• Monday, July 22, 2024
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Debunking Economic Myths: Opening borders for food not always a bad move

Technological advancements have facilitated the hybridization of various goods, including food, to meet the demands of a growing global population. According to Macrotrends, the global population reached 8,045,311,447 in 2023, with a growth rate of 0.88 percent. These developments help ensure that the food supply can keep pace with rising demand.

Of the 18.6 million people experiencing food insecurity in Nigeria, 3.3 million reside in the northeastern states of Borno, Adamawa, and Yobe (BAY region). This number could rise to 26.5 million nationwide by the peak of the 2024 lean season and to 4.4 million in the Bay States if immediate action is not taken, according to a report from the Office for the Coordination of Humanitarian Affairs (OCHA).

In light of these alarming projections, opening borders for food imports is a topic of heated debate. Critics argue that such measures can undermine local agriculture and lead to economic instability.

However, given the severity of the food insecurity crisis, increasing food imports might be a necessary step to address immediate needs and prevent further deterioration.

Thus, a closer examination reveals that the benefits of open borders for food imports can outweigh the drawbacks, particularly for nations grappling with food insecurity, high inflation, and climate-induced agricultural challenges.

Nigeria, Africa’s most populous nation, is currently facing a severe economic crisis marked by soaring food inflation, widespread food insecurity, and significant climate challenges such as flooding.

According to the National Bureau of Statistics (NBS), Nigeria’s food inflation rate reached 40.53 percent in April 2024, a staggering increase from the previous year. This surge in food prices has exacerbated food insecurity, leaving millions of Nigerians struggling to afford basic necessities.

The situation is further exacerbated by insecurity, with militias preventing farmers from accessing their fields. In some northern regions, farmers must even pay taxes to farm—a harsh reality that disrupts the food supply.

“Thus, a closer examination reveals that the benefits of open borders for food imports can outweigh the drawbacks, particularly for nations grappling with food insecurity, high inflation, and climate-induced agricultural challenges.”

To add salt to the wound, climate change has led to more frequent and severe flooding. These floods have devastated agricultural lands, reduced crop yields, and further strained the food supply. The Nigeria Agriculture Extension and Research Liaison Services (NAERLS) reports on the impact of the 2022 flooding on agriculture, showing that the floods destroyed about N700 billion worth of investment in the agricultural sector in 2022.

In this context, the debate over opening borders for food imports takes on heightened significance.

One of the most persistent economic myths is that protectionism—restricting imports to protect local industries—is inherently beneficial for a nation’s economy. While this approach can shield local producers from foreign competition, it often leads to higher prices and reduced availability of goods.

In the case of food, protectionist policies can exacerbate shortages and drive up inflation, making it harder for consumers to access affordable, nutritious food.

Contrary to this belief, open borders for food imports can offer several advantages. Importing food can help stabilise domestic prices by increasing supply and reducing the pressure on local markets.

This can be particularly beneficial in times of poor harvests or natural disasters. Relying on a diverse array of food sources reduces the risk of food insecurity. If local crops fail due to climate conditions or insecurity, imports can ensure that the population still has access to essential food items.

Additionally, importing food can stimulate competition, encouraging local producers to improve efficiency and reduce costs, ultimately benefiting consumers.

Several countries have successfully leveraged food imports to enhance their food security and economic stability. These examples provide valuable insights for Nigeria.

According to the report by the Singapore Food Agency (SFA), Singapore currently imports more than 90 percent of its food from more than 180 countries and regions. Import-source diversification is their core strategy. This has worked well for them so far.

Singapore was ranked number 1 in the world in the Global Food Security Index for the second year running in 2019—the result of their long-term planning and proactive actions to safeguard Singapore’s food supply.

However, the country is vulnerable to emerging trends. First, with population growth, global demand for food is projected to increase by 50 percent by 2050. Second, climate change will put more pressure on the global food supply through rising temperatures, the loss of arable land, and increased frequencies of erratic weather patterns. Third, countries increasingly look inward, prioritising their needs over international trade.

