• Friday, April 19, 2024
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Maize, sorghum prices fall 21% after millers suspend purchase

Maize, sorghum prices fall 21% after millers suspend purchase

Since the announcement by major feed producers in the country to suspend the purchase of maize and sorghum from farmers, prices of the grains have dropped by 21 percent as hoarders are releasing more of the commodities to the market.

BusinessDay survey of markets in Yobe and Kano shows that a 100kg bag of maize now sells for N45,000 as against N57,500 sold last week in Dawanu market in Kano, indicating a 21.7 percent decrease in price. A metric ton of maize sells for N450,000 as against N575,000 sold a week ago.

A 100kg bag of sorghum now sells for N45,500 as against N57,500 a week ago in Yobe, while a metric ton now sells for N455,000 as against N575,000 within the same period. This shows a 21 percent decline in price.

Experts lauded the move by the federal government, noting that commodity prices have started dropping and it is expected to fall further.

“The immediate impact is that commodity prices have started dropping and further decline is expected,” said Kamaldeen Raji, managing director, AFEX Fair Trade Limited.

“This can significantly affect farmers income and financial stability. On the other hand, for millers, the suspension may result in more available volume of commodities, but the ultimate determinant of whether this is a solution will be the overall volume available in the market,” he said.

“If there is a surplus, it could potentially help stabilize prices.”

Maize and other grains is becoming scarcer in the Nigerian market, owing to the worsening rate of insecurity, extreme weather conditions, increase in local sourcing by industries that uses maize as raw material and high rate of export of Nigerian grains across the African continent.

This makes little available for local consumers, leading to price increase of maize – a leading cereal grown in Nigeria, closely followed by sorghum and rice.

Nigeria is Africa’s second-largest maize producer after South Africa, churning out about 12.9 million metric tons in 2022, according to data from the Food and Agricultural Organisation.

“Some of the middlemen have mopped up these grains and are hoarding them, making the prices artificially surge. Once millers stop off-taking, the prices will come down,” said Oluwasegun Falade, head of agro-input of Flour Mills of Nigeria.

According to him, each miller will be adopting different strategies to cope, based on their decisions internally, adding that some already have a large stockpile.

Nigeria is the natural habitat for many varieties of sorghum and the world’s second-largest producer and supplier of the crop, churning out 11 million metric tons while demand is put at 12.5 million MT, leaving a gap of 1.5 million MT, according to data obtained from the Federal Ministry Agriculture.

“The prices are coming down now and it is expected to decline further within the coming weeks when hoarders release the ones they have been hoarding to the market,” said Muazu Bawa, secretary of the National Association of Sorghum Producers in a response to questions.

However, experts call on the government to address the underlying factors driving the surge in food prices and not just stop at the temporary suspension of oof-taking.

“While the temporary suspension of off taking may have some impact on managing food prices, it is important to address the underlying factors that drive the surge in prices,” Raji said.

“These factors include transportation costs, input prices, market demand, and overall supply availability. By addressing these factors and ensuring a sufficient supply of commodities in the market, there is a better chance of stabilizing food prices in the long term.”