• Saturday, April 13, 2024
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Cost of jollof surges 34% in one year

Cost of jollof rice surge 10% in seven months – Report

The average cost of preparing a pot of jollof rice for a Nigerian family of five has risen by 34.2 percent in one year, according to a new Jollof Index report.

The report, titled ‘Hungry for Change’ by SBM Intelligence, an Africa-focused geopolitical research and strategic communications consulting firm, shows that the cost of preparing a pot of the popular Nigerian delicacy rose to N12,373 in June 2023 from N9,220 in the same period of last year.

This means that a family of five that earns the monthly minimum wage of N30,000 would have to spend 41.2 percent of the pay to cook a pot of jollof.

A further analysis shows that it increased by 202.8 percent from N4,087 in July 2016, when the index was launched and rose within a period of four months (March-June) by 13.7 percent.

“The price increase in April and early May could be linked to the lingering consequences of last year’s floods which dealt a fatal blow to the late harvest and the naira redesign policy,” the report said.

It said the price was also influenced by the seasonal fluctuations of certain food items but that, however, towards the end of May and into June, the average cost was affected to varying degrees by two crucial policy choices.

“These are the end of the country’s petrol subsidies and the devaluation of the local currency, the naira, to unify the exchange rate and attempt to remove arbitrage in the system. The subsidy removal increased fuel prices and increased food and transportation costs across West Africa over the last two months,” it added.

According to Israel Odubola, a Lagos- based research economist, the increment reflects the inflationary pressures the country is experiencing currently.

“It shows increased financial pressure for low and middle-income households. They would now have to allocate more financial resources for food and other basic needs, meaning fewer funds for savings and investments,” he said.

Using the Jollof Index, SBM illustrates how food prices have changed over time. The data gathered monthly from 13 markets spread across Nigeria’s six geopolitical zones is computed using the costs of the ingredients. It does not include December because of seasonal variations that cause price hikes.

The ingredients that make up the index are rice, groundnut oil, chicken or turkey, beef, seasoning, pepper, tomatoes, salt and onions. While the index has treaded close to food inflation since collection began in 2016, it has provided a simple way of communicating the realities of inflation to the Nigerian public.

The report also revealed that month on month, prices increased by 4.7 percent between March and April, 2.8 percent between April and May and 5.6 percent between May and June.

“Protein sources are the most affected. One of our interviewees noted that her family had long migrated from turkey to chicken, then to beef, innards and now mostly ponmo (cow skin) and eggs. But these alternatives are also getting costlier,” authors of the report said.

They added that apart from jollof rice, the cost of fresh tomatoes used for making another widely consumed staple across the country such as rice and stew has recorded a notable increase.

“From selling a custard pail of tomatoes for N1,500 as of January this year, the cost has increased to N6,000 at the time of the survey, especially in urban markets. Farmers complain of the poor yields due to floods late last year,” they said.

The SBM report highlighted that across the 13 markets, Wuse II in Abuja is the most expensive place to make jollof rice at N16,230, while it is the cheapest in Onitsha, Anambra at N10,050.

In the fourth quarter of last year, flood incidents in the country destroyed 70,566 hectares of farmland, damaged 45,249 houses and displaced over 1.4 million Nigerians, with about 600 persons reported dead.

The floods affected the volumes of paddy rice, which is putting pressure on the price. As at May, the price of a ton of paddy was over N300,000, David Ibidapo, partner and head of corporate strategy at Investapool Limited, said.

“There is a need to start rethinking the strategies around ensuring that we cultivate our paddy rice in the dry season. So the government needs to think of ways of driving investments into irrigation farming because it is expensive for farmers,” he said.

According to Ibidapo, cost-effective options like solar-generated power for irrigations needs to be considered, pending the time the country rebuilds the refineries that can be supplied at a cheaper rate.

President Bola Tinubu in May announced the removal of the petrol subsidy upon his inauguration into office. Barely three hours after the speech, petrol prices across the country surged by an average of 174.6 percent from two months ago.

Petrol in Africa’s biggest economy was selling at an average of N526.7 per litre from an average of N191.8 per litre a month ago, according to BusinessDay’s calculation of NNPC’s new/old price list.

Last week, Nigerians saw a second hike in petrol prices as the Nigerian National Petroleum Company Limited (NNPC) increased the pump price at its stations in Abuja to N617 and other marketers across the country also adjusted their prices. In Lagos, Mobil station along the Lagos-Ibadan Expressway was selling the product at N568.

Read also: Fuel Subsidy Removal: Kwara govt approves 500m fund for traders

In June, the Central Bank of Nigeria abolished segments of the official foreign exchange market to the Investors & Exporters Window, where the “willing buyer and willing seller” was re-introduced. Based on this adjustment, the official rate rose from N463.38/$ to N830 as at last Wednesday.

Nigeria’s food inflation rate accelerated for the six straight month in June to 25.25 percent, highest in 17 years, from 24.82 percent in the previous month, according to the National Bureau of Statistics.

The latest Nigeria Development Update report by the World Bank said the loss of purchasing power from high inflation has pushed an additional four million people into poverty in the first five months of 2023.

“Average prices of locally produced staples have increased faster than average inflation. The loss of purchasing power increased the poverty headcount rate by an estimated two percentage points or four million people,” it said.

The bank added that in the immediate term, the removal of the petrol subsidy has caused an increase in prices, adversely affecting poor and economically insecure Nigerian households.

“The poor and economically insecure households will face an equivalent income loss of N5, 700 per month, and without compensation, an additional 7.1 million people will be pushed into poverty.”

Food prices in Nigeria are even more complicated because the petrol subsidy removal and naira devaluation created economic pressures that affect lower-income households the most and make food security worse, according to SBM.

“While this is a huge concern, there is something deeper to worry about. Food insecurity can lead to socio-economic instability, forced migration, social unrest and excessive burden on global resources and infrastructure,” it said.

It recommends that it is necessary to recognise this looming crisis and act swiftly to reduce its impact with regional, national and global governments collaborating to tackle the underlying factors driving escalating food prices.

The measures identified are promoting sustainable agricultural practices, enhancing transportation infrastructure, revisiting import policies and strengthening local economies.