Agriculture: FG Rolls Out Directive on Movement of Food Items


Thursday, April 23, 2020 / 12:05 PM / By CSL Research / Header Image Credit: Twitter; @raufaregbesola

At a joint meeting held by the Ministers of Agriculture, Defence, Interior and Police Affairs, it was resolved that special passes, that can be identified by the security agencies at both states and federal levels, should be provided to those conveying foodstuff, perishable items, livestock and farm inputs. According to the Minister of Agriculture, the resolution is aimed at facilitating the free movement of food items despite the current lockdown in some states to contain the spread of the COVID-19 pandemic. Furthermore, it was agreed that the Federal Ministry of Agriculture and law enforcement agents set up a joint technical task team to draw guidelines for ensuring the safe operations of farmers/grains markets, livestock and poultry markets and dealers and sellers of agricultural inputs during the COVID-19 crisis.

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There have been previous reports that unscrupulous security agents extort money from those conveying food items, hindering the free flow of essential goods. Hence, we believe this is a coordinated and coherent response from the authorities in addressing the menace. However, in our view, the movement of food items should be restricted to certain hours of the day for effective monitoring

That said, we believe the decisions reached are palliative measures that are geared towards easing food shortages, ensuring farmers take full advantage of the ongoing planting season and mitigating the adverse effects of the lockdown on the agriculture sector. In view of the increased demand for food items due to stockpiling, we think seamless movement of consumer staples will at least in the short term, help in easing inflationary pressures arising from surge in demand and widening supply gap caused by the continued closure of the land borders. Based on the latest inflation data released by the National Bureau of Statistics, food inflation rose by 8bps to a 2-year high of 14.98% y/y in March from 14.90% y/y in February.

However, as the lockdown extends we expect consumer demand to slow, given that a substantial proportion of the informal sector who earn daily incomes have been forced to close down their businesses in compliance with the lockdown directive. Middle-income earners have also seen a reduction in their disposable income, stemming from cut in wages and salaries by employers who are grappling with cash flow constraints. Accordingly, we think stimulus measures in the form of conditional cash transfer to the poor and vulnerable members of the society is needed to sustain demand for food items and mitigating the adverse impact of the lockdown on agricultural output.

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