Nigerians groan, farmers, processors profit from food price hike

• Ex-provost doubts govt’s willpower to sustain policies
• Price of paddies rises from N6,000 to N12,000
• Demand for local staples marginally rises

Indications have emerged that farmers, processors and their distributors have begun to reap the benefits of closing some borders and a regime of restriction on foreign exchange as these have catalyzed demand for locally produced food items.

The Guardian gathered that as food items smuggled into the country before the border closure shrink and availability becomes a challenge, consumer have marginally shifted their demand to locally produced foods, making farmers, processors and distributors of rice, poultry products and other food items to savour the gains of the moment while most Nigerians groan over price hike.

While speaking with The Guardian on effects of the policies, the General Manager of Tuns Farms, Mr Taofeek Badmus, said the Nigerians farmers and processors are now encouraged to produce more because there is a stable market for their products.

“I think it is safe to say with the closure of borders, consumers have fallen back on locally produced products like chicken, fish and rice,” he said.

However, to sustain the tempo, he urged the government to provide enabling environment, credit facilities to small-scale farmers and sustain the closure to avoid policy summersaults that could become counter-productive to the agro-allied sector.

He disclosed to The Guardian that the high demand for locally produced foods have stimulated a marginal rise in price that could sustain the production.

“The closure has also brought a price surge in products like the day-old chicks, and the live birds’ price has also increased, while the selling price for frozen chicken has increased from N850 to N950 per kilogramme,” he explained.

Henry Olatujoye, President of the National Palm Produce Association of Nigeria, said in a normal situation, border closure “is an anti-trade policy, but in the case of Nigeria where we have unfriendly neighbours promoting illegal importation to Nigeria, it is a welcome idea.”

Though prices of commodities are expected to go up as it is now, the high price regime of locally processed foods would not last long, he explained.

“The price will definitely induce production propensity of farmers and increase their earnings. On the issue of forex restriction, we in the National Palm Produce Association of Nigeria support the government 100 per cent. Most importers are anti-government policies and they do a lot of evils to blackmail the government’s progressive policies. You can imagine getting forex from the government to import sub-standard goods into the country,” he said.

Reacting to the trends, Managing Director of Agrecourse, Ayoola Oluga, said the policies would aid import substitution, boost local production and increase incomes of local producers.

He explained, “The border closure has made the prices of foreign products skyrocket. The local alternatives are sold at cheaper rates and the average Nigerian prefers more affordable options because of their low purchasing power.”

So, he added, if people buy local alternatives, farmers would increase their production. Oluga said a 50kg bag of foreign rice, for instance, is at least N22,000, while a local brand is about N20,000

Head of Agric and Micro Insurance, Leadway Assurance, Mr Fatona Ayoola, also supports the policies, saying, “The border closure will further consolidate the gains made by local producers as farmers will be motivated to produce more to meet up with the gaps in supply due to the closure.

“This will inadvertently lead to an increase in both the farmers’ disposable income and wealth creation as there will be an available existing market for what is being produced.”

He added that entrepreneurs and businessmen in Nigeria would also be compelled to clear their goods through the Nigerian ports, which could grow the revenue of the country.

“The forex restrictions will compel our entrepreneurs to look inwards and create innovative indigenous products and services for the consumption of our large population. This will lead to the savings of our foreign exchange earnings and further boost our external reserves,” Fatona said.

A director of Agriculture Department of the Lower River Niger Basin Authority, Ilorin, Dr Olabisi Awoniyi, said the price of paddies (unprocessed rice) from farmers has gone up from about N6,000 [before the closure] to about N12,000 now.

This implies the cost of production of rice processors would automatically increase and this would be transferred to consumers.

A rice farmer and processor in Iwo, Osun State, Mr Ayooade Popoola, said the price of unprocessed rice has gone up from about N100 per kilogramme to over N150. This, he said, would encourage farmers to cultivate more rice next planting season.

He, however, lamented the absence of government support, saying the Anchor Borrower’s scheme has not given loans to farmers in the area despite several applications.

Chairman of Kebbi State Rice Farmers Association, Mr Suaib Augie, also lamented that farmers are stressed and forced to sell below production cost because of the unusually high cost of production.

The very high cost of inputs such as seeds, fertiliser, tractor services and labour have eroded the profitability of farmers and hence, production becomes unsustainable.

The Anchor Borrower’s scheme, he too explained, could not help farmers to minimise the cost of production because the inputs are supplied at the market or higher prices, making profitability very rare.

He advocated subsidies on agricultural inputs to stimulate production, productivity and profitability.

Dr Akin Oloniruha, a former provost of the Ahmadu Bello University College of Agriculture, Kabba, Kogi State, said the policies would impact positively on agricultural production if strictly observed.

For instance, he said, some milk companies have stepped up activities to increase local production due to forex restriction on imported milk.

“I have often said that the gap between demand and supply of rice is bridged by smugglers who do not pay duties on imported rice and with serious adverse consequences on local production,” he explained.

The closure of our borders would encourage more people to go into farming while those already in production will increase their capacity, he added.

However, he expressed doubt about the ability and willpower of the government to sustain the policies in the face of escalating pressure from the neighbouring countries and their agents within the country and the government.

“My fear is the sustainability of these policies because powerful forces will mount pressure on the government and they either jettison the policies or create loopholes for unscrupulous elements to exploit.

“For instance, maize farmers are groaning under the high cost of production and low prices because large consumers are now importing processed maize rather than buy local maize.

“The government should fix the power [electricity] speedily so that people can profitably invest in the production of farm inputs because as our imports of food will decrease, imports of agricultural inputs will exponentially rise,” he advised.