The organised private sector, on Monday, blamed the worsening insecurity in the country for the food inflation which increased to 40.87 per cent in June 2024 up from 25.25 per cent in June 2023.
Data released by the National Bureau of Statistics on Monday showed that the rise in food inflation in June 2024 represented a 15.62 per cent point increase year-on-year and a 2.55 per cent rise month-on-month.
The NBS report showed that the highest increases in food prices were recorded in millet, garri, guinea corn, yam, water yam, coco yam, groundnut oil, palm oil, catfish, and dried fish.
It stated that the hike in the costs of these commodities pushed up the country’s rate of inflation during the review month.
This came as the Nigerian Association of Chambers of Commerce, Industry, Mines, the Lagos Chamber of Commerce and Industry, as well as economic experts decried the persistent insecurity across the country.
They also called for massive investments in rural infrastructure, stressing that the Federal Government must tackle the rising food inflation to address hunger in Nigeria.
An economist at Lotus Beta Analytics, Shedrach Israel, attributed the surge in food inflation to various factors, including over-reliance on importation, exchange rate fluctuations, insecurity, and global economic uncertainty.
“The implications are far-reaching, leading to reduced purchasing power, increased cost of living, and economic instability,” Israel said.
“To address this challenge, I recommend that the government and monetary authorities take decisive action to diversify the economy, implement fiscal policies, strengthen the naira, and enhance economic productivity,” he added.
40.8% food inflation
Giving a breakdown, the NBS stated, “The food inflation rate in June 2024 was 40.87 per cent on a year-on-year basis, which was 15.62 per cent points higher compared to the rate recorded in June 2023 (25.25 per cent).
“The rise in food inflation on a year-on-year basis was caused by increases in prices of the following items: millet whole grain, garri, guinea corn, etc (bread and cereals class), yam, water yam, cocoyam (potatoes, yam and other tubers class), groundnut oil, palm oil, etc (oil and fats class) and catfish dried, dried, etc.
“On a month-on-month basis, the food inflation rate in June 2024 was 2.55 per cent which shows a 0.26 per cent increase compared to the rate recorded in May 2024 (2.28 per cent)”
The NBS stated that the average annual rate of food inflation for the 12 months ending June 2024 was 35.35 per cent, an 11.31 per cent point increase from the average annual rate of change recorded in June 2023.
The core inflation rate, which excludes the prices of volatile agricultural produces and energy, stood at 27.40 per cent in June 2024, up by 7.34 per cent, when compared to the 20.06 per cent recorded in June 2023.
According to the Consumer Price Index and Inflation Report for June 2024, the NBS attributed the rise in food inflation on a year-on-year basis to increases in prices of the following items, millet whole grain, garri, guinea corn, etc (bread and cereals class), yam, water yam, coco yam (potatoes, yam and other tubers class), groundnut oil, palm oil, etc (oil and fats class) and catfish dried, dried fish-sardines, mudfish (fish class), etc.
It said, “The average annual rate of food inflation for the 12 months ending June stood at 35.35 per cent, which was an 11.31 per cent point increase from the average annual rate of change in June 2023 which was 24.03 per cent.”
Edo records highest
A breakdown of the NBS data indicated that food inflation on a year-on-year basis was highest in Edo (47.34 per cent), Kogi (46.37 per cent), Cross River (45.28 per cent), while Nasarawa (34.31 per cent), Bauchi (34.78 per cent) and Adamawa State (35.96 per cent), recorded the slowest rise in food inflation.
On a month-on-month basis, June 2024 food inflation was highest in Yobe (4.75 per cent), Adamawa (4.74 per cent), and Taraba (4.12 per cent), while Nasarawa (0.14 per cent), Kano (0.96 per cent) and Lagos (1.25 per cent) recorded the slowest rise.
Generally, Nigeria’s inflation figure rose to 34.19 per cent in June, about 0.24 per cent points from the previous headline inflation rate of 33.95 per cent in May. The rate of increase was also higher month-on-month at 2.31 per cent higher than the rate recorded in May 2024 (2.14 per cent).
