News

April 21, 2024

FX PUZZLE: Nigerians query high food prices despite dollar’s crash

Naira

By Gabriel Ewepu

WITH Naira appreciating to N1, 300 to the dollar thus giving a ray of hope that the economy is recovering, Nigerians, including farmers and Civil Society Organizations, CSOs, are puzzled that the heartwarming development was yet to reflect on food production and prices.

They pointed out that prices of farm inputs are still very high while interest rates are far above farmers can afford among other factors.

However, they suggested how government can ensure the appreciation of the Naira is sustained to eventually impact on food production and make prices affordable by Nigerians.

Naira has appreciated from close to N2, 000/N over the past four weeks to N1, 300/N, gaining about N700.

Stronger Naira, higher purchasing power, and more food to buy – AFAN

 The National President, All Farmers Association of Nigeria, Ibrahim Kabir, said stronger Naira will lead to higher purchasing power and more food would be bought.

Kabir said: “The stronger the Naira the higher its purchasing power and the more food you can buy with it, therefore, food will become more affordable, which is a prerequisite for food security.” 

He also expressed hope that, “Indeed, it is pretty obvious that these costs will come down which will make the price of food items to come down as well.

“We can safely assume that a stronger Naira connotes cheaper inputs and by implication lower production cost to the farmer and therefore cheaper and more affordable food to Nigerians.”

However, he suggested, “Government should continue providing the enabling environment for production by ensuring that energy becomes readily available and affordable.”

Naira appreciation hasn’t impacted on food prices —POFAN 

 The National President, Potato Farmers Association of Nigeria, POFAN, Chief Daniel Okafor, asserted that the prices of food items still remain high despite the Naira appreciating.

Okafor said: “Naira appreciation to me has not impacted in any way to price of food in the country. The food in circulation today is still the output of former production, which purchase of agricultural inputs were at high prices.

“Farmers bought their inputs at high cost so you cannot force them to sell their produce at low prices because of Naira appreciation.

“Moreover, if we should tell ourselves the truth was Naira depreciation actually the cause of high cost of food? To me, the answer is no, it has been as a result of insecurity and high cost of labour and agricultural inputs. 

“Basically, planting season is just setting in and I can predict what the cost of Agricultural inputs will look like as a result of the Naira appreciation. Till the season comes fully we can then know whether there is positive or negative impacts of Naira appreciating.

“The positive impact of Naira appreciation will only be felt by farmers when we see the decrease in the prices of agricultural inputs and the likes. We can express our feelings when we are able to get labour and other agricultural inputs at affordable prices and on time.”

Meanwhile, speaking on how Naira appreciation could translate into reduction in food prices and production, he said, “The appreciation will only translate into reduction in food prices and production only if security challenges is controlled to the least minimum and inputs prices is reduced.

“Like I earlier pointed out, Naira appreciation didn’t much affect the food price increase but insecurity situation where only few farmers can access their farms easily and freely.”

However, he advised government to demonstrate its will to sustain the Naira appreciation recently recorded, and also do the needful to boost food production.

“Government knows better what to do if the political will is there. The ugly situation faced in Nigeria is due to lack of political will. Government should prepare to do the needful and at the right time”, he added.

‘Sustain Naira appreciation to boost food production’

 An agribusiness expert and Chief Executive Officer, EA Daniels Farm, Engr Daniel Ijeh, said the Naira appreciation can only be felt in the agricultural sector if government can put in place sustainable measures in place that would help farmers increase productivity.

Ijeh said: “Not yet. Price is a function of demand and supply. The effect will be immediate as with many kinds of disruption. It might reflect in the future if it is sustained.

“If the Naira appreciation is sustained over extended period, supply will go up thereby leading to a reduction in price.

“I think the uncertainty and unpredictability of farm input prices will reduce with this little appreciation of Naira. “This will create stability in the price of farm inputs, if not for an extended period but for the short term in the appreciation is sustained.

“This appreciation may make more farmers increase production thereby increasing the supply of food items which will result in a decrease in price”.

Meanwhile, in his advice, he said, “The first thing government should look into is up-scaling of agricultural expertise in Nigeria.

“Our current expertise is too poor that our yield is way below the world average in many crops.

“Farm finance is equally an area that if properly handled can lead to increase in good security. The land tenure needs be revisited especially in southern Nigeria.”

 Naira appreciation is good … but reconsider high lending rates, others – ActionAid

 The Country Director, ActionAid Nigeria, AAN, Andrew Mamedu, noted the appreciation of the Naira, but called on government to reconsider reduction of lending rates while putting in place other measures to boost food production.

Mamedu said: “First is to recognize that the Naira has appreciated from the peak it got to and the highest ever in the history of the country compared to the dollars; for instance, it got to almost N2, 000 depending on looking at it from parallel market or official rate.

“Within three months we saw this astronomical increase, and now it has started appreciating to N1, 300.  

“Now, having established that the reduction is having an impact on the economy immediately in terms of direct impact, we only saw this reduction starting about three weeks ago, and it will take a while to see the impact in respect to cost of food production.

“For the cost of food to reduce, it is going to be a combination of some factors. What is pushing the cost of food production? Top on that list, of course, is insecurity, farmers are not going to the farms, and it is simply a matter of demand and supply which simply means that production has reduced drastically and, when production reduces drastically, it is definite that we will have fewer produce in the market and, of course, the cost will go up.

“The second one is that with the inflation currently put at over 30 percent, farmers would also increase their prices, so inflation has not reduced.

“Because of the high exchange rate, the high cost of some of the items used for farming, including farm implements, will affect the cost of production of food.

“But with the appreciation of the Naira, we have not seen the direct impact on the cost of food items.

“However, naturally, the Ramadan Fast is also keeping food prices high, so after the fast we can see how food prices will go down, and government also ensures further appreciation of the Naira, and then put measures in place to ensure Nigerians sell at the right prices.

“Some of these things are not only for government, but also the people.

“CSOs and others have to play a role to build the economy, use made-in-Nigeria goods and reduce importation drastically, and all these will help the Naira appreciate.

“Government should also look into the high lending rate to help businesses survive.”

Food production is not impacted by Naira appreciation –Sokoto AFAM

 The Chairman, All Farmers Association of Nigeria, AFAN, Sokoto State Chapter, Jamilu Muhammad, lamented that Naira appreciation was not felt yet, saying what was really affecting food production was the high cost of petrol and low mechanization.

Muhammad said, “For now it (Naira appreciation) is not really reflecting, and what is responsible for high food prices are basically local factors, and they have little to do with Naira appreciation for now, which is about fuel, Premium Motor Spirit.

“We use fuel at the rate of 800 per litre to do irrigation. So if Naira appreciates, how does that affect the cost of food production except the pump price of PMS drops?

“The Naira appreciation impacts imported food items, but if the PMS pump price reduces it will also help food prices reduce, if not we are just going to witness little changes.

“What farmers can point at as impact of Naira appreciation is on imported farm inputs, and if farmers buy farm inputs in the next three months, then we will begin to see the impact, and that means the price of Urea, NPK will reduce, and in the near future the price of food will drop but, at the moment, we have already done the production with costly farm inputs and food prices will still be high, but, maybe in the next two months, it will drop because the price of agrochemical will drop and that will impact our production.

“We need more solar-powered generators, earth dams, and local production of farm inputs; currently we have only three companies in Nigeria producing Urea and NPK fertilizers but we need 20 to boost food production and reduce high food prices.”