The scope of this report is from March to May 2016. This report shows that the prices of locally produced consumer goods have been rising since January, while the prices of imported goods have also maintained a generally upward trajectory over the same period. Indeed, consumer prices have substantially risen since the last SBM Intelligence food prices report which covered the period from July 2015 to January 2016. The upward march in consumer prices, which has continued almost unabated since Q3 2015, will put a lot of pressure on Nigerians already grappling with other negative social factors as delayed (and in some cases, unpaid) salaries, a spike in the pump price of petrol, as well as other petroleum products, continued power shortages, and in certain parts of the country, increased insecurity.
The overall picture will not turn positive in the short term. The last report noted that “upward trends of the price of consumer goods and economic hard times experienced among Nigerians which have led to the reduction in their purchasing power are signs that we should expect a fall in the standard of living among Nigerians.” Recent economic data seems to have validated that prediction. Bloomberg News reports that the economy shrunk by 0.4 percent in the first quarter of 2016, the first contraction in more than a decade, and the CBN Governor, Godwin Emefiele, said on May 24 a recession (technically defined as two successive quarters of negative growth) is imminent.
Nigerian homes today are finding it harder to provide for their needs than they did when we released our last report. The upward trends in the price of consumer goods and economic hard times experienced among Nigerians which have led to the reduction in their purchasing power are signs that we should expect a commensurate fall in the standard of living. This, coupled with rising unemployment, falling and delayed wages and rising unrest in key farming regions means already squeezed families will continue to feel like they are in the eye of the perfect economic storm.
All levels of government, will need to play a creative, assertive and intelligent role in curtailing the persistent rise in consumer commodities, especially in areas that it has substantial control over such as infrastructure development, which can ease the logistical challenges all Nigerian producers currently face, and by encouraging small scale farming across the country. Government also needs to invest in agricultural extension programs to educate farmers on modern farming techniques that will enhance production. Critical however to increased production is the stability and security of the food growing North East and the North Central regions. Government urgently needs to address the persistent and varied security challenges so that farmers can return to planting.
Government also needs to invest in new, as well as upgraded storage infrastructure and further encourage trade taking advantage of local food growing comparative advantages, thus elongating the availability of key farm products and ultimately contributing to bringing down their prices. For some staple crops such as tomatoes, as much as 60 to 70% of the harvest is lost to rot. A simple measure like improved preservation and infrastructure for quicker transport to markets will improve farmer incomes and drop prices in the market.
More resources should be allocated to agricultural research and development, in order to raise productivity levels in such things as plant yield, improved seed varieties and average production per hectare, thus pivoting the economy away from its centuries old reliance on subsistence agriculture to a more modern, scientific form of agrarian production befitting of a growing and developing economy as Nigeria.
Finally, government intervention should be measured, in order to ensure that they do not make the situation worse by well-intentioned, but ultimately misguided helpfulness.
Read the full report here.