The core inflation rate, which excludes the prices of volatile agricultural produce and energy, stood at 27.40 per cent in June 2024, up by 7.34 per cent when compared to the 20.06 per cent recorded in June 2023.
Reacting to the development, the National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Dele Oye, said the causes of Nigeria’s food inflation hitting 40.87 per cent in June were insecurity, supply chain disruptions, exchange rate volatility, climate change, and monetary policies.
He said, “Persistent insecurity, particularly in northern Nigeria, has severely disrupted farming activities. Many farmers have abandoned their farms due to threats from insurgents, bandits, and herders-farmers conflicts, leading to reduced agricultural output.
“Also, the transportation of goods has been hampered by poor infrastructure and insecurity on major roads, increasing the cost of moving agricultural produce from farms to markets. In addition, the depreciation of the naira has increased the cost of imported agricultural inputs such as fertilizers, herbicides, and machinery, translating to higher production costs for farmers.”
Speaking on the adverse effect of climate change, Oye asserted that adverse weather conditions, including irregular rainfall patterns and flooding, have negatively impacted crop yields.
He added, “Central bank policies, including the pricing of the naira at market rates, have influenced inflationary pressures. The removal of fuel subsidies has also contributed to increased transportation and production costs.”
The president noted that the implications of this rise would reflect on the masses, poverty level, and food security.
He said, “The sharp rise in food prices has led to higher living costs, disproportionately affecting low-income households who spend a significant portion of their income on food. Higher food prices exacerbate poverty, as more households are pushed below the poverty line, this can lead to increased malnutrition and food insecurity.
“It would also birth prolonged food inflation, which could lead to social unrest and protests, as people struggle to cope with the rising cost of essential commodities. Furthermore, poor nutrition due to unaffordable food prices can lead to long-term health issues, especially among children, pregnant women, and the elderly.”
NACCIMA advises govt
Speaking on the way forward, the NACCIMA boss called on the Federal Government to prioritise improving security in agricultural regions to enable farmers to return to their farms without fear, which is inclusive of deploying security forces and establishing community-based security initiatives.
He said, “Investment in rural infrastructure, such as roads, storage facilities, and irrigation systems, is crucial to facilitate the efficient transportation and storage of agricultural produce.
“The central bank should consider policies that stabilise the naira and reduce inflationary pressures. This includes managing foreign exchange rates and controlling money supply growth, and continuing to provide tax incentives for agricultural investments can encourage more private sector participation in the agriculture sector.”
He emphasised that engaging stakeholders, including farmers, agribusinesses, and financial institutions, in the policy-making process was crucial to creating practical and effective policies that address the real challenges faced by the agricultural sector.
“Implementing targeted subsidies for critical agricultural inputs can help reduce production costs. Additionally, support programmes such as grants and low-interest loans for farmers can boost agricultural productivity.
“Promoting agricultural diversification and the adoption of innovative farming techniques can help increase resilience against climate change and other disruptions. The implications of food inflation are profound, affecting every aspect of society. Addressing this challenge requires a multi-faceted approach, with the government playing a pivotal role in ensuring security, improving infrastructure, and enacting supportive policies. By doing so, we can mitigate the impacts of food inflation and work towards a more secure and prosperous future for all Nigerians,” he concluded.
Explaining the root cause of the rising food inflation, the National Vice President of the Nigerian Association of Small-Scale Industrialists, Segun Kuti-George, said it was a basic economic theory.
He said, “Whenever the demand for a good or service exceeds the supply, there will be a price increase. When such a price increase persists over a period, it becomes inflation. Thus, food inflation in Nigeria is caused by an acute shortage in the supply of food compared with the demand for the same items.
“Exploring the reasons behind this supply shortage, let’s first acknowledge that this situation is ironic for a country like Nigeria. Nigeria has about 923,000 square kilometres in area, with only about 13,000 square kilometres being water. This means approximately 910,000 square kilometres of land, of which about 70 per cent is arable and suitable for agriculture.
“Despite this, the supply of food is far below demand. One major factor is Nigeria’s high population, which exceeds 200 million people. For instance, the United States, with about 350 million people, manages to feed its population and still exports food, even with a significant portion of its land being desert. The core issue in Nigeria is the lack of adequate attention to agriculture.”
