Release of food from strategic reserves: Is the timing right?
Dr. Olukayode Oyeleye, Business a.m.’s Editorial Advisor, who graduated in veterinary medicine from the University of Ibadan, Nigeria, before establishing himself in science and public policy journalism and communication, also has a postgraduate diploma in public administration, and is a former special adviser to two former Nigerian ministers of agriculture. He specialises in development and policy issues in the areas of food, trade and competition, security, governance, environment and innovation, politics and emerging economies.
February 14, 2024335 views0 comments
The purported approval by the House of Representatives of the release of food from the national strategic reserves in response to food price increases is an interesting decision with far-reaching implications, from the legislative chamber as well as the executive branch of the government. It begs the questions bordering on circumspection and insight in public service interventions in matters of existential importance to the populace. The concerns here are not so much about the quality and quantity of what the government is releasing but more about the appropriateness, timing and implementation. The question of quantity is also of paramount importance as the amount getting to the beneficiaries matters a great deal. It seems unlikely that those involved in taking this decision about the food from strategic reserves actually understood or thought through the problem before proffering the adopted solution.
Primarily, the problem is an increase in food prices arising from general rise in prices of various commodities: food only happened to be a category within the larger mix. More importantly, the concerns are more demanding of attention because food is consumed by all irrespective of class, social status, age, education, marital status, volume of earnings, geopolitical location, tribe or religion.
Nigeria’s socio-economic experience, over the years, has revealed an annual pattern of cyclical fluctuations in food prices, particularly — although not limited to — locally produced food in which food prices rise toward the festivities period in December and remain substantially high till sometimes in March or April, only to begin to fall as cropping season comes in full swing. The reduction in prices reaches the minimum prices possible at the peak of harvesting season, remaining so for the period between June in southern Nigeria and September in northern Nigeria for reasons of different rainfall patterns. Thereafter, prices begin to gradually rise, peaking again toward December ending, thus repeating the cycle.
During the periods of stable economy, the cyclical fluctuations in food prices have not been considered alarming but rather a part of predictable occurrences to which people have had little or no difficulty in adjusting. For commercial actors, this cycle serves as a predictor of investment timing. In particular, speculators flood the food markets, buying food items when cheap and storing against when the prices rise. It is hardly justifiable to refer to these market players as hoarders as they invest huge funds, often using bank loans in their speculative tactics.
What they buy and store does not always bring the expected profits, because of many unforeseen circumstances. In some cases, commodities are wasted in transit through logistic problems, including thefts. In some cases, the storage goes wrong and a lot of stored food goes into waste. In some cases, prices drop earlier than anticipated, especially when harvest comes earlier than expected. Speculators are thus forced to sell cheaper and earn less profits or sometimes at a loss.
The current food price increase is remarkably different from the normal annual cycles. Since it began to give signs towards the end of 2023, it was clear that it was associated with a general increase in the prices of other commodities which had a domino effect on food and agricultural commodities. The competing attention for other items purchased in a circumstance of general price increases has therefore put intense pressure on food items as commodities mostly purchased by every household and which forms a bulk of recurrent expenditure for most individuals and households. The present situation is therefore more of an economic crisis than humanitarian crisis, especially any of those arising from natural or man-made disasters such as earthquakes, flooding or wars.
Any response in the form of distribution of foods from strategic reserves is both wrongheaded and mediocre in nature. Rather, the appropriate response ought to be one that draws from profound knowledge of the underlying economic crisis which triggered the unusually high and sustained rise in food prices. Wrong diagnosis of the problem has led to inappropriate prescriptions and remedial measures that are at best going to have transient impact while the price increases will remain after the distributed food has been exhausted. Meanwhile, it is important to put the distributed food in perspective and juxtapose it with the population of the expected beneficiaries.
Many things are likely to go wrong with a policy that is at best a knee jerk reaction to an enduring problem. How the food is distributed is of great essence. On what statistical basis are the beneficiaries identified and targeted? Although news reports had it that, as a temporary response to the nation’s growing food crisis and the rising cost of commodities, President Bola Tinubu has ordered the immediate release of more than 102,000 metric tonnes of various grain types from the national food reserve, it is doubtful if this quantity will make any impact.
If this quantity is shared evenly among all the 36 states and the FCT, then each will go home with 2.8 metric tonnes, which is infinitesimally small even for a local government. It is embarrassing to make any fuss about this quantity in the public domain. And, what then happens if there is a natural disaster that warrants the distribution of such food to victims thereafter? The storehouse would have been emptied!
On the field dynamics of food production, harvest and trade, the commercial activities of food merchants are noteworthy. In northern Nigeria, for instance, commodity merchants from Niger Republic, Mali, Burkina Faso and Chad annually mop up grains at major markets such as Dawanau in Kano metropolis and Maigatari in Jigawa State. This is notwithstanding the sustained official border closure between Nigeria and Niger as their activities are largely informal, mostly escaping official radars. In particular, the recent free fall of the Naira has provided additional impetus for the mop up activities as the Nigerian currency has further weakened against the CFA of either West or Central Africa. This means that, on the average, one CFA will buy more of the same quantity of food from Nigeria now than it did the same month of the previous year. To the Nigerian farmers in the north, this is also an encouragement as it seems like they are earning more in naira even though the currency is falling in value.
If indeed the federal government is sincere, committed and keen on addressing the food crisis and bringing down its prices, then it needs to draw up a robust and comprehensive programme involving collaboration with the states to massively produce food by incentivising farmers to boost farming activities. The insecurity as a result of banditry that is becoming recurrent and widespread all over Nigeria, particularly in the rural countryside in recent times, needs to be tackled head on. The recent killing of two traditional rulers in Ekiti State and another one in Ekiti local government area of Kwara State are tell-tale signs of insecurity that will have more adverse effects on food production and will further drive up food prices. Without taking these variables into consideration, any measure taken on food distribution by the federal government could be mere cosmetic and ephemeral in impact. The greater prospects of widespread riots as a result of mass protests need to be prevented. The case of spontaneous protests in Niger State a week ago could be a foretaste of wider and bigger things to come as the citizens continue to groan under the pangs of food price inflation. Government must make this a top priority and act quickly to avoid a breakdown of law and order or a state of anarchy. The time to act is now.
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