Apart from the insecurity that keeps farmers away from producing food, which creates scarcity, there are other factors contributing to food inflation that the government appears to have turned a blind eye to.
According to a director at Cutix Plc., Mrs. Ijeoma Ezeasor, apart from the pervasive issue of insecurity in Nigeria, food insecurity can be tackled with some changes in policies by the federal government.
She said the advent of Covid-19 created some problems relating to the supply chain that are still affecting manufacturers in Nigeria today. She noted that foreign exchange instability, especially at the ports, perpetrated by Nigeria Customs Service puts manufacturers in a bad position for competition.
Contents
Forex challenge
She stressed that the problem is dire for manufacturers, especially in the food industry. Ezeasor said there are some inputs in food manufacturing that are imported. The availability of forex affects the cost of those inputs and by extension, the cost of production and the final product. She stressed that the costs of all those imported inputs force manufacturers to pass the costs to final consumers.
- “As a result, final consumers are finding it difficult to purchase the final products, which leave much food in the warehouses of food manufacturers,” she said.
Extortion, other factors
Ezeasor added that the increased prices of diesel, coupled with bad roads also add to food inflation in the country. She added that there are thousands of non-state actors that liter the highways collecting funds from transporters of agricultural products illicitly. She said as long as these conditions remain the costs of food items will continue to rise every day.
Affirming the development, the manager of a company in Agbara Industrial Estate, Ogun State, who chose to be anonymous, told Nairametrics that his management pays as much as N800,000 at illegal checkpoints just to convey a 40-foot container of goods from Apapa Port to Agbara Industrial Estate.
He said such a cost is inevitable because if you choose to take up the issue with them at the constituted authorities, you will end up paying demurrage; then the use of your raw materials will be delayed, and that delay in production may prove to be costlier than parting with the illegal payment in the first place.
- Consequently, according to him, “Those costs will be passed on to the final consumers of the products. Then there are costs we incur after getting the final products. We still incur distribution costs at the same illegal checkpoints. And if we don’t pay, our goods will be delayed, which is expensive because it creates inventory problems.”
Extortion is also impacting local production and distribution of food. For instance, according to a truck owner, Musa Sani, transporting various commodities such as food items, timber, and other goods means enduring a gruelling journey through more than 100 checkpoints across Taraba and Benue states. He said this journey not only contributes to increased food prices but also exposes the drivers to exploitation by corrupt law enforcement officials and criminals.
Sani said the relentless extortion by security personnel, imposition of multiple taxes, and the proliferation of illegal checkpoints compel truck drivers transporting farm produce, cattle, and timber to reconsider using certain sections of the roads in Benue and Taraba states, which increases the cost of distribution of farm products, ultimately to be borne by end-consumers.
- “Going through alternative but longer routes equally incur distribution costs in the form of expensive fuel and costly repairs,” he said.
The cost of transportation amid bad roads is also part of the problems facing the cattle dealers. Decrying the high cost of transportation, another cattle dealer, Mohammed Saidu, said it costs between about N1 million to convey a trailer load of cows from the North to the South. He added that it used to be between N100,000 and N120,000 in 2019.
Also speaking, Amos Imarenakhua, an economic affairs analyst, told Nairametrics that the fact that the naira has been gaining strength over the past few weeks is good news that should spell a reduction in the prices of food in the coming weeks and months if the trend is sustained.
- “But even at that, Nigerians will never enjoy a fair price of food if non-state actors continue to extort players in the agriculture sector,” he said.
Speaking about non-state actors with Nairametrics, a dean at Adeleke University, Professor Tayo Bello, affirmed that the activities of non-state actors in extorting money from farmers and transporters, coupled with dilapidated roads are a major contributor to the high rise in food prices.
- “These have become deeply entrenched in our economic system,” he said.
Professor Bello noted that between Ijebu-Ode and Ibadan, there are about 15 checkpoints, all extorting motorists who are transporting agricultural products.
He stated that the activities of thugs have been developing over the past several years as they have become more brazen. He said such brazen activities show that the local and state governments are either complicit or are sponsoring such activities outright, which proceeds do not end up in state coffers.
He added that bad roads across the country also contribute to the high rate of food inflation as transporters charge farmers based on the length of time they spend on the roads as well as the cost of maintenance of their trucks.
A truck driver, Abdullahi, who spoke with Nairametrics in Lagos, affirmed this. He said over the last year, the cost of maintaining his truck has tripled. He said the spare parts are expensive, and the mechanics charge much more than before to repair their broken-down trucks.v
