+Food Inflow: Pressure on Farmers’ Profits
As we approach the festive season, the increasing cost of food continues to be of concern to many Nigerians as food inflation has risen to 39.16% in October from 37.77% in September 2024, according to the NBS report on inflation.
The Federal Government of Nigeria proposed to begin a 150-day duty free import window for the import of maize, rice paddy, wheat and cowpeas (beans) in July 2024. The move is meant to curb rising food prices and increase the supply of these staples.
However, officials have not yet implemented the duty-free import since its announcement in July.
The government expected this policy to increase the supply and decrease the price of these staple products in the market, as the prices of most of these staple products have increased by over 100% within one year.
Also, the porosity of the Nigerian borders could lead to increased undocumented outflow of agric produce through the Nigeria border states, and this might cancel out the aim of the policy.
The prices of food have increased by 8% points within a year. It rose from 31.52% in October 2023 to 39.16% in October 2024. The situation is worse in border states.
Yet, it could lead to market complications in the agriculture value chain – the drop in prices may discourage local production of these staples and reduce employment in crop production.
So, for those who missed this in its first publication, here is the analysis on the food crisis: The burden of the 150-day duty free import policy.
Food Outflow: Pressure on Food Prices
The 150-day duty-free import of staples assumes increased significance in its potential to counterbalance the undocumented outflow of foods through Nigeria’s land borders.
The average food inflation in Nigeria’s 17 border states is higher than that in the landlocked states, indicating reports of farmers preference to sell their produce in more valuable currencies after the Naira devalued.
The NBS data on Food Inflation already shows that almost all the 17 states in Nigeria around the border have the highest month-on-month food inflation especially in the month of June.
“In the month of June, Nigeria’s border states had a higher month-on-month food inflation rate at 3% compared to 2.4% in landlocked states,” a Dataphyte Data Card reads.
Most of these border states are classified as the food belt of the country, and the cross-border sale of food might be upending the normal food price stability in the states.
In Nigeria, staple foods such as cereals (rice, wheat, oat, and corn), legumes (lentils and beans) and tubers (potato and yam) account for about 90% of the people’s food calorie intake.
In the last 5 years, the domestic demand/consumption of staple farm produce, especially rice, wheat, and corn, has been on the increase.
The market has not been able to fully meet the country’s demand for these staple products, as domestic production, although slowly rising, is not commensurate with the country’s rapidly growing population.
Food Inflow: Pressure on Farmers’ Profits
The deficiency in supply from local sources necessitated importation of more agricultural products, especially rice and wheat.
Lucy Okonkwo is a research analyst at Dataphyte with a background in Economics. She loves to write data-driven stories on socio-economic issues to help change the narratives to inspire growth and development.
