Food prices in Nigeria have risen to record levels in the last five years and Nigeria faces a food security crisis. In our previous Jollof Index, we have highlighted the causes, impacts and policy solutions to the rising food prices in the country and the threat to food security. This has been corroborated by the Food and Agricultural Organisation and has just recently made it to policy circles. In May 2018, the United Nations Food and Agriculture Organisation warned that 12.8 million Nigerians will go into famine between June and August 2021 and a more recent report by the organisation confirms that 19.4 million people in Nigeria will be in a food crisis by August this year. The policy responses have been slow and sometimes comical. While we were putting finishing touches to the last Jollof Index, a House of Representatives member moved a motion to investigate the causes of food inflation and the Lagos State government launched a five-year agricultural development roadmap that aims to solve the problem of food inflation in the state. In the meantime, geopolitical tensions have following Russia’s invasion of Ukraine have started to affect inputs across the global agricultural value chain.
The national average for the latest Jollof Index shows that prices rose in October and November, slightly declined in January and began an upward trend in February and March. The spike in October and November is attributed to the increasing demand for food items in anticipation of the holiday season in December. Rice and groundnut oil account for this increase as companies purchased end-of-the-year welfare packages for their employees. In October, diesel prices began inching up on the back of supply shortages, and this was augmented by continuous concerns about insecurity which has been keeping more and more farmers away from their farms. In February and March, the issues that caused food prices to increase include a continued increase in diesel prices, petrol scarcity and heightened insecurity. Petrol prices typically have a knock-on effect on the cost of transportation and food storage, especially for products like turkey given Nigeria’s precarious power situation which forces pretty much every business to run on expensive petrol or diesel generators. All our respondents indicated that the price decline in January was because of a sell-off of the stock that most traders acquired in anticipation of bigger sales during the festive season. Most respondents indicated that these anticipated sales did not happen as many buyers did not open their purses during the 2021 yuletide. Inadequacy of storage facilities forced them to sell off stock at lower prices, especially perishables.
This is worrisome.
The average cost of making a pot of Jollof rice for a family of five went up from ₦8007.50 in Q3 2021 to ₦8595 at the end of Q1 2022, a 7.3% increase. Price surges are now a common phenomenon in all the markets and the erstwhile judicious approach of running to outskirt markets in a bid to save costs is no longer tenable. This showed particularly in Abuja. It will cost the most to make a pot of Jollof rice in Wuse II at ₦10,900 while Bayside Mbakpa in Calabar accounts for the lowest cost of making a pot of Jollof rice at ₦6,840. Our interviews across these markets revealed a few trends; adapting to the fluctuating prices is one thing that customers told us they have learnt to do. One of our respondents, a meat seller, described what he has noticed recently that people are abandoning beef for cheaper parts such as intestines, and other innards in a bid to save cost. Additionally, more customers ask that their meats be sliced into smaller pieces.
The sit-at-home protest by separatists in the South-East and associated violence in the region is one of the causes of food insecurity in the region.
Our interviews with traders on the state of events confirmed this. One of the respondents said that since July last year when a trailer with cows was burnt in Anambra, the price of beef had gone up. Despite the fuss about boycotting cow meat as a form of protest, beef is still one of the most used proteins in cooking and the alternatives are few. Fruit and vegetable sellers also complained about food spoilage and losses as a result of the sit-at-home protest. A fruit seller had this to say: “Since the protest started, I don’t sell for about four days in a week. I cannot buy perishable fruits and vegetables after Thursday because I have only Saturday to complete all my sales. If anything remains after Saturday, it will spoil because there is no market on Sunday and Monday.”
Across the country, protein sources like turkey and beef accounted for the increase in most states in February and March, thus making it difficult for many Nigerians to afford protein in their meals as many families are now more concerned about food quantity other than food quality or dietary requirements. In the face of this sad reality, it is disturbing that a member of the House of Representatives only recently moved a motion for the investigation of food inflation when the very causes of food inflation are obvious. A good place to begin such investigations would be to examine why in the last seven years, more than 10 companies in the food, drink and beverage industry have shut their operations and businesses in Nigeria. The reasons for this are not far-fetched. The business environment is not friendly owing to unfavourable government policies, multiple taxation, over-regulation, unstable electricity supply and other similar issues.
While the country is still struggling with poor electricity supply which makes food storage, mostly done by refrigeration, difficult, the national grid recently collapsed twice in three weeks. The alternatives, petrol and diesel which account for a major increase in the cost of food production, were also not readily available. In January, diesel prices went up to ₦700 from ₦288 and a bad batch of petrol was imported which had unsafe levels of methanol, leading to a prolonged scarcity.
Despite different policies seemingly geared towards food sufficiency, Nigeria is still a predominantly import-reliant country as about 70% of the country’s dietary products are imported, and as production capabilities dwindle further in the face of a rising population and dwindling power of the naira, the trend is likely to continue. In 2018, about 52% of the rice demand was met from imports, and a similar trend has continued. 99.7% of the country’s total wheat demand is sourced from imports and amid the Russia-Ukraine war, the supply of wheat, which is used to produce rice substitutes like noodles and pasta, is likely to take a dip. Currently, Ukraine and Russia produce 29% of the world’s wheat exports and 62% of sunflower oil. Moreover, the war has led to a global surge in fertiliser prices as shipments from the Black Sea region have been reduced. Hence, food prices are likely to take an upward trend in the coming months. Already, the cost of a 50kg bag of NPK increased from ₦8,000 in the previous year to about ₦17,000 presently. A bag of Urea fertiliser now costs ₦17,000, up from ₦6,000 last year, thus increasing the cost of food production. While the commissioning of the three million ton fertiliser facility is expected to improve the availability of fertiliser, it may not improve the cost. The United Nations and Food and Agricultural Organisation have reported that 14.4 million people in Nigeria are already in a food crisis, and another five million are likely to be added to this number by August. We can only imagine how many more Nigerians will be faced with a food crisis by the end of the year if there are no actionable steps to tackle the already daunting challenges.
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