Insecurity has continued to impede agriculture and deter investments in food-producing regions, resulting in a decline in output.
Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) noted the agricultural value chain had been disrupted following restrictions imposed by insecurity.
A leading member of the Organised Private Sector (OPS), NACCIMA said rising insecurity had a direct effect on production capacity of farmers, especially with over 80 per cent of farmers as smallholders.
“These farmers are unable and frightened to do their normal farming due to security situation in the country, despite the fact that these individuals make a living from farming and contribute to the country’s food supply.
“In addition, they contribute to provision of raw materials for food processing and for majority of agro-allied businesses,” NACCIMA said.
The association noted that this posed a threat to rural-to-urban conveyance of goods, saying: “The agricultural value chain has been disrupted… And it is conceived that the primary cause of inflation, particularly food inflation, is endogenous.”
NACCIMA was reacting to rising inflation, which hit 20.52 per cent in August, from 19.64 per cent in July as reported by National Bureau of Statistics (NBS).
In a statement, the group said this figure exceeded market expectations of 20.25 per cent, making it the highest figure since September 2005.
The association said these inflationary statistics might be incorrectly underestimated considering the primary research on price of essential foods, transportation and household goods.
It noted that it was the seventh consecutive monthly increase since February, showing a 3.52 per cent increase compared to the August 2021 inflation rate of 17.01 per cent. Food inflation also increased to 23.12 per cent in August, a 1.1 per cent increase from the 22.02 per cent recorded in July.
NACCIMA said the global increase in fuel prices and resultant increase in diesel prices have a direct impact on prices of goods produced with petroleum products.
“Notably, increased transportation, manufacturing, and heating costs have indirect implications on the cost of goods. It is increasingly crucial for most manufacturing enterprises to consider energy cost efficiency and become more reliant on alternative energy for production,” the association said.
The association noted that following the war between Russia and Ukraine, worldwide inflation rate had increased, leading to an increase in price of oil and food.
“Nigeria’s dependence on these countries (Russia and Ukraine) for agricultural commodities, such as grains and wheat for direct consumption and industrial commodity production had an effect on food prices…’’