Why prices of foodstuff may remain high, even with new harvest

Few weeks ago, harvest of some grains begun and expectations are high. However, prices will remain a major factor that will shape the market, not only along demand and supply, but also the cost of production, conflict in production areas and the increasing spate of the international demand of our major grains, hinged on the […]

Few weeks ago, harvest of some grains begun and expectations are high. However, prices will remain a major factor that will shape the market, not only along demand and supply, but also the cost of production, conflict in production areas and the increasing spate of the international demand of our major grains, hinged on the fallen value of the naira.

Since 2016, the country’s food production is struggling to keep pace with population growth and food demand due to years of reliance on importation, increased livestock/feed production and the rising demands of the country’s grains within the West and North Africa sub-regions.

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An agric economist, Mr Ojo Ajibade, in a telephone conversation, said high cost of inputs is likely to keep the prices of produce high, even at the peak of harvest.

“With the current prices of fertiliser, seeds, pesticides, herbicides and increasing cost of labour, there is no way all these will not affect the prices of produce,’’ Ajibade said.

He said the cost of maintaining poultry farms, for instance, is increasingly becoming unbearable for many farmers, and the only way they can remain in production is by increasing the prices of poultry products.

“The cost of feed is something else, just as other inputs, to the extent that some farms are folding up. That is why the prices of chicken and eggs are going up. Many farmers are still struggling,’’ the expert said.

The Agricultural Commodities Forum of Nigeria has blamed the rising insecurity, especially in the North, the COVID-19 pandemic and what it describes as over reliance on the rain-fed agriculture as part of the reasons behind the recent astronomical increase in prices of foodstuff in the country.

In a communiqué after its recent meeting in Abuja, which deliberated on and examined, among others, the issue of insecurity as it affects farmers and high prices of food items, it was noted that over one million of their members had been pushed out of their farms by bandits.

The forum observed that prices of food items across the country had spiked beyond the reach of ordinary Nigerians, thereby creating unusual hardship among the people.

In the communiqué, jointly signed by Bashir Ibrahim of the Agricultural Commodities Producers Association of Nigeria (ACPAN) and Anibe Achimugu of the National Cotton Association of Nigeria (NACOTAN), the Forum expressed “sympathy and solidarity with Nigerians in this difficult time, particularly the majority struggling to make ends meet.”

“The activities of violent criminals in key food-producing areas with North-East, North-West and North-Central, leading to forceful displacement of a large number of people and disruption of farming activities, were responsible for the high prices.

“More than one million farmers have been displaced in 2020 alone due to the criminal activities of terrorists and bandits. Many of our members and officials have been kidnapped and held for ransom, while others have lost their lives.

“Seasonal spike in the prices of food items is an unfortunate feature of rain-fed agriculture, compounded in Nigeria by grossly inadequate storage infrastructure. “It is a phenomenon that happens every year, particularly between planting and harvesting periods,” the communique reads.

Current food prices across some of the markets in Abuja, Niger and Nasarawa states show that a hundred kilograms of maize in Nasarawa goes for N24,000, which translates to N240,000 per metric tonne (1,000kg). Even at off-season, before the recession and COVID-19, the highest it went was N160,000 per metric tonne, although this varied from market to market.

This increase in maize pushed prices of feeds for the poultry and other allied industries to go higher. Currently, a 25kg bag of feed costs between N6,400 and N9,200, depending on the brand. This has also affected the current price of eggs in the market, rising from N30 three years ago to N70 currently in the market. Observers forecast that it might reach N100 per egg in the coming months. The price of chicken has also gone from N1,200 to more than N4,000, depending on where you are buying from within the period under review.

For other products where maize is a component, like Semovita, a 10kg bag rose from N1,650  three years ago to N5,200 currently, depending on the brand and where you are buying from. Many large sized families are now making difficult choices as income shrink in the same period.

One hundred kilograms of paddy (un-milled) rice  goes for N20,000 currently in parts of Nasarawa, Niger, southern Kaduna, Plateau, Benue, from early harvests.

Observers forecast a further rise in the period leading to December and New Year festivities. The price of rice usually stays between N9,000 and N12,000  as harvest commences. Currently, a 25kg bag of milled rice sales between N16,000 and N19,000 while 50kg sales between N28,000 and N32,000, depending on the brand and which market you are buying from.

Similarly, a plate of rice has also responded to these prices, moving from N250 to N450 or more, depending on the restaurant and location.

For groundnut, last year saw prices go up by more than 50 per cent—from N7,000 per un-milled 100kg bag to N18,000 before the planting season. The current price is N13,000  per 100kg for un-milled bag. This has also pushed up the price of groundnut oil and other byproducts of the crop.

The only crop that perhaps has dropped in price is cassava. A pickup truck, which goes for N70,000, has now dropped to N35,000 in parts of Nasarawa and Benue states. The cost of cassava was a major topic as the tuber crop has never in the history of the country gone up such high for a measure (mudu) of garri from N120 to N600.

Usually, during harvest period, prices drop by more than half until the second quarter of another year, but this has changed since the 2016 economic recession. And just when the country is recovering from the recession, the COVID-19 pandemic came with a global shock in all the sectors of the economy, except the information technology.

Although this price increase may sound positive to the farmers who are struggling to cope with high cost of production, consumers are groaning that their purchasing power is fast declining, leading to hunger in many parts of the country.

Mrs Victoria Adah, a civil servant resident in Abuja, said despite the high cost of produce in the market, her salary remained the same.

“If you go to the market, you will be surprised about the cost of food items, it is becoming unbearable and something needs to be done immediately,’’ she said.

Because of the perceived underperformance in the Ministry of Agriculture, President Muhammadu Buhari, Wednesday sacked the minister, Mohammed Sabo Nanono.

By Hussein Yahaya, Vincent A. Yusuf & Baba Martins