Analysis of food inflation in the last one year, experts views, FG’s intervention

By Okeoghene Akubuike

There has been a continuous increase in food prices in the last one year, making it difficult for many Nigerians to afford basic staples, leading to hunger and malnourishment.

The latest Consumer Price Index (CPI) and Inflation report for April 2024 released by the National Bureau of Statistics (NBS) showed food inflation increased to 40.53 per cent on a year-on-year basis.

The NBS said the April figure indicated a 15.92 per cent increase compared to the rate recorded in April 2023 at 24.61 per cent.

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The bureau said the rise in food inflation on a year-on-year basis was caused by increases in prices of food items such as Garri, Millet, Yam Tuber, and Water Yam, CocoYam.

Others are dried fish sadine, Dried Catfish, Mudfish Dried, Palm Oil, Vegetable Oil, Coconut Oil, Beef Feet, Beef Head, Liver, Frozen Chicken, Mango, Banana, Grapefruit, Coconut, Water Melon, Lipton, etc.

The NBS latest Selected Food Price report for April also confirmed the increases in various food items across the country.

An analysis of the report showed that several food items had increased by over a 100 per cent in the last one year such as garri, rice, beans, maize, sweet potato, yams, tomatoes, onions, etc.

The report said that the average price of 1kg of white garri increased by 134.98 per cent on a year-on-year basis from N362.50 recorded in April 2023 to N851.81 in April 2024 .

Also it said the price of 1kg of local rice increased by 155.93 per cent from N546.76 recorded in April 2023 to N1, 399.34 in April 2024.

The average price of 1kg of brown beans rose by 125.43 per cent on a year-on-year basis from N615.65 in April 2023 to N1387.90 in April 2024.

Also, the average price of 1kg of white maize grain increased by 130.08 per cent on a year-on-year basis from N346.67 recorded in April 2023 to N797.61 in April 2024.

The report revealed that the average price of 1kg of sweet potato increased by 182.04 per cent on a year-on-year basis from N286.26 recorded in April 2023 to N807.35 in April 2024.

The average price of 1kg of yam tuber rose by 154.19 per cent on a year-on-year basis from the N444.69 recorded in April 2023 to N1,130.37 in April 2024.

In addition, the average price of 1kg of tomatoes increased by 131.58 per cent on a year-on-year basis from N485.10 in April 2023 to N1,123.41 in April 2024.

It showed that the average price of 1kg of onions increased by 128.04 per cent on a year-on-year basis from N446.79 in April 2023 to N1,018.83 in April 2024.

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The NBS said that the National Average Cost of a Healthy Diet (CoHD) per adult a day stood at N1,035 in April  2024 from its latest CoHD report.

The bureau said CoHD had steadily increased since the first CoHD report by the bureau in October 2023.

“The CoHD in April 2024 is 40 per cent higher than what was recorded in October 2023 at N703 and five per cent higher than CoHD in March 2024, which was N982.”

The report said the food groups that had driven the increases in CoHD the most were vegetables, starchy staples, and fruits.

The NBS also said that in April, the average CoHD was highest in the South-West at N1,406 per adult per day, while the lowest average CoHD was recorded in the North-West at N781 per adult per day.

The bureau further said that at the state level, Ekiti, Ogun and Osun recorded the highest CoHD at N1,483, N1,447, and N1,417, respectively,  while Kogi and Katsina recorded the lowest CoHD at N709, followed by Kaduna and Nasarawa at N756 and N769, respectively.

According to the World Bank’s most recent Nigeria Development Update report, The UN’s Food and Agriculture Organisation (FAO) warned that no fewer than 26.5 million Nigerians living in the states of Borno, Sokoto, and Zamfara, and the Federal Capital Territory (FCT), may face a food crisis between June and August.

Also, the International Monetary Fund (IMF) said over the last decade, limited reforms, security challenges, weak growth and now high inflation had worsened poverty and food insecurity in Nigeria.

The IMF said at the conclusion of its Executive Board’s 2024 Article IV Consultation with Nigeria that food insecurity could worsen with further adverse shocks to agriculture or global food prices.

Economists have attributed the food inflation to several factors such as insecurity, exchange rate instability, and supply side shortages, as they proffered some solutions to addressing them.

Paul Alaje, the Chief Economist, SPM Professionals, said there was a need to boost the supply side by coming up with a National Agricultural Development Programme.

“In key local governments that have arable land, let us plant crops there, like cashew nuts in Kogi, cassava in the South-East, rice in Kebbi and potatoes in Jos and so on. We are blessed everywhere in Nigeria.

But when we leave it in the hands of the private sector alone or local farmers to farm, there will be a big problem.”

