financing; for the practitioners, a willingness to learn and adopt new technologies; and for the government a new resolve to drive the momentum through.