Tumbling world food prices: Nigeria’s surging food inflation

Nigeria now stands out as an island of surging food inflation in a world where food prices are tumbling. Recent report of the Food and Agriculture Organisation (FAO) shows that global food prices have been tumbling in the last nine consecutive months.

The price of maize, which sky-rocketed when Russia invaded Ukraine, has dropped significantly even as the war is still raging. Prices of palm oil and other vegetable oils also fell.

The world appears to have left Nigeria in its island of surging food inflation as global food prices tumble precipitously.

Nigeria’s food scarcity and the consequent surging prices are so disturbing that even war-torn Ukraine with an economy ranked far below Nigeria is now donating grains to Africa’s largest economy.

The reverse should be the case if Nigeria was harnessing its natural endowments. Nigeria has a population of 216 million compared to Ukraine’s 44 million. Besides, Ukraine is ranked 84th in global economic list based on gross domestic product (GDP). Nigeria is 27th on that list.

Above all, Ukraine has been devastated in the last 11 months by Russia’s cruel invasion. Nigeria should be donating food and other items to Ukraine. It is strange that a war-torn country with an economy and population about a fifth of Nigeria’s is now feeding Africa’s largest economy.

Nigeria’s food inflation is surging out of control even as global food prices are tumbling.

The National Bureau of Statistics, NBC, is yet to reel out inflation figures for December 2022. When the figures are out, food inflation may hit 25 per cent.

The 2022 harvest was not as bumpy as expected and as stocks from the harvest wane food prices are surging and pushing millions more below poverty line.

Palm oil, one of the food items that Nigeria once had global production control, is now too expensive for the poor. The price of four liters of palm oil has climbed from N4,000 in 2021 to N7,500.

The price of a 50kg bag of rice has risen to N44,000. Nine months ago, the same quantity of rice sold for N27,000. A medium size tuber of yam now sells for N3,000 as against N1,500 in the first quarter of 2021.

The price of a standard loaf of bread has surged from N500 in the first quarter of 2022 to N700. Some dare-devil bakers sell as high as N800.

No one knows where Nigerian food prices are heading to. The only thing everyone knows is that prices would continue to rise. In fact, many have started saving in food items rather than in naira. Many believe that a 50kg bag of rice might carry a price tag of N55,000 by the middle of this year. That suggests an impressive profit of N11,000 for those who store the commodity now for the next eventful six months.

Nigeria’s insurmountable food inflation is the product of an odd combination of factors that the authorities have practically no solution to.

One of the major problems is imported inflation caused by a perpetually depreciating naira. Nigeria shamelessly depends on imported food items even as it sits on millions of hectares of arable land.

Haulage has become another catastrophic cause of food inflation. Nigeria is probably the only economy of its size that concentrates most of its land transportation system on roads.

Nigeria’s rail system collapsed about 30 years ago. The system is just being reactivated. Consequently, evacuation of food items from distant parts of northern Nigeria to the markets in the south is done by giant articulated trucks burning expensive diesel which now sells for anything from N800 per liter.

The cost of hauling food items in articulated trucks from the north through a distance of 1, 200 kilometers could be as high as N2 million per truck, because the cost of diesel for the journey could be as high as N1.2 million.

The high cost of haulage is worsened by the fact that the trucks wade through scores of road blocks mounted by police, Customs, soldiers, Federal Road Safety Commission (FRSC) and even local vigilantes.

Each truck driver parts with a minimum of N500 at each of the check points derisively tagged “toll gates”. By the time the truck meanders its way into the market, the toll gates would have raised the cost of the food items by at least 10 per cent.

Nigeria’s food inflation is primarily caused by the country’s primitive method of farming. Large quantities of rice produced by peasant farmers are still manually harvested and threshed.

The finishing touches done by mills in developed economies are handled manually in a clumsy process that introduces large quantities of stones into the product and reduce its market value.

Nigeria depends on wild groves grown and sustained by providence for most of its palm oil supplies. The wild trees, some of which are 50 years old and 60 feet tall, bear fruits intermittently and the fruits yield very little oil. Poor processing drastically reduces the quantity of oil extracted from fruits of the wild groves.

Retailers are another cause of food inflation. They make more money from the food items they sell because their pricing mechanism defies the dictates of the invisible hand of market forces of demand and supply.

A medium size tuber of yam leaves the farm in Benue state at N500. It wades through scores of check points which add at least N100 to each tuber of yam. After the market unionists extortionist levy, the retailer finally slams a price tag of N3,000 on the tuber of yam that left the farm at N500. Food items like onions, tomatoes and even pepper all undergo such arbitrary pricing process that gives the final retailer more profit margin than the farmer.

Ukraine’s pathetic intervention in Nigeria’s food crisis is a sad reminder of the gravity of the crisis and the helplessness of the rulers which probably explains why Nigeria pushes six patriots below poverty line every second.