FAO Food Price Index up 0.9% in May

Data from the Food and Agriculture Organization of the United Nations has revealed that the global Food Price Index rose by 0.9% to 120.4 points in May 2024, driven mainly by increases in the price indices for cereals and dairy products. Kola Masha, the CEO of Babban Gona, recently joined CNBC Africa to discuss the impact of this increase on Nigeria's food price index and shed light on some key issues facing the agricultural sector in the country. Masha highlighted that while there has been some stabilization in food prices globally, the initial spike triggered by events like the Ukraine war is gradually normalizing as supply chains improve. However, he emphasized the importance of addressing long-term challenges within Nigeria's agriculture space, especially in light of recent governmental interventions. One such intervention is the federal government's plan to suspend import levies on staple food items like rice paddy and maize seeds. While Masha acknowledged the short-term benefits of such measures in curbing inflation, he cautioned that the focus should shift towards enhancing productivity at the farm level. He stressed that sustainable solutions lie in improving access to finance for smallholder farmers, enabling them to invest in quality inputs that can drive higher yields and promote self-sufficiency. Despite various avenues available for farmers to access financing, including government-backed initiatives, Masha pointed out that the sector remains severely underfinanced relative to its significant contribution to Nigeria's GDP. He urged the government to prioritize de-risking strategies and guarantee programs that can attract private capital and stimulate agricultural growth. Addressing concerns around insecurity impacting farming communities, Masha acknowledged the risks but highlighted that millions of small farmers continue to persevere in their daily work. While localized insecurities pose challenges, he underscored that broader access to finance remains the linchpin for enhancing productivity across the agricultural value chain. Looking ahead, Masha cautioned against overreliance on importing food as a short-term fix, noting that sustainable strategies involve protecting domestic industries to drive up productivity and competitiveness. Drawing parallels with successful sectors like poultry, he emphasized the need for strategic interventions that create favorable conditions for local producers to thrive. In conclusion, Masha's insights shed light on the complex interplay of factors influencing Nigeria's agriculture sector, from finance and security challenges to the broader policy frameworks needed to foster sustainable growth and food security.