Food inflation, which is already at a record high of 23.3 percent, is projected to hit 26.3 percent by December, according to a presentation made by the Financial Derivatives Company Limited (FDC) at the Lagos Business School Breakfast Meeting.
Food inflation typically falls during harvest season (April-July and September-December). But this year, food inflation defies the trend due to the compound effect of flooding and structural bottlenecks.
Food inflation rose steadily this year from 18.37 percent in April to 19.50 percent in May to 20.60 percent in June, and to 22.02 percent in July. In September, the figures hit 23.34 percent, the highest in 17 years.
Harvest season usually, is to taper inflationary pressures. But with the flood that has affected 33 states (most of them being agrarian economies), and 92 percent of the entire country, concerns are rising about an impending food crisis.
The affected commodities, according to the FDC report, are important to the Nigerian economy. Flooding in Adamawa state has affected cotton, groundnuts, millet, cassava, guinea corn, and yams. In Benue (the nation’s food basket), commodities affected are yam, rice, beans, cassava, sweet potato, maize, soybean, sorghum, millet, sesame, and cocoyam.
In Cross River state, yams, cassava rice, maize, fishing, palm oil, kernels, timber, cocoa, and rubber have been affected. In Gombe, groundnuts, cotton, sorghum, millet, cowpeas, cassava, beans, onions, tobacco, etc.
Of the affected commodities, Nigeria is the largest producer of rice in Africa and the 14th highest in the world. Nigeria is the world’s largest producer of cassava and yam tubers.
Cocoa is one of Nigeria’s leading non-oil export commodities, and Nigeria is the 4th largest producing country in the world, 5th largest producer of vegetables (16.4mn tonnes), 11th largest producer of maize, 3rd largest producer of groundnuts, 3rd largest producer of sweet potato, 2nd largest producer of sorghum, and the 12th largest producer of cotton.
The price of rice, the most consumed staple, is surging as the days go by, especially towards the festive period. According to FDC findings, the price of a bag of rice (50kg) has seen a 40.86 percent surge from N34,076 before the flood to N48,000 as of today.
“The demand for rice is crazy right now because people want to buy ahead of the yuletide season as they believe that the price will go up. Since demand is high, the price will definitely keep going up. Ideally, even though there’s an increase in price, it should stabilise for a while, but because the demand is high, the sellers/importers too are taking advantage,” a middle-aged rice dealer told BusinessDay in a market survey.
A bag of maize (used for animal feeds) which used to sell for N15,000 before the flood rose to N29,000, a 93.33 percent surge.
“This rise in food inflation was caused by increases in prices of bread and cereals, food products, potatoes, yam, and other tubers, oil, and fat,” the September Consumer Price Index report by the National Bureau of Statistics (NBS) said.
The NBS monitors 43 food items in total on a state-by-state basis and tracks their prices to evaluate food inflation. Items that constitute the food basket, based on classifications, according to the six geo-political zones in the country, are brown beans, boneless beef, 500g sliced bread, white garri, onion bulb, 1 bottle of palm oil, local rice, tomato, wheat flour: Golden Penny (2kg), and yam tuber.
Should the food inflation rate increase further in the coming months, many more Nigerians will fall into poverty, experts told BusinessDay.
