An important realisation that anyone who works in agriculture arrives at regularly is the importance of timing in the sector. Agriculture is a very time-driven activity, especially in the agriculture economies in some African countries where planting is mostly done during the rainy season of the year. So, the rain starts at a certain time of the year, people plant and harvest at a certain time of the year, and whatever you do in a certain month of the year has huge implications.
In Nigeria, 80 percent of the grains produced in the country, particularly maize, are harvested between October and December, which is when most farmers sell. That harvest then stays within the system through the following year until the onset of a new harvest. Unfortunately, supply shortfalls continue to mark the landscape, with the World Food Program estimating that 26.5 million people will face acute hunger during the June-August 2024 lean season, and that dire reality is playing out with an increasing number of households in the country facing acute hunger.
In response to the situation, the Federal Government announced the suspension of import duties on maize, husked brown rice, wheat, and cowpeas for 150 days. Seeing the increase in food supply shortage and a hike in food prices with food inflation exceeding 35 percent, this policy is hoped to drive down food prices until the local harvest season.
The plan is straightforward: when the import-free commodities arrive in Nigeria, supply issues will be addressed, and coupled with the waived fees, food can be sold at lower prices. However, a closer look at the policy reveals the importance of timing in agriculture interventions. If the modalities surrounding the policy are not finalised promptly and the commodities arrive late, the very initiative intended to support our agricultural sector could harm it.
In such a scenario, stakeholders would have purchased items that would not be consumed by the time our local harvest season begins. Prior investments in local initiatives to bolster productivity may then be lost, with insufficient infrastructure being unavailable to deploy towards extending the life-cycle of produce, leading to a situation where excess food cannot be stored or offloaded in time. This could result in a crisis; post-harvest losses, already at peak levels of over N3.5 trillion annually, could double. Farmers, who are among the poorest demographics, would once again bear the brunt of this crisis, being forced to sell to any available buyer at prices far below market value. If buyers are unavailable, the commodities risk spoiling, leading to further losses and setbacks for little pockets of progress made in the local sector.
All players therefore need to move with the required urgency to both shore up food security and achieve the gains of managed prices while ensuring that producer livelihoods can be protected at the end of the day. One of the policy conditions that was announced was a requirement for 75 percent of imported commodities to be sold through recognised commodity exchanges. Commodities exchanges like ours foster transparent and fair pricing for players, a necessity within this policy structure, while creating access to markets that allow negotiation of equitable contracts, increasing production and manufacturing, and establishing pathways to secure food supply.
Trade through commodities exchanges is therefore an important bit of the policy direction, introducing efficient management of the trade processes while fulfilling the huge requirements for data availability for policymakers to continue to make informed decisions on the food security situation in the country.
Agricultural data at granular levels that can help assess and manage production and price risk for the agriculture sector is still generally unavailable in Nigeria, but it has become more important than ever. In most developed agriculture economies, key decision makers know what the production of key staple commodities will be two to three months before harvest and are able to gauge and then provide storage needs.
Ghana and Cote d’Ivoire, for instance, will have a forecast on what the likely production performance of cocoa would be one to two months before the season starts, and as a country we also need to get to a level where we leverage data and historicals to predict crop performance and then accurately provide necessary resources to maximise output and eliminate supply risks. This we can achieve through a combination of efforts from both the private and public sectors, and this move to trade commodities through exchanges is one of such steps in the right direction.
Coupling trade data at this level with data on weather patterns and triangulating these and other vital data points will get us to a position as a country where we can project baseline production plus or minus a certain range and plan based on that information.
As a response to the current food supply deficit, the necessity of the current policy direction is evident, but to achieve optimal results and a best-case scenario, the government and all players in the value chain should act swiftly to ensure a seamless operationalisation because in agriculture, timing is everything.
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