Failed food blockage in Nigeria confirms law of economics

Some food traders’ attempt to pull the plug on supplies to their largest market came unstuck as it fell on the wrong side of basic economics.

By blocking food supplies headed for some of the largest markets in Nigeria, such as Mile 12 and Oyinbo Markets in Lagos; Bodija Market in Ibadan; New Benin and Ikpoba Hill markets in Benin City; Onitsha Main Market in Anambra, and Abeokuta Market in Ogun State, the traders not only cut off their largest markets but opened the door for wastage of the mostly perishable goods, particularly vegetables.

The traders, who eke out a living from their sales of food produce, would find that losing their largest markets comes with severe challenges.

Take the case of Adamu Danjuma, whose trailer load of tomatoes that was headed for Lagos was intercepted on the road. Nearly all his goods were already spoilt before the blockage ended Wednesday.

Danjuma, who could not immediately estimate the size of his loss, is one of the known farmers in Sokoto who grows vegetables and sends them to Lagos and other adjoining states. The proceeds of the sale go into sustaining his family of eight.

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Danjuma’s vegetables were among the hundreds of items trapped for days en route to Lagos and denied entry into their largest markets.

The pain felt by Danjuma provides a clue of the ugly experience waiting to be told by hundreds of farmers whose goods ranging from tomatoes to onions, fruits and yam tubers down to potatoes and grains were held back during the incident.

Although some level of normalcy has been restored and free movement of farm produce across the regions has begun, analysts say the food blockage was always going to cause untold hardship for farmers while also leading to food price hikes in the states expecting the produce.

The Amalgamated Union of Foodstuff and Cattle Dealers of Nigeria (AUFCDN) had embarked on the blockage in protest of the alleged killing of its members, among other issues.

The union had also demanded payment of N475 billion compensation for the lives of members and properties lost during the #EndSARS protest and the Shasa Market crisis in Oyo State.

Money is made where the food is consumed

In 2019, Nigerians spent N22.8 trillion on food items, according to data on household expenditure published by the National Bureau of Statistics (NBS). The bulk of this amount was thrown into the purchasing of starchy roots, tubers and plantain; rice, vegetables; fish and seafood; grains and flours; pulses, nuts and seeds; meat; fruits; oil and fats.

The total amount spent on vegetables and meat alone came to a total of N2.95 trillion.

Notably, the NBS data showed that consumption expenditure in the period was higher in the South West, as the region spent N6.2 trillion on food.

This was followed by the N4.6 trillion spent in the South-South region; N4.3 trillion in the North Central; South-East (N2.6 trillion), and finally North East (N1.59trn), the data showed.

The above data show why the South is the market for most of the food produced in Nigeria and validates why Danjuma, who lives in Sokoto, takes the pain of moving his goods to Lagos where they are consumed more.

The effect of the food blockage may take a week before it dissipates and food prices begin to normalise, according to Ayodeji Balogun, CEO, AFEX, Nigeria first private sector commodities exchange, and tech-enabled agriculture company.

“The prices will affect mostly perishables like vegetables, tomatoes and pepper in the Southern region. It will also affect export shipment for certain commodities that are headed towards Apapa Port,” Ayodeji said.

Africa’s most populous nation is already grappling with rising food costs caused by a host of factors, including lingering insecurity challenges and acute dollar shortages.

Nigeria’s inflation accelerated for the 17th consecutive month to 16.47 percent in January, caused by rising food prices that rose to 20.57 percent, the highest on record.

This has continued to put a strain on consumers whose income have been badly affected by the pandemic, erode returns on investments, and increase the headache of policymakers who are battling to get the economy on its feet after suffering its worst recession last year. It could also worsen poverty levels and widen the inequality gap of the country.

According to Emmanuel Ijewere, vice president, Nigerian Agribusiness Group (NABG), it is a wake-up call for states to plan in improving the country’s storage capacity to save for rainy days and tackle any impending food situation.

Nigeria is producing less and less food for its growing population hence it is prone to any sudden shock in the food supply, he noted.

BusinessDay’s price trend watch shows that while prices of tomatoes, pepper, onions and other vegetables doubled in the Southern region of the country due to distortion in the supply chain, the price crashed significantly in the North caused by the supply glut, thereby leading to waste and destruction of the items as there was no demand to meet up with the excess supply.

As economists put it, in a market, particularly a case of perfect competition, the forces of demand and supply are at play and as such, neither the seller nor the buyer alone can control the market.