• Friday, July 12, 2024
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BusinessDay

Food import success lies on avoiding past hurdles

Food volatility and the need to embrace multi-dimensional solutions

Nigeria needs to import food from wheat to rice to tame the cost-of-living crisis, but Africa’s most populous nation must avoid past mistakes.

Food inflation has become a major hurdle in Nigeria, reaching 40.66 percent in May 2024, according to the National Bureau of Statistics (NBS). Twelve months ago, food inflation was 24.82 percent.

While importation of food should be a no-brainer for Nigeria at the moment, experts have suggested better ways of doing that to avoid encouraging traders to unduly abuse the entire process.

“I support the government’s effort to bridge the current gap in availability with imported food, so long as this is for a very short period, well monitored and managed to ensure that it’s the new way to provide food for Nigerians and raw materials for agro-based processing and manufacturing industries,” said a major investor in the Nigerian agriculture industry, who pleaded anonymity.

“While we welcome the short-term effort to improve the availability of food, we have to start now to plan for the next dry and rainy seasons, assuming an improvement in the overall security situation in the rural areas. What’s the plan to ensure that the farmers have an adequate supply of improved seeds, fertilizers and agrochemicals for the next dry and rainy season, having lost this one? What’s the plan to begin to rebuild our strategic food reserves to forestall the kind of the current quagmire that we have found ourselves in? What’s the plan to improve on general food storage to minimise post-harvest losses and encourage processors to transform agricultural commodities into more durable forms?” he asked.

Read also: Top five states with highest food inflation in May

He further said the next dry season farming is only about three months away, urging Nigeria to prepare early.

“The next rainy season will start in February/March, whether we’re ready or not. Are we going to lose that window of opportunity again?” he asked.

Nigeria isn’t producing enough food. Data from the Ministry of Agriculture and Food Security shows that Nigeria is the largest producer of yam with 40 million metric tons per annum, but yam demand in the country stands at 60 million metric tonnes per annum (MT), leaving a gap of 20 million MT.

Nigeria produces 42 million MT of cassava but has a demand of 53.8 million MT of the crop, leaving a gap of 11.8 million MT.

Nigeria’s production of Irish potato stands at 900,000 MT per annum but with a demand of 8 million MT and a gap of 7.1 million MT.

Similarly, local production of sweet potato is estimated at 1.2 million MT, while demand stands at 6 million MT, leaving a gap of 4.8 million MT.

More so, the country produces 400,000 MT of wheat annually but with a demand of 4 million MT. This leaves a gap of 3.6million MT.

Maize production in the country is estimated at 10.5 million MT, but demand is 15 million MT, leaving a gap of 4.5 million MT.

Insecurity is a major culprit. More than 350 farmers were kidnapped or killed in the 12 months up to June 2022 alone, according to a Nigerian security tracking website, BBC reported. Between 2017 and May 2020, herdsmen conducted 654 attacks, killed 2,539 and kidnapped 253 people, mainly farmers in Nigeria, a report said.

A 2022 Global Food Crisis Report said banditry and kidnapping in the northwestern and northcentral states of Sokoto, Katsina, Zamfara, Kaduna, Benue, Plateau and Niger had continued to hinder food production.

The exchange rate crunch has also raised the cost of inputs by over 100 percent in one year. Logistics costs have also spiralled.

Average food prices have surged by over 70 percent since January 2024 to date, according to a BusinessDay survey across major markets in Lagos, on the back of lingering insecurity, climate change, high input costs and an acute dollar squeeze.

According to the experts, the federal government will need to make a concerted effort to stem insecurity, drastically reduce post-harvest losses, fix structural deficiencies across the value chain and increase technology usage on farms to boost local food production in the long run.

Kolawale Jaiyeola, an Oyo State-based economist and farmer, said Nigeria should return to the cement, sugar and rice industry models that worked in the past.

“I am for the importation of food as a temporary measure. But licenses for food imports should be given to real farmers with visible local investments. It was what former President Olusegun Obasanjo did in 2006 on cement. Jonathan repeated that on rice, even though it was a partial success but it helped. I do not support allowing everybody to import because traders will abuse the process,” he noted.

Recently, former President Muhammadu Buhari restricted access to foreign exchange for the importation of milk, maize and other products to few firms. The process failed as the firms could not import enough food or produce sufficiently for the economy, with prices of those items jumping.

Jaiyeola said the model was faulty and should not be repeated.

Tajudeen Ibrahim, director of research and strategy, Chapel Hill Denham, said food imports is one of the solutions to tame surging food prices, noting that Nigeria currently has a huge shortfall in all its staples.

“Local food supply is facing combinations of issues, particularly the worsening insecurity. When there is a shortfall in local production, naturally, what is expected to support the overall supply are the imports,” Ibrahim said.

“The only thing required is the stability in exchange rate because if FX is stable and we import, there will be no attendant impact on headline inflation,” he noted.

Muda Yusuf, an economist and chief executive officer of the Centre for the Promotion of Private Enterprise, said taming the surging food prices in the country is an emergency issue that requires a short-term emergency solution.

Yusuf applauded the Tinubu’s administration for the removal of duties to encourage imports while stressing the need for the government to ensure that local agricultural investments are protected.

“We have been clamoring for the integration of the fiscal and trade policies measures to tame inflation, and the removal of duties on import of staples is in line with it,” he said.

“The imports won’t crash prices but will halt the continuous surge in food prices,” he noted.

Kalu Aja, a financial analyst, supported this position, saying the Nigerian government must import food now to cut the rising food inflation in Nigeria.

“The biggest palliative is going to be reduction in inflation, and the government has not done that. The way to go is to import food over a limited period. Let food come in so that food inflation can come down,” he said earlier in an interview.