An Impending Food Crisis?


Wednesday, September 16, 2020 / 12:49 PM / by CSL Research / Header Image Credit: CGTN  


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A Reuters report says twin crises, floods and maize shortages which are coming just after movement restrictions and financing difficulties caused by COVID-19 containment measures have complicated the early planting season may lead to a food crisis. According to the report, the head of Kebbi state branch of the Rice Farmers Association of Nigeria said floods early this month across northwest Nigeria destroyed 90% of the 2 million tons of rice that Kebbi state officials expected to harvest this planting season. The loss is said to be equivalent to 20% of Nigeria's last year's rice production. A shortage of maize has also led to a steep increase in the price of maize and consequently chicken feeds, affecting the cost of production of chicken, a common source of protein in Nigeria. Maize constitutes between 50% to 70% of chicken feed in the country. 


The price of rice, a major Nigerian staple has been on the rise since August 2019 when the government shut the land borders to stem its illegal importation. Data from the National Bureau of statistics showed that the price of local rice rose by 30.9% between July 2019 and July 2020. The increase in the price of rice is said to have resulted in an increase in demand for maize. This combined with FX issues (the FG had in July included Maize on the list of items for which FX can't be gotten from official sources) and a poor harvest end last year led to a steep increase in the price of Maize. 


Meanwhile, the President Muhammadu Buhari ordered the Central Bank of Nigeria (CBN) not to allocate foreign exchange to importers of food and fertilizer, a move many believe would worsen the food situation and lead to a greater risk of a food crisis. With fertilizer prices already up and likely to increase further following the FX restrictions, many farmers may avoid the use of fertilizers which may result in poor crop yield. Food prices have been on the rise and the inflation data released by the National Bureau of statistics yesterday showed that food inflation rose to 16.0% in August from 15.4% in July.  While we do not expect the increase in food prices to abate, we are of the view that the government needs to take a second look at its overall agricultural strategy to avert a food crisis.

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