The country has established a robust food import policy that ensures a stable and diverse food supply. By sourcing food from multiple countries, Singapore minimises the risk of supply disruptions and keeps food prices relatively stable.

Furthermore, an article from WorldAtlas.com reports that the United States, being one of the world’s largest economies, imports a total of $133 billion USD worth of food and food products, followed by China at $105.26 billion USD with the largest farm in Mudanjiang city mega farm (22’500’000 acres), Germany at $98.90 billion USD, Japan at $68.86 billion USD, the United Kingdom at $66.54 billion USD, the Netherlands at $64.38 billion USD, France at $62.29 billion USD, Italy at $51.34 billion USD, Belgium at $40.87 billion USD, and the Russian Federation at $38.60 billion USD.

However, importing a high amount of food does not necessarily mean that a country is food insecure. In fact, many of the world’s largest food-importing countries also happen to be among the world’s wealthiest.

It is important to note that the majority of the countries importing the most food in the world have the potential to become completely food-sufficient if they choose to do so. In these cases, where food insecurity is not a concern, food is imported to create more variety for the consumer, not to prevent starvation within the population. Importing a large amount of food does not mean that a country is food insecure.

The Nigerian context: Benefits of open borders

Although, according to WorldAtlas.com, Nigeria is not among the top 34 countries in the world with an insufficient food supply, the current food inflation—driven by reform policies and insecurity—is significantly impacting food availability with no clear end in sight.

In this context, opening borders for food imports can address immediate, critical challenges. By increasing the supply of food through imports, Nigeria can reduce the upward pressure on food prices, helping to lower the overall inflation rate and making food more affordable for the population.

With a more stable food supply, the risk of food insecurity can be significantly reduced. Additionally, exposure to international competition can drive local farmers to adopt more efficient practices and technologies, enhancing productivity and sustainability in the long term.

While the benefits of open borders for food imports are compelling, it is essential to consider the potential drawbacks and address them proactively.

However, there are also potential drawbacks. Sudden exposure to international competition can hurt local farmers, especially small-scale producers, who may struggle to compete on price and quality.

Also, over-reliance on food imports can make a country vulnerable to global supply chain disruptions, trade disputes, and price volatility. Increased demand for foreign currency to pay for imports can put pressure on the national currency, potentially leading to devaluation.

Addressing the drawbacks

To maximise the benefits and mitigate the drawbacks of open borders for food imports, Nigeria can adopt several strategies. Set aside political interest and wage war on insecurity, supporting local farmers through subsidies, technology investments, and infrastructure development. This can help them compete more effectively and improve productivity.

More so, the establishment of strategic food reserves can buffer against global supply chain disruptions and price volatility. This ensures a steady food supply even in times of international market instability.

Nigeria should diversify its import sources to reduce dependence on any single country or region. This can mitigate the risks associated with trade disputes and supply chain disruptions.

The myth that protectionism is always beneficial for a nation’s economy, particularly in the context of food, does not hold up under scrutiny. For Nigeria, opening borders for food imports can offer a viable solution to the pressing issues of food inflation, food insecurity, and climate-induced agricultural challenges.

By stabilising prices, ensuring a more reliable food supply, and encouraging local agricultural innovation, open borders can contribute significantly to economic stability and growth.

However, it is crucial to address the potential downsides proactively. Supporting local farmers, establishing strategic reserves, and diversifying trade sources are essential measures to ensure that the benefits of open borders are realised without undermining domestic agriculture or economic stability.

While open borders for food imports are not a panacea, they can be a crucial component of a broader strategy to enhance food security, stabilise prices, and promote sustainable economic growth in Nigeria.

By learning from the experiences of other countries and implementing well-thought-out policies, Nigeria can navigate the challenges and leverage the opportunities presented by open borders to build a more resilient and prosperous economy.

 

About the authors:

Oluwatobi Ojabello, senior economic analyst at BusinessDay, holds a BSc and an MSc in Economics as well as a PhD (in view) in Economics (Covenant, Ota).

Wasiu Alli is a business and finance journalist at BusinessDay who writes about the economy, business trends, and politics. He holds a BA. Ed. and M. Ed. in English Language and Education.

 

 

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