Prices of Food Items
In Nigeria, the prices of food items have been steadily increasing, posing a significant challenge for consumers and the overall economy. While the pervasive issue of insecurity, which keeps farmers away from producing food and creates scarcity, is a contributing factor, there are several other factors that the government appears to have overlooked.
The Forex Challenge
The Forex Challenge A major concern for manufacturers, particularly those in the food industry, is the availability of foreign exchange (forex) from both the official Central Bank of Nigeria (CBN) window and the parallel market. Many of the inputs required for food production are imported, and the fluctuations in the forex market directly impact the cost of these inputs. During the Buhari regime, while the dollar rates at the parallel market were higher than the CBN’s official rates, manufacturers could still access forex from the parallel market at relatively manageable costs. However, the current situation is significantly different, with dollar rates skyrocketing at both the official auction window and the parallel market, making it extremely difficult for manufacturers to source the necessary forex for their imported inputs. As a result, these increased costs are ultimately passed on to the final consumers, making food items more expensive.
Fuel Price Increases
Another significant contributor to the recent escalation in food prices is the rise in fuel prices. As fuel costs increase, the transportation and logistics expenses for moving agricultural products and raw materials also surge, further driving up the prices of food items.
Import Restrictions and Border Closures
The government’s policies on import restrictions and border closures have also played a role in exacerbating food inflation. By banning the importation of certain food items and closing borders, the supply of these products has been disrupted, leading to scarcity and higher prices in the domestic market.
Supply Chain Disruptions
The advent of the COVID-19 pandemic has created significant problems related to the supply chain, which are still affecting manufacturers in Nigeria today. Ezeasor explains that the disruptions in the supply chain have made it challenging for manufacturers to source the necessary raw materials, leading to delays and increased costs that are ultimately passed on to consumers.
Extortion and Illegal Checkpoints
One of the most significant contributors to the rising food prices is the widespread extortion and the proliferation of illegal checkpoints along the transportation routes. Truck owners and drivers transporting agricultural products, such as food items, timber, and cattle, face a grueling journey through numerous checkpoints where they are forced to pay exorbitant sums to corrupt law enforcement officials and non-state actors.
As the manager of a company in Agbara Industrial Estate, Ogun State, shared, his management pays as much as N800,000 at illegal checkpoints just to convey a 40-foot container of goods from Apapa Port to the industrial estate. These costs are inevitably passed on to the final consumers, further driving up the prices of food items.
Bad Roads and Transportation Challenges
The poor state of Nigeria’s road infrastructure is another factor that contributes to the rising food prices. Truck drivers transporting agricultural products face significant challenges, including increased fuel costs, costly repairs, and delays due to the dilapidated roads. These added expenses are then reflected in the final prices of the food items.
Musa Sani, a truck owner, shared his experience of enduring a grueling journey through more than 100 checkpoints across Taraba and Benue states, which not only contributes to increased food prices but also exposes the drivers to exploitation by corrupt officials and criminals.
Similarly, the cost of transporting cattle from the North to the South has skyrocketed. Mohammed Saidu, a cattle dealer, revealed that the cost of transporting a trailer load of cows has increased from between N100,000 and N120,000 in 2019 to around N1 million currently, further driving up the prices of meat and dairy products.
Government Inaction and Complicity
The government’s apparent indifference to these issues and the lack of effective policies to address them have also contributed to the ongoing food inflation. Professor Tayo Bello, a dean at Adeleke University, stated that the activities of non-state actors in extorting money from farmers and transporters, coupled with the dilapidated roads, have become deeply entrenched in the economic system.
Moreover, Professor Bello noted that the brazen activities of these non-state actors suggest that the local and state governments are either complicit or are sponsoring such activities outright, with the proceeds not ending up in the state coffers.
Potential Relief and the Need for Comprehensive Reforms
While the recent strengthening of the naira is a positive development that could potentially lead to a reduction in food prices in the coming weeks and months, Amos Imarenakhua, an economic affairs analyst, cautioned that Nigerians will not enjoy fair food prices if the issue of non-state actors extorting players in the agriculture sector is not addressed.
To tackle the rising food prices, the government needs to implement comprehensive reforms that address the root causes of the problem. This includes:
- Improving security to ensure that farmers can safely produce food without the threat of attacks or displacement.
- Stabilizing the forex market and ensuring the availability of foreign exchange for manufacturers and importers of essential food items at reasonable rates.
- Cracking down on the extortion and illegal checkpoints along transportation routes, ensuring that the proceeds from these activities do not end up in the pockets of corrupt officials and non-state actors.
- Investing in the rehabilitation and maintenance of the country’s road infrastructure to facilitate the efficient movement of agricultural products and reduce transportation costs.
- Reviewing import restrictions and border closure policies to ensure a stable supply of essential food items in the domestic market.
- Implementing policies that encourage local production and reduce the reliance on imported food items, thereby insulating the sector from external shocks and fluctuations.
- Addressing the issue of rising fuel prices through measures such as deregulating the downstream oil sector, encouraging investments in refineries, and exploring alternative energy sources to reduce dependence on imported fuel.
Conclusion
The rising prices of food items in Nigeria are a complex issue with multiple contributing factors. From insecurity that keeps farmers away from producing food, to challenges posed by the forex market, fuel price increases, supply chain disruptions, extortion, poor infrastructure, import restrictions, and border closures, the government’s inaction and complicity have exacerbated the situation. To address this pressing issue, the government must take decisive action and implement comprehensive reforms that address the root causes of food inflation. Only then can Nigerians hope to enjoy fair and affordable prices for their essential food items.