• Monday, July 22, 2024
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BusinessDay

Nigeria’s grain prices seen rising 50% this year

grains agric produce

Nigeria will see a 50 percent rise in the prices of rice, maize and wheat before the end of 2022 as fertiliser shortage, surging diesel prices, and the Russia-Ukraine war have disrupted supplies, experts in the country’s agricultural sector have said.

The experts who spoke with BusinessDay said there might be a food crisis over the worsening insecurity that had cut down grain production and forced the country to rely on imports for food security.

According to them, the global market is currently facing a huge supply shock as the Russia-Ukraine war has cut off shipments from the Black Sea region that accounts for 30 percent of major grain trade and at least 12 percent of food calories traded.

“Nigerian grain prices will rise by 50 percent before the end of the year, especially bread prices owing to the Russia-Ukraine war that has disrupted grain and fertiliser supplies,” an executive in a top agro-allied manufacturer said.

Read also: Replenishing strategic grain reserves will cushion effect of food scarcity – Expert

Russia is the world’s largest exporter of fertilisers, accounting for 23 percent of ammonia, 14 percent of urea, 10 percent of processed phosphate, and 21 percent of potash exports, according to data from the Fertilizer Institute.

Since it invaded Ukraine, global fertiliser trade has been disrupted and prices have continued to surge.

In Nigeria, a 50kg bag of urea fertilizer now sells for between N16,500 and N17,000 as against N10,500 and N11,000 last year, indicating a 54.5 percent increase in price, while NPK fertiliser now sells for between N15,000 and N19,000 as against N10,000 last year, a 90 percent rise in price.

“We are going to see a fresh spike in the prices of food, most especially for grains,” said AfricanFarmer Mogaji, chief executive officer of X-ray Consulting Limited.

“This is as a result of the combination of factors like the Russia-Ukraine war and the escalating insecurity. Prices are already surging and Nigerians would have to brace for harder times,” he said.

The price of Automotive Gas Oil, popularly known as diesel, has soared by almost 170 percent in one year to N700-750 per litre from N220-N240 in March last year.

The surge in the price of diesel, which has been deregulated, followed the rally in global oil prices, buoyed by the Russia-Ukraine crisis. Brent, the global oil benchmark, sold for $106 per barrel at the time of writing.

“Diesel prices are surging and with this, we are going to see another fresh spike in food prices,” said Victor Iyama, national president of the Federation of Agricultural Commodity Association of Nigeria.

“Just last two weeks, we paid N350,000 to transport our commodities from Kano to Lagos, and yesterday, we had to pay N600,000 for the same truck and distance because of the surge in diesel price,” he said.

“We have no choice but to transfer the extra cost to the consumers,” he added.

Inflation in Africa’s biggest economy rose marginally in February 2022 to 15.70 percent from 15.60 percent in January 2022. The inflationary pressure has reduced consumers’ disposable income, hence, making basic needs elude Nigerians.

The limited purchasing power of Nigerians puts basic food commodities out of the reach of many and a country with over 23.2 million unemployed people indicates that the threat of famine is potent.

“Things are just getting hard daily for Nigerians and the government is not doing anything about it,” said Obiora Madu, CEO and president of Multimix Group.

“Logistics is already a big challenge in Nigeria and now with the surge in diesel prices, it has further compounded the problem. Transporting fresh vegetables now with a cold chain will be almost impossible,” Madu said.

Since the security situation became intense a few years ago, agricultural activities have been greatly impacted as farmers in Africa’s most populous country had to abandon their farmlands owing to escalating issues of kidnapping, banditry, and terrorism in major crops-producing states.

As a result, growth in the agricultural sector has been inconsistent and slowing since the third quarter of 2016 over worsening insecurity issues.

Read also: NSPRI unveils solutions to Nigeria’s post-harvest losses

The fourth-quarter figures from the National Bureau of Statistics show that growth in the sector grew by 2.13 percent in 2021. The sector has been growing at an average of 2 percent in the last eight years, below the 2.7 population growth rate.

The country has been unable to drive sustained growth and generate substantial foreign exchange through the sector despite its potential owing to the government’s inability to resolve insecurity issues that have been a major setback to agriculture.