Tackle insecurity, tariffs to ease food inflation, experts urge FG

Farmers, commodity traders, and business associations are urging the Federal Government to address the worsening insecurity situation in the country and reduce import tariffs on certain commodities as a step to immediately cut costs for consumers.

Food prices in Africa’s most populous country have surged by more than 50 percent from January to date over escalating insecurity, surge in diesel prices, and global supply chain disruptions induced by the Russia-Ukraine war.

Nigeria’s inflation hit 17.71 percent in May, while food inflation accelerated to 19.5 percent in May from 18.37 in April amid an increase in prices of staple foods across the country, according to the National Bureau of Statistics (NBS).

“Our food production has not been growing in the past few years owing to insecurity in the country. If we want to tackle the high cost of food, we must address the insecurity situation in the country,” said Muda Yusuf, founder of the Centre for the Promotion of Private Enterprise in a response to questions.

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.

The situation has hampered the country’s ability to drive sustained growth and generates substantial FX through the sector despite its potential owing to the inability of government at all levels to resolve insecurity issues that have been a major setback to agriculture.

Growth in the sector slowed to 3.16percent in the first quarter of 2022, from 3.58percent it grew in the preceding quarter.

Read also: Nigerians hurting as food inflation exceeds global record

“We have more local problems causing a surge in food prices than the Russia-Ukraine war. We have lost 60 percent of our food production in the northern region due to insecurity,” said Edobong Akpabio, outgoing head, agribusiness, Lagos Chamber of Commerce and Industry (LCCI).

“Insecurity must become a thing of the past before Nigeria can curtail the recent surge in food prices,” she added.

Apart from the impact of worsening insecurity on food prices, experts also urge the government to temporarily suspend tariffs and levies on wheat to ease food inflation in the country.

Since the disruption of the global supply chain by the COVID-19 pandemic and now the Russia-Ukraine war, governments of various countries have been showing support for imports of critical commodities their countries lack comparative advantage in production.

A quick review of actions taken by other countries whose food security situations were threatened as a result of the war reveals that Thailand between March and June 2022, will allow maize imports above its monthly quota of 53 543 tons and waived the import surcharge of $4.70 per ton to bridge its supply gap.

Similarly, South Korea’s farm ministry announced recently it would cut the import duty on wheat flour to check rising food prices, which have contributed to near decade-high inflation, and consider allowing the state-run Korea Agro-Fisheries Trade Corp to import wheat flour to boost domestic supply and stabilize food prices.

Nigeria can also learn from these countries to address the impact of import duty on imported items and most especially food and raw materials for food manufacturing to control the escalating food prices in the country.

“We need to temporarily suspend tariffs and levies on commodities we cannot grow locally to reduce surging food prices,” said Ayodeji Ebo, managing director, and chief business officer, Optimus by Afrinvest said.

Another expert who was earlier quoted, Yusuf said the government needs to grant import waivers to food processing companies in the wheat value chain to reduce their land costs, thus reducing the prices of the derivatives.

He also calls on the government to address the high cost of transportation to reduce food prices. “A litre of diesel is above N800, this has doubled the cost of food transportation and it is affecting commodity prices,” Yusuf said.

In Africa’s biggest oil-producing country, food producers and retailers are now facing intense pressure from rising energy costs as they have to spend more on diesel to power their factories and on logistics.