The persistent cash crunch facing households and businesses could trigger a food crisis in Africa’s most populous nation in the second quarter of the year if the government fails to act fast, farmers have said.
More than a week after the Central Bank of Nigeria ordered lenders to dispense the old naira notes, in compliance with the Supreme Court’s ruling, many automated teller machines across the country are still sitting idle while bank branches are rationing the available cash.
The farmers who spoke to BusinessDay said the naira scarcity has worsened their woes as many are now forced to cut down on their production or shut down completely, thus leading to production shortfall.
They also attributed a further decline in the country’s food production to the Ramadan period – when most farmers tend to be less productive due to their religious obligation.
According to them, the country is approaching the peak period of the rainy season – May through July, when vegetables such as tomatoes and pepper become scarce owing to their inability to grow well during the rainy season.
“Our food security has been under threat since the outbreak of the pandemic, and the naira scarcity has further worsened the situation,” said Florunsho Olayemi, lead consultant and chief executive of Sammorf Agro-Consult Limited.
“There might be food shortages in the second quarter if the government fails to act now and address the cash crunch issue in the economy,” Olayemi said.
He said many farmers who usually cultivate during the dry-season farming could not do so this year because of the cash scarcity as rural economies are still 100 percent cash-based.
Since the initial deadline of the naira redesign policy (January 31), farmers have continued to count losses and fear it could cause a food crisis as many cut down on their production hectares.
“I have incurred a huge loss due to the naira scarcity and I am yet to get enough resources to go back to the farm again,” Mohammed Abdulsalam, a 56-year-old vegetable farmer, said from his Kano farm in the North.
Poultry farmers have raised an alarm that the industry is on the verge of collapse owing to the naira scarcity. Sunday Onallo-Akpa, national president of the Poultry Association of Nigeria, said over 15 million crates of eggs worth over N30 billion had been lost to the ripple effects of the naira scarcity.
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Since 2020, Nigeria’s food production has come under tremendous pressure as farmers battle rising costs of growing food, worsening insecurity, climate change and high logistic costs.
“Farmers have been suffering from a combination of issues since the pandemic outbreak and the cash crunch is further aggravating it,” said Ibrahim Kabiru, national president of the All Farmers Association of Nigeria. “There will be a reduction in food production as a result of the effect of all these factors.”
However, Kabiru believed that despite the negative effects of the cash crunch, there would not be food scarcity in Africa’s biggest economy.
He said the naira scarcity has eased recently and the raining season has commenced, adding that both factors will help reduce the current pressure on farmers.
Recently, the Food and Agricultural Organization said 25.3 million people in Nigeria would face acute food insecurity from June to August 2023 lean season – a period when stocks are depleted, and food prices reach their peaks.
The 2023 figure is 5.85 million higher than the 19.45 million people projected to face acute food insecurity last year.
“We are going to have a shortfall in production and can only hope it won’t be serious. Farmers have been struggling to survive and the naira scarcity has compounded the problem,” Abiodun Olorundenro, operation manager at AquaShoots, said.