Maize and Rice Price in Freefall: Nigeria’s food system is next!, by Imam Isah Musa, PhD.
Nigeria is an endowed agrarian country with rich cultivable, fertile and vast land areas that climatically favour the production of different kinds of food crops for human, livestock and industrial consumption.
Rice and maize have become a highly strategic and priority commodity, in fact, nowadays, they are the most comparative and competitively advantageous in terms of immediate family food security and marketability. Besides, they are crops produced in almost every state in the nation.
These two crops have for a very long period taken over as the most staple, widely produced by an estimate of over 12 million and over 50 million farmers involved in rice and maize farming, respectively with addition of over 90 million people directly employed in the processing and other value chain activities as their major means of sustenance, and livelihood.
In recent times, there has been dramatic strange fall in prices of these pair commodities across Nigeria’s market, which is well celebrated by array of consumers. But logical and deeper economic introspections suggest an unhealthier economic equilibrium because under normal circumstance, price fall of agricultural commodities mainly occur during harvest not off-harvest season.
Meaning, the price fall of maize and rice now is primarily driven not by increased market supply due to increased local production, but likely the easing of restrictions on food imports by the relevant state authorities.
While the fall in prices of the twin staple commodity present a temporary respite to struggling households through reduced inflation and increased nutrition, in the nearest time, no doubt it might transfer the heavy and costly burden to the local producers all over the country. This trajectory would disparage, disincentive millions of farmers in the coming year, thereby causing a sustained long-term decline in local production that will widen the production deficit, increase over-dependence on importation and further exacerbate the level of food insecurity, especially among the most vulnerable peasant farmers.
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Many of these are smallholder farmers, and a significant portion of the population relies on agriculture, especially maize and rice production, for their livelihood, and it simply means that any policy about the two crops must be properly and critically weighed considering the far-reaching consequences capable of disrupting the entire value-chain economic activities.
It is indeed a sign of economic respite and positivity when prices of basic food commodities slowed down dramatically within the two years of sustained unbearable hike that has never been witnessed in recent history. But the point of concern remains that in the next two months when harvest commences fully, the further fall in the prices of these commodities would be unimaginable and impactful – a situation capable of causing loss of investment by farmers as revenue from their produce, many may never be able to recover the cost of production not to talk of profiting.
For anyone following recent trends in production process will testify that this years’ production season was marred with unimaginable and unbearable hike in the cost of inputs like fertilizer, herbicide, labour, fuel, and transportation. On the other hand, an exorbitant and prohibitive interest rate of more than 30% remains a chess to beat. This is the stack reality that farmers were subjected and without any deliberate action by the government to ameliorate or lessen the brunt, unimaginable economic stress awaits large scale farmers.
It is said that – every harvest season is considered as the most exciting, joyous and celebrative period of farmers everywhere in the world but going by the prevailing realities in the country, no doubt, this year’s harvest would be one of the most challenging, destructive, disparaging, demotivating and disincentivising moment that will hugely impact negatively on the entire food system in the nation.
In furtherance, this ugly trend will dampen and demoralise farmers from production, leading to smallholder’s income collapse, debt default, job losses, mental health issues, disinvestment and reduced agricultural GDP. It is not a doom prophecy but the situation ahead is more likely that cost of production surpasses expected revenue which will create catastrophic disincentive for farmers, leading to abandoning farms, food shortages and social unrest.
This scenario where prices of commodities fall freely amidst rising cost of production cost, is simply described as rising risk and uncertainty in the country’s food production system.
As a matter of unprecedented national urgency, government must be properly positioned to provide succour and correct the market imbalances both in a short as well as long term measure, and it must be proactive in doing so, in order as to avoid the unthinkable disaster awaiting farmers.
In a short term the government should provide:
a. Minimum Support Price. A minimum price set by the government to purchase major staples and if the market prices fall below, government agencies intervene to buy the produce there by creating a safety net.
b. Activation of strategic grain reserves. Purchases surplus produced during harvest time and store it to reduce market glut and stabilises prices. The reserves can then be used during shortages at a reasonable price.
c. Debt forgiveness. Where farmers couldn’t genuinely repay back loans judiciously used in agriculture due to price crash of produce government should put in place debt forgiveness/relief mechanism to bail out their situations.
While on a medium term:
a. Reduce cost of production. Providing inputs like fertilizer, seeds and herbicide at a reduced cost and timely to farmers.
b. Subsidies Mechanisms: Providing access to simple labour-saving farming/processing devices at a subsidised and cheaper price to farmers/processors.
c. Energy subsidies for agriculture. Provide preferential tariffs for electricity for farming/processing and hugely investment in solar-powered irrigation pumps and farm machineries.
The same deployed strategy that crashes and dampened prices of maize and rice must equally be employed with the same speed to force the cost of production lower – down ward to ensure production cost is commensurate with the prices of produce for the betterment of consumers, farmers and nation at large.
As the current image suggests that farmers are in peril, food supply is at risk, and uncertainty await consumers, which further illustrates that behind the recent Nigeria’s commodity price fall, agriculture in Nigeria remains clinically the misunderstood sphere!
Imam Isah Musa, PhD.,
National Agricultural Extension and Research Liaison Services,
Ahmadu Bello University, Zaria.
+2348069554425
imamgarki@yahoo.com
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