What’s driving rising food prices in Nigeria?

Recent data from Nigeria’s National Bureau of Statistics revealed a concerning trend: food inflation in the country has skyrocketed to 40.66 per cent on a year-on-year basis, a significant jump from the 24.82 per cent recorded in May 2023. This spike has raised questions about the affordability of essential commodities for many Nigerians. To shed light on this issue, Ify Umunna, Head of Corporate Strategy at Afex, shared insights and perspectives in an interview with CNBC Africa. Discussing the inflation rate of 33.9 per cent for May, Umunna emphasized that despite minor fluctuations, individuals and families are facing challenges in purchasing food as their buying power continues to decline. The current situation points to persistent struggles for households to afford basic necessities. Looking ahead, Umunna highlighted that while the Central Bank of Nigeria (CBN) aims to reduce inflation to around 21 per cent, core inflation remains high at 27 per cent. Afex predicts a stagnant pricing trend throughout the year, with a potential 30 per cent surge in food production costs anticipated in the upcoming trading season. Addressing the drop in month-on-month inflation rates, Umunna acknowledged potential contributing factors but stressed the importance of focusing on food inflation and its underlying drivers to ensure sustainable shifts in the cost of essential commodities. The surge in prices can be attributed to various macro and microeconomic factors, such as insecurity in food-producing regions and rising transportation costs. Moreover, Umunna highlighted the impact of escalating costs on key commodities like maize, paddy rice, and soybeans, revealing an approximate 40% surge in food prices. Despite the government's plan to import essential food items, the long-term sustainability of this strategy remains questionable. Umunna emphasized the significance of bolstering local agricultural production to enhance food security and reduce dependence on imports. The interview delved into the dilemma of food exports being more profitable than meeting domestic demand, leading to potential shortages in local markets. Umunna underscored the need for incentives and strategies to retain food supplies within Nigeria to address the growing affordability crisis. Afex's current focus involves providing farmers with essential inputs for the wet season, including fertilizers and seeds, to enhance productivity and mitigate supply challenges. Concerns were raised about the quality of seeds and access to fertilizers for farmers, highlighting the importance of research and development in creating climate-resilient crops. The conversation also touched on the low adoption of mechanized farming practices in Nigeria, emphasizing the need for increased mechanization to boost agricultural productivity. In terms of food processing and value chain operations, rising costs, logistical constraints, and post-harvest losses were identified as key challenges. While progress has been made in storage and warehousing, the pace of improvement needs to accelerate to effectively address food supply chain inefficiencies. As Nigeria grapples with the repercussions of surging food inflation, stakeholders are urged to prioritize sustainable solutions that strengthen local agricultural production, enhance food security, and promote affordability for consumers. Collaborative efforts between the public and private sectors will be crucial in driving positive change and ensuring a resilient food ecosystem for the nation.