Why prices of food items have increased in Nigeria

Prices of food items have skyrocketed by as much as 30 per cent in many parts of Nigeria in the last one year. This increase is largely caused by border closures, COVID-19 containment measures, and insecurity, checks by PREMIUM TIMES have shown.

Other causes, according to our checks, are flooding during the wet season, poor storage facilities, and rising demand.

These factors have meant limited availability of food items plus rising demand, leading to rise in prices.

The prices of some selected food items have shot up by 30 per cent according to price checks by this reporter and the Nigeria Bureau of Statistics, (NBS).

According to the NBS, the average price of one dozen eggs medium size increased by 5.48 per cent between October 2019 and October 2020.

Market Insight

In October 2019, a dozen eggs could be purchased at N462.46, but in the same month in 2020, it has risen to N487.81.

Also, the average price of one kilogram (kg) of tomato increased by 31.81 per cent in the last one year.

The medium price of 1kg of tomato in 2019 was N233.38 but has gone up to N307.63 in 2020.

Similarly, the price of 1kg of onion in the one year rose from N202 to N270.59 showing a 33.38 percent increase.

Likewise, in October 2019, one could purchase a 1kg tuber of yam at an average price of N179.75 but in 2020 it increased to N242.87 representing a 35.11 percent increase.

The average prices of local rice and imported rice also increased by 31.87 percent and 38.62 percent respectively.

One kg of local rice in October 2019 cost N303.69 but N400.73 in October 2020; imported rice in 2019 was N382.59 while in 2020, it is N530.32.

From a random check at Orange Market in Karu LGA of Nasarawa State, a bag of garri cost N15,000 but was purchased at N8,000 in October 2019.

The cost of tomato paste in October 2019 was N50 but increased by over 100 per cent to N150 in October 2020.

The price of a bag of cassava in Abakaliki in October 2019 was between N1,000-N1,500 but has increased to N10,000, checks by this newspaper showed.

Prices of these food items differ depending on its availability in a region.

The prices of egg, tomatoes, onion, local rice and imported rice were lowest in Borno, Niger, Borno, Zamfara, and Niger respectively.

However, the prices were highest in Rivers, Delta, Akwa Ibom, and Abuja.

Causes of Increase in price

Post harvest losses, pandemic

This newspaper reported how Nigerian farmers lamented post harvest losses on their farms due to natural and social disasters.

“Farmers in Kebbi had access to their farms but were unable to sell many of their produce due to the interstate lockdown, which led to waste and loss of output,” Garba Yahuza said.

Donald Akule, who spoke to PREMIUM TIMES, said prior to the lockdown, he harvested two tons of maize on a 4.8 hectare of land.

But this year he could barely get 28 bags (100) kg of maize on the same size of land, which is equivalent to 0.1 ton of maize.

Mr Akule narrated how farm produce was stolen on the farms after harvest, ascribing it to hunger.

After the lockdown was eased, some farmers in the state have not been able to access loans from the Central Bank of Nigeria’s anchor borrowers programme, he said.

Inflation

Nigeria’s inflation rate rose further to 14.23 per cent in October, meaning that prices of items generally increased in the month of October.

Nigeria’s inflation has been on the rise since the country shut its land borders. The situation became worse with the emergence of the coronavirus which affected the global economy.

The economy is yet to recover from the coronavirus effects and the plunge in crude prices.

This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam, and other tubers, meat, fish, fruits, vegetables, alcoholic and food beverages, and oils and fats.

Experts have long anticipated inflation in the country

“Food for example, one would have thought that the onset of harvest season will moderate the food inflation but you and me have read about things happening there now especially in Zamfara and Katsina states, where the farmers are being made to pay harvest levies before the Boko Haram people will allow them to go to their farms to harvest, so you can imagine that being put on top the cost of the harvest,” Chike Mbonu, a business analyst said.

“Also, it is becoming difficult to move products from the north to the south because of supply chain challenges,” he said.

He said the border closure was a contributory factor, adding that the nation’s local production still falls short of our local demand.

“So that people can borrow and push growth and let inflation rise and hope that down the line, the output will come and overtake the inflation and the inflation will moderate.

“The unsavoury combination of border closures, coronavirus related disruptions, and lower interest rates have fuelled inflationary pressures in Africa’s largest economy,” Lukman Otunuga, a senior research analyst at FXTM, in a statement to PREMIUM TIMES said.

“With consumer prices projected to jump to almost 14 percent in October, this will be the highest rate since February 2018. In a perfect world, the government may have deployed tight fiscal policy to tame inflationary pressures.

“However, such a move that involves raising taxes and limiting government spending may do more damage than good at a time where Nigeria continues to heal wounds inflicted by COVID-19. With inflation projected to rise amid ongoing border closures, the Central Bank of Nigeria may have limited room to loosen monetary policy.”

Border closure

Nigeria closed its land borders to trade in August 2019. But this has seen prices skyrocket, with inflation at a 30-month high, posing a challenge for increased spending.

Mr Mbonu concurred that the border closure was a contributory factor, noting that the nation’s local production still falls short of our local demand.

Ndidi Nwuneli, managing partner of Sahel Consulting, had blamed security officials and insecurity for being a pain in the neck to the sector.

“We have not looked at population, climate change, and hunger, which is going to be a major future issue if not taken care off soon,” she added.

Flooding and poor storage facilities

Flooding has continued to occur in Nigerian states, with this year recording the worst flooding in 32 years, reports have said.

This has raised concern amongst officials and experts. President Muhammadu Buhari also lamented about the impact of the flood on food production in Nigeria, especially rice production.

Jigawa and Kebbi are some of the states that have benefitted from the federal government’s Anchors Borrowers Programme to assist farmers boost rice production in the country but the states have suffered from severe flooding.

Poor storage facilities have continued to pose a threat to fighting food insecurity.

Some farmers have continued to complain about storage of farm produce.

Visits to the markets in Abuja have shown that some small scale businesses who sell food do not have storage facilities for perishable goods.

At the close of markets, goods like tomatoes, pepper, fruits are thrown to the roadsides or waste bins.