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Challenges before FG’s c’ttee on rising food prices

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The Federal Government on Wednesday after the Federal Executive Council (FEC) meeting, set up an inter-ministerial task force over the continuous rise in the prices of food items in the country.

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 Members of the five-man inter-ministerial committee include the ministers of Agriculture and Rural Development, Finance, Water Resources and Transportation.

The committee, which has just one week to report back to the federal government, is expected to examine areas that government needs to intervene to bring down the skyrocketing prices of food stuff in country.

While some of the federal government agricultural policies have created and opened up markets for the Nigerian agricultural produce across sub-Saharan Africa, other factors put significant pressure on prices of food stuff.

Dr. Samuel Negedu is an agricultural consultant and National Coordinator, National Agricultural Foundation of Nigeria. He told Daily Trust on Sunday that rising cost of food items has to do with the cost of production.

He said all inputs have gone up by more than 50 per cent, and that farmers “now sell in a way that they can be in business this season.”

Dr. Negedu advised the committee to look at all inputs-fertiliser, agro-chemicals and other issues such as labour and cost of transportation.

 “Those are the very important issues that must be tracked. If they don’t, it will be difficult. The prices of food don’t just go up like that. They went up because inputs cost went higher. In fact, if you know the cost of bringing tomato from Kano to Abuja, you will be embarrassed,” he said.

While advising government to sit down with input providers to see how the costs of input affects food prices, some analysts express concern that even government does not have the needed foreign exchange that will assist in the area of agricultural inputs. They lament that agro dealers are now sourcing Forex in the parallel markets “and the farmers have to pay for it”.

 Dr. Innocent Okuku is an agricultural economist and marketing manager, Notore Chemical company-producer of Urea fertiliser. He noted that it was possible for government to intervene towards reducing the price of food in the market, but stressed that if government does not have a reserve, with which to cushion rising prices, it will be difficult to intervene without having to pay partially for the cost of the food.

“How is government going to reduce prices of food items? If farmers are selling food based on production cost, how do you force the price down?  Secondly, the prices are rising because of food scarcity, how do you deal with that if you are not going to pump additional food items into the market?

The big question is: what structure has been created over the years to empower government  to respond? What is generally done across the globe is to have a strategic food reserves system where if prices start rising, government can pump from there into the market and therefore because of the additional supply, prices can drop,” the Agric economist noted.

Dr. Okuku pointed out that if people are selling their products based on the cost of production last year, government should not expect that they will rationally bring down the prices of their products.

“The only thing government can do is to have a system where it can pump additional grains into the market because the prices in the market are responding to the forces of demand and supply or the law of cost of production. Is along that line that government can intervene- and something should be done in futuristic terms. It is not something you can just jump in,” he said.

 

The agric economic experts pointed out that logistics cost of moving produce from one part of the country to another, is an area government can intervene and lower prices immediately.  

 

But he expressed worry that the structure is not there for government to intervene, adding, “for example the rail system is not working sufficiently for us to move agricultural produce otherwise one method is to ask people to use the cheaper rail system and government can then go to the other end of the market to see how people translate that to ensure reduced food prices in the market.

Agricultural production and selling is purely business. It’s not governments that produce the crops. So for government to go to farmers who produce the crops and ask them to sell at cheaper rates will be a problem. The big challenge for that committee is for them to find a structure that they will use to achieve the set objectives.

He warned that if government wants to force the prices down, people will hoard further, emphasizing that “if it cost somebody N10 to produce a cup of maize and he wants to sell at N12 and you say N12 is too high in the market, the farmer will go and keep his maize if it is not perishable. So if you’re forcing him to sell at N10, he takes it away from the market and that will create more scarcity. And what you are trying to prevent will actually be aggravated.”

Similarly, Dr. Aliyu Suleiman, an agric economist with USAID market programme, said the food prices are merely responding to the forces of demand and supply, adding that if government releases grains from its strategic grains reserve into the market, the forces of supply will bring down the price.

He called on the committee to ensure that the dry season farming kicks off in full swing so that when the rain-fed harvests is depleting, it will be replaced by the dry season harvests to ensure continued availability of food items, which will force the prices down.

Dr. Suleiman is of the view that it will be difficult for government to force down the prices of food items right now except it decides to use what is in the strategic grains reserves to float the market.

He said government must also be careful not to release all the grains at once because some merchants will buy and still take it to other countries for more profit. He added that government could choose to do it on monthly or weekly basis until the situations stabilizes.

Also speaking, Professor Tunji Orokoyo, consultant and agric extension expert, however said he was happy for the farmers

“You know rice is the darling crop of the federal government. As long as Nigerian will prefer to eat imported rice, so be it, let them pay for it. I have no problem with our farmers. But I know that rice is massively going out of Nigeria; if you go to our northern boarders, you will see many trucks in Sokoto, Kebbi, taking rice to as far as Libya. I am happy for our Nigerian farmers. Farmers are really enjoying the situation,” he said.

The professor said except government resorts to what it has in the nation’s strategic grains reserves, it will be difficult to deal with situation.

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