Alaje also recommended that the government should look at having corps members trained and participate in agro planting and harvesting, saying as we have an orientation camp for corps members we can have an orientation camp for farming.

“I remember in the 1st Republic we had something like farming hubs developed by the Late Chief Obafemi Awolowo, we can repeat the same thing so we have increased output on the supply side for agro allied.

He said the government would also need to be very deliberate in stamping out insecurity in the country, especially in the farm areas.

“I know the government is trying and I respect and appreciate the efforts of security agencies but concerted effort must be given to farm areas.

“Those are our food production centres, we can’t afford to ignore them even if it means getting support to protect those farm areas.”

Alaje also said that the government must dedicate some regions as food regions.

“If we do this and are able to boost our output, food inflation will come down. We are seeing demand and there is no supply that is why prices are going high.”

He also said that the government needed to address the issue of logistics, which is the movement of goods from one place to another in the country.

“Diesel has increased to an average of N1,400 per litre, petrol has also increased to an average of N700 per litre, this will have an implication of moving the goods and on the cost of food.

Alaje said villages and urban centres should be connected by train, adding that a unique transport model should be in place where the roads are good and safe for people and goods to pass.

“Nobody wants to produce food that nobody is buying. If they can boost the supply side I am very confident and statistics have proved it all over the world that prices can come down especially for food,” he said.

Dr Ayo Anthony, an Economist said the factors responsible for food inflation were high exchange rates, and insecurity which had led to a drop in food supply.

Anthony said that most of the food produced in Nigeria, especially manufactured or processed food, or prepackaged food had an import element.

“When food produced has an import element, definitely the exchange rate will be a factor.

“You don’t expect an economy with an exchange rate of about N1,500 per dollar to have stable food prices compared to the N700 per dollar in the preceding year.

“So an increase in exchange rate is an increase in the cost of production which will be transferred to final consumers in the form of an increase in prices.’’

Anthony said the government needs to boost the supply of forex through quality exportable goods and increases in Nigeria’s export base and export varieties.

“Also, we can reduce the demand pressure on forex. Unnecessary imports should be reduced, health tourism should be reduced, let us patronise our health care facilities in Nigeria.

“We should ration our limited forex to only more important items. Items that can be produced domestically, services that can be rendered domestically should not be purchased from outside.

“This will reduce the pressure on forex and the forex should be channeled to more productive activities like production of food and other goods and services,” he said.

A foodstuff trader, Mr Peter Okpara, said in the last one year, the prices of commodities had recorded an unprecedented increase, especially food items.

Okpara attributed the continuous food inflation to the removal of fuel subsidy, insecurity, low supply and inadequate storage facilities.

“Some of the economic policies of this administration, like the removal of fuel subsidy have caused a lot of problems. It has led to an increase in transportation cost.

“Also, many farmers cannot even farm anymore because their farms are not secured.

“Take cassava for example, the output of cassava this year cannot be compared to the output of last year.

“So because there is high demand for cassava and the supply is low, we are witnessing an increase in the price of Garri almost on a daily basis.’’

He said the government should give the “real local farmers” incentives, provide them with mechanised farming tools and provide adequate storage facilities, as they also address the insecurity in the country.

In addressing the rising food inflation, President Bola Tinubu declared a state of emergency on food security and rolled out interventions to boost food supply in the near term and reduce the suffering faced by vulnerable households.

Tinubu had on Feb. 8, 2024, directed the Federal Ministry of Agriculture and Food Security to release 42,000 metric tons of assorted grains to farmers and households from the Federal Government’s Strategic Food Reserve.

Also, the Central Bank of Nigeria (CBN) donated 2.15 million bags of fertilisers valued at more than N100 billion to Nigerian farmers which it handed over to the Minister of Agriculture and Food Security, Sen. Abubakar Kyari in March.

The CBN Governor, Olayemi Cadoso, said the contribution was aimed at amplifying food production capabilities and foster price stabilisation within the agricultural sector.

Also, following the removal of fuel subsidy, the Federal Government approved N5 billion for each state and the Federal Capital Territory (FCT) to enable them to procure food items for distribution to the poor in their respective states.

The Minister of Agriculture and Food Security, Sen. Abubakar Kyari, said the ministry had procured and distributed 58,500 metric tonnes of milled rice to dampen escalating food prices in the country.

Kyari said this during his presentation at the ministerial sectoral update in commemoration of President Bola Tinubu’s first anniversary.

“We inaugurated the dry season farming with cultivation of 118,657 hectares of wheat in 15 states of the country in acceleration of all year- round farming.

“We supported 107,429 wheat farmers with inputs resulting in output of 474, 628 metric tonnes.”

 

News Agency of Nigeria (NAN)