President Buhari has said during a recent nationwide broadcast that middlemen are responsible for the rising food prices in the country.
The president also disclosed that he had directed the Ministry of Agriculture and Rural Development to rehabilitate the National Food Reserve Agency to address the continued rise in food prices.
He had said: “The Agricultural sector remains key to our economic diversification efforts as the sector has been a consistent driver of the non-oil sector contributing 22.35% and 23.78% to the overall GDP in the first and second quarters of 2021.
“We have seen significant private sector investments in almost all areas of the agricultural value chain. And these have continued even during the COVID-19 pandemic.
“Unfortunately, as our food production capacity has increased, food prices have been going up due to artificial shortages created by middlemen who have been buying and hoarding these essential commodities for profiteering…”
Middlemen, also referred to as intermediaries, play a vital role in ensuring that the distribution channel between the producer and the consumer is complete.
Nigeria’s President Muhammadu Buhari recently blamed the increasing cost of food items in the country on middlemen, who he alleged, were hoarding essential commodities for profit.
President Buhari’s claim is unsubstantiated as there are several other major factors responsible for the hike in the cost of food items.
This was not the first time the President would blame the high cost of food items in the country on middlemen.
In September 2020, he also blamed middlemen for rising food prices in the country at the time.
In a series of tweets via his verified Twitter handle, Buhari noted that the government is conscious of the challenge of high food prices, amidst a poor economy rocking the world due to the global coronavirus situation.
He, however, said middlemen, among other factors, are responsible for rising food prices.
“We are also engaging with food producers, associations and groups to tackle the issue of exploitative behaviour by middlemen and other actors, which is one of the factors responsible for the high food prices being experienced,” the Nigerian leader wrote.
In verifying this, Dubawa examines other factors, aside from the role of middlemen, that may have contributed to rising food prices.
Rising food insecurity
Dubawa researched factors that may have been responsible for the increasing cost of food items in the country.
In a report by the World Food Programme, over 13 million Nigerians are food-insecure during the lean season with some 4.4 million in the northeast.
In Nigeria, there has been a high level of food insecurity for the past four decades. This, undoubtedly, is a major factor in the rising cost of food prices in the country.
According to the Food and Agriculture Organization (FAO), food insecurity has been on the rise since Buhari was elected into power in 2015.
While data shows that demand for food has continued to increase since 2014 due to the country’s rising population, there is no corresponding growth in the amount of food production largely due to surging insecurity, inconsistent government policy, poverty among others.
Dr. Tayo Bello, a Developmental Economist and Associate Professor of Law at Babcock University, expatiated on the Consumer Price Index in an interview with Dubawa.
He defined the CPI as the basket of goods which typically is the product of services purchased by individuals.
He said, “Importantly, the CPI serves as a barometer for any economy because once it brings inflation, inflation will affect the purchasing power of consumers and it is a serious threat to any economy either developed or developing and it is through this consumer index that you can derive the cost of living index.”
According to him, CPI measures the price of consumer goods and it is a tool to measure inflation and can be used to formulate the future economy.
Dr. Bello said inflation can be caused by various factors, citing the types of inflation. Speaking on the demand-pull inflation, he explained that this situation arises when the aggregate demand is higher than the goods available.
He added: ”When you talk of cost-push it is as a result of the aggregate increase in the cost of production.
“For example, with the way foreign exchange earnings are declining coupled with rising foreign currencies, there’s no way you will not have a cost-push. What we’re having in Nigeria now is cost-push, it’s not like we have a sudden increase in population.
“The last one is built-in inflation which can be as a result of production cost or other factors,” he stated.
While referring to the present inflation rate in Nigeria which is 16%, he noted that the country suffers from galloping inflation, taking into consideration the inflation rate of 15.7% in 2016.
He said, “Investors pay more attention to CPI because it is an indicator of where the economy is going, it is also a barometer that can be used to forecast inflation and sensitive assets. There’s no rational investor that will go into a country where you know that what they have is a persistent increase in the cost of goods and services which is inflation. There was a time I discussed with the press on ‘LikeAMonkey’ inflation (zigzag) and that’s what we have in Nigeria.
“The present inflation rate in Nigeria is 16% and the projection is that by 2022, it will be 13.5%. Let’s go back to the inflation rate from 2016. In 2016, the inflation rate was 15.7%, in 2017, it was 16.5%, in 2018, it was 12.09% and in 2019 it was 11.4%, and we’re talking of 2021, 16%.
“If you look back, the inflationary rate was lower in 2019. With this, there’s no way the economy will not be affected because there’s no steadiness. Once we have that trend, what will happen is the economy and the barometer which the CPI measures will show a red indicator and when that happens, it means the economy is not going in the right direction.”
Between 2018 and 2020, for instance, an average of 21.4 percent of Nigeria’s population reportedly experienced hunger.
In 2014, Nigeria’s population was at 176,404,931 which represents an increase of 4,639,112 people compared to 2013.
According to data made available by Statista, the country’s population increased to 181,137,448 in 2015 when President Muhammadu Buhari assumed office and currently stands at 212,568,404 in 2021.
Meanwhile, in a bid to improve agricultural finance in Nigeria, the Nigerian government has introduced different financing initiatives, and between 2018 and 2020 committed over half a trillion naira in budgetary allocation to Nigeria’s agriculture sector.
However, most of the budgetary allocations to the sector in the period of three years have been for capital items. This is to say the agricultural sector has been underfunded.
This, among other factors, has greatly affected food production in the country.