According to Kuti-George, the country cannot continue to use traditional farming methods with hoes and cutlasses and expect different results.
He asserted that agriculture in Nigeria must be fully mechanised to optimise land use and achieve high yields.
He added, “Another critical issue is insecurity, successive governments have not addressed this adequately. Insecurity prevents people from farming, leading to abandoned farmlands and destroyed crops.
“Mechanisation and security are crucial, I saw a video of Adams Oshiomole where he once proposed that security allocations be strictly monitored to ensure funds are spent appropriately, but this was voted down. This indicates a lack of seriousness in tackling insecurity. A situation where farmers are killed, or their crops are destroyed by animals is unacceptable. The government must address insecurity to allow people to farm safely.
“The implications of these issues are evident in the market. Prices of food are unacceptably high. A piece of tomato selling for N500 and a tuber of yam for N8,000 to N10,000 are examples of this inflation. States in the Middle Belt, like Kogi and Benue, which are our agricultural basket, are among the most insecure. This insecurity forces farmers to abandon their lands, leading to food scarcity and high prices.”
Kuti-George stated that for Nigeria to achieve food security, the government must declare a state of emergency on food production.
He stated, “This involves giving agriculture the attention it deserves, encouraging and funding farmers, mechanising agriculture, and providing security. Additionally, developing infrastructure, particularly roads, is vital to ensure that agricultural produce reaches markets in good time. Statistics show that 50 per cent of our harvests rot before reaching the market, which is unacceptable.
“With the recent Supreme Court ruling on Local Government autonomy, Local Governments should now receive direct funding. We must hold Local Government officials accountable for these funds to ensure they develop infrastructure within their areas. This will aid in enhancing agricultural productivity and mitigating food inflation in Nigeria.”
Meanwhile, the National President of the Association of Small Business Owners of Nigeria, Dr Femi Egbesola, said food inflation drives poverty deeper and engenders insecurity for the masses.
“The socio-economic and production characteristics of the farmers, unavailability of modern agricultural equipment and machinery, lack of latest agricultural technology, inconsistent and unfocussed government policies, the poor infrastructural base, insecurity, all interact in a synergism to challenge the sector, resulting in low production, high prices of food items, hyperinflation, underdevelopment and high rate of poverty.
“Food inflation drives poverty deeper and engenders insecurity for the masses, out of the bid to feed themselves, may indulge in negative activities and vices that breed insecurity. When food is out of the reach of the common man, the nation is likely to go into anarchy and economic poverty.
“Implementing subsidies for essential food items and controlling prices can help make basic foods more affordable. Subsidies on fertilizers and seeds can also reduce production costs for farmers. The government also needs to urgently strengthen food security programmes. Critical intervention support programmes in the agricultural value chain will also be very helpful. Fighting insecurity and off-taking farm products will also encourage farmers to be more productive,” he said.
The Chairman of the Agro-allied Group of the Lagos Chamber of Commerce and Industry, Kola Aderibigbe, said Nigeria’s food inflation would keep rising until the Federal Government declares a state of emergency on food production.
“Last year when the President came into power, we advised him to declare a state of emergency on food production in Nigeria. Why? Because we foresaw this. There is a fundamental problem of herdsmen invading farmlands,” he said.
Aderibigbe said there would be a continuous rise in food inflation until insecurity is solved and farmers can return to their farms.
He said large-scale farmers engage private security to protect their farms, a service that drives up food prices in the market.
“Just yesterday, my farmland was invaded and my crops destroyed; and I have evidence,” Aderibigbe stated.
The farmer said insecurity remained a present danger and that many others in his association were victims.
The LCCI Agro-allied chairman highlighted other factors including shocks from food transport due to Tinubu’s removal of fuel subsidy, power supply challenges and the skyrocketed cost of imported feed due to a tumbling naira on the foreign market.
The Nigeria Labour Congress asked the government to put appropriate policies in place to curb rising inflation.
NLC’s Head of Information, Benson Upah, made this known in an interview with one of our correspondents in Abuja.
He said, “Appropriate government policies that grow the economy with an emphasis on local production will help in curtailing the inflational spiral.”
(PUNCH)