Wednesday, July 08, 2020 / 12:28 PM / by CSL
Research / Header Image Credit: Daily Graphic
A Business Day report says many farmers across the country were unable to commence this year's planting season at the right time due to movement restrictions that prevented them from accessing inputs such as seeds, fertilisers and even physical access to their farms, stoking fears that they may be food shortages next year. According to the report, farmers are recording significant declines in productivity across plant and animal production, which at harvest will reveal serious food shortages in the country. Movement restrictions created bottlenecks for food and other deliveries, in a country where transport infrastructure requires overhauling.
The pandemic induced disruptions to the food supply chain has caused a hike in food prices across the country. Prices of inputs such as fertilisers have also increased significantly. Any shortfall in food production will result in a further hike in prices. We note that, food inflation which makes up c.50% of the inflation basket has been on the rise and have been the major contributor to rising inflation. From Boko Haram insurgency to Herdsmen-related attacks, food prices have been pressured in the last few years. The composite food index was up 15.04% y/y in May 2020 on the back of increases in prices of bread and cereals, Potatoes, Yam and other tubers, Oils and fats, Fruits, Fish and Meat according to the latest data published by the National bureau of statistics.
The impact of Covid-19 on the finances of consumers in Nigeria has been very significant amidst job losses and pay cuts. Also, expectations of an increase in electricity tariffs and fuel costs also mean the average Nigerian consumer is being pushed to the limits. While we expect food prices to remain elevated in the short to medium term, we expect the authorities to begin to take needed steps to avert a food crisis.