Production pattern and insecurity
With a very large population size as stated, Nigerian farmers, to a large extent, lack the capital and technological advancement to produce the bulk of food needs in Nigeria.
A report by the FAO stated that only 57percent of the 6.7 million metric tons of rice consumed in Nigeria annually is locally produced leading to a deficit of about 3 million metric tons, which is either imported or smuggled into the country illegally.
Meanwhile, animal production has remained underexploited. It stated that domestic demands for livestock outweigh supply as livestock mostly reared by farm families in Nigeria are the small ruminants like goats (76 million), sheep (43.4million), and cattle (18.4 million).
According to the World Bank, the food production index in Nigeria for 2018 stood at 101.9. Recent data from the United States Department of Commerce further showed that Nigeria still depends on approximately 1.7 MMT of imported parboiled rice to meet its domestic rice consumption demand.
Despite his promise of improving security, Nigeria has experienced more insecurity since Buhari came to power in 2015.
The Global Terrorism Index (2019) ranked Nigeria as the third-worst nation prone to terrorism with no improvement since 2017.
Nobel Laureate Wole Soyinka has described the country as a war zone and the Sultan of Sokoto recently said northern Nigeria is the worst place to live in the country.
One of the areas worst hit by the insecurity situation is the agriculture sector as several farmers have become internally displaced persons (IDPs), thereby causing a spike in food prices.
A study shows perennial cases of farmer-herders clashes, banditry and kidnappings have made many farmers to flee their farmlands due to fear of attacks by bandits or being kidnapped after which a ransom is demanded.
Another major factor responsible for hikes in food prices in Nigeria is inflation. Since Buhari came into power in 2015, there has been sustained inflation in the country which has continued to make it difficult for many, particularly low-income earners, to eke out a living.
Since the inception of the Buhari administration, this staple food item has continued with an unsteady price as Nigerian households struggle to feed.
Interestingly, in 2015, a bag of rice was sold at N8,700, however by 2016, with the high rate of inflation, a 50kg bag of rice was sold for N16,857. As of October 2017, the same value cost N18,000, the price was stable through 2018 in some parts of the country.
In 2019, the same bag of rice sold for N25,500, by 2020, a naira metrics report revealed that a 50kg bag of rice was sold for N26,125.
In 2021, the average price of a 50kg bag of imported rice goes for N28, 000 based on market surveys.
For instance, inflationary pressures have never abated since the Buhari administration announced a shutdown of Nigeria’s porous land borders with all neighbours in October 2019 in a move to spur mass production of food as well as curb smuggling and associated corruption.
Currency devaluation and COVID-19 pandemic
Similarly, the poor performance of the Naira on the currency market, coupled with its devaluation, impacted the demand and supply of food. With food demand outweighing production, food prices steadily rose.
Furthermore, the outbreak of the COVID-19 pandemic contributed to an increase in the food index to the tune of 22 percent, according to data from the National Bureau of Statistics.
The country fell into its deepest recession in 40 years during the height of pandemic restrictions, according to a report by the World Bank.
The report stated that the Nigerian economy shrank by 1.8%, as the COVID-19 crisis drove the economic slowdown.
In a report by Guardian, farmers have narrated how they bribe bandits and herdsmen in their locality to enable them to go to farm unhindered and to ensure cows don’t enter their farms.
It would be recalled that in August 2019, just three months after celebrating its signing of the AfCFTA, Nigeria slapped a ban on the movement of all goods from countries with which it shares a land border: Benin Republic, Niger and Cameroon, effectively banning all trade—import and export—with its neighbours.
According to the president, the purpose was to curb smuggling of goods such as rice, tomatoes and poultry to encourage the production and consumption of homegrown food.
But the policy is said to have contributed to the high cost of food items in the country as citizens experience widespread hunger.
According to a survey by Statista, the greatest majority of Nigerian households experienced an increase in the prices of essential food items, as over 87% of households said the prices of beans, cassava, yam and sorghum have shot higher since January 2020.
It added that about 79 percent of respondents said the prices of rice increased over the same period and 74 percent found onion more expensive than it used to be.
A similar Food Survey conducted by Dataphyte in March shows that Nigerians witnessed an average of 66.8% increase in the prices of food items between last February, the month the first case of Coronavirus was confirmed, and March 2021, when the survey was conducted.
The analysis of the prices of foodstuffs across 13 states in the country showed that the food price situation had contracted the purchasing power of citizens.
In May, the UN Food and Agriculture Organization (FAO) warned that at least 9.2 million Nigerians face a crisis or worse levels of food insecurity this year because of the country’s conflicts.
As a Guardian report puts it, “rising insecurity, misdirection of government funds to the agricultural sector, and poor implementation of interventions by the federal government have been identified as the leading causes of hike in food prices in the country.
“Other causes include multiple taxations on inter-state food transportation by federal, state, and local governments.”
Additionally, low level of mechanisation and poor research and development activities as well as adverse weather conditions resulting from climate change contribute to a hike in food prices in Nigeria.
The president’s claim that middlemen are responsible for hikes in food prices in Nigeria is misleading. The hike in food prices in Nigeria cannot be tied to middlemen alone as the president has claimed. The foregoing research has shown that while there might be cases of individual middlemen hoarding essential commodities, as claimed by the president, other important factors contribute substantially to the increase in the prices of food items in the country.
The researcher produced this fact-check per the Dubawa 2021 Kwame KariKari Fellowship partnership with SaharaReporters to facilitate the ethos of “truth” in journalism and enhance media literacy in the country.