Nigeria to see further food price hikes in Q4 2022, says AFEX
November 18, 2022260 views0 comments
By Onome Amuge
- Welcome to the world of ‘Open Banking’ in Nigeria
- Cashless economy and Nigeria as developing nation
- Nigeria sees inflation hit 17-year high at 21.91% in February 2023
- Economist sees emerging political order reshaping Nigeria’s future
- Nigeria pledges repatriation as foreign airlines trapped funds hit $743m
The recent incidents of flooding resulting from incessant rainfall and larger global economic effects in key food-producing regions are most likely to result in further price hikes across Nigeria and further heighten the gap between production and output level by farmers in the fourth quarter of 2022.
AFEX, Nigeria’s leading commodities market player, made the projection in its 2022 Wet Season Crop Production Report launched recently at the AFEX head office in Abuja.
The report, which seeks to provide accurate and reliable data to aid the understanding of the national food system through farmer surveys and measurement of transaction level data, tracks six key commodities and their performance in the preceding season.
As reflected in the report, price and market changes across maize, paddy rice, sorghum, soybean, cocoa, and sesame have been affected due to predictable seasonality effects, activities in the agricultural value chain and larger macroeconomic global events.
As a consequence, higher prices were forecast across all commodities in the report. Maize is projected to reach a higher average price point ranging between $486.72 (or NGN214,980) and $498.09 (or NGN220,000) per metric tonne by the end of Q4 2022, compared to an average price of $475.97 (or N210,229) per metric tonne in Q4 2021. Also, soybean prices are projected to rise by six percent by May 2023.
According to the report, Nigeria’s most consumed grains are currently faced with declining food balance sheets as consumption levels rise faster than production levels, worsening food insecurity. As a consequence, AFEX forecast an average decline in production levels of up to 11.5 percent across commodities like maize, paddy rice, sorghum, and cocoa. On the other hand, it noted that soybean and sesame will experience a close to 6.5 percent increase in production levels.
AFEX stressed that the effects of the Russia-Ukraine crisis remain a persistent cause of the price surge in the local agricultural commodity markets, especially because of the hike in the price of fertiliser. This negative impact was also highlighted in the report as affecting the output level of most commodities. The report also forecast paddy rice as being the most susceptible to production and output pressures, facing close to a 22.47-percent decline in production volumes in 2022 in the wake of the crisis-induced fertiliser price hike.
David Ibidapo, AFEX’s head of market data and research, who presented the report findings at the launch event, indicated that the company’s annual crop production report seeks to provide robust market intelligence for agriculture value chain players in Nigeria.
“We have more than doubled the count of farmers surveyed for this research, up from 9,117 farmers surveyed last year to 20,677 farmers surveyed for this year’s report,” he said.
Ibidapo also specified key indicators measured through the survey, stating that factors such as land usage, inputs (quality of seeds and fertilizer usage), weather conditions, and the farmers’ output expectations were put into primary consideration.
On the challenges limiting Africa’s agriculture output, AFEX observed that access to reliable data is a recurring limitation for agriculture on the continent. To this end, the commodities exchange firm said it has consistently advocated for a food balance sheet that will strengthen productivity improvement efforts, subsequently enhancing food security across Africa.