By Steve Onyeiwu
(pix: WB) |
Rising food prices is problematic because it reduces the real purchasing power
of households and shifts expenditures away from essential items such as health,
education, housing, etc. Data compiled by the World Economic Forum show that
the average Nigerian household spends about 56 per cent of income on food (the
highest in the world!). Three other African countries with high expenditures on
food as a percentage of income are: Kenya
(46.7 per cent), Cameroun
(45.6 per cent), and Algeria
(42.5 per cent). To put things in context, countries like USA , UK ,
Canada and Australia spend
6.4 per cent, 8.2 per cent, 9.1 per cent and 9.8 per cent, respectively. This
is consistent with Engel’s law in Economics, which argues that poor households
(and developing countries) typically spend a larger proportion of income on
food.
Why are food prices rising in Nigeria ,
whereas they have been falling globally? First, as an import-dependent economy,
the depreciation in the value of the Naira relative to foreign currencies may
have resulted in steep increases in the prices of imported food (rice, sugar,
milk, beverages, frozen food, etc.). Second, because of Nigeria ’s rapid
population growth, food supply in the country may be lagging behind demand. Nigeria ’s
population has been growing by about 3 per cent per annum, while the growth of
agricultural value added was estimated by the World Bank to be 3.7 per cent as
of 2015. This means that agricultural output is barely keeping pace with
consumption. Supply shortfalls have been exacerbated by instability in
food-producing areas of the country, deteriorating rural infrastructures,
climate change and the exodus of rural dwellers to urban centres in search of
illusive opportunities. Finally, the country’s high inflation rate of about 16
per cent inevitably affects food prices, as all prices adjust to reflect the
level of inflation.
Rising food prices is a major problem in Nigeria , and
may precipitate food riots if not addressed effectively. The unemployment rate
in Nigeria ,
officially estimated at 14.2 per cent, implies that many Nigerians suffer the
double-whammy of low income (or no income at all) and rising food prices. Wages
have also been very stagnant, causing significant decreases in the real
purchasing power of workers. Thus, the demand by the Nigerian Labour Congress
(NLC) for a significant increase in the minimum wage is unassailable and long
overdue. It is now obvious that the so-called minimum wage in Nigeria has
become the proverbial “starvation wage.”
To address the problem of rising food prices, Nigeria could learn some lessons
from countries that have been successful with agricultural development. One
such country is India ,
which in the 1950s and 1960s experienced food shortages so severe that it
became known as the “begging-bowl” nation. But by making food self-sufficiency
its top economic and foreign policy priority in the 1960s, India has
succeeded in jettisoning its “begging bowl” image, and has become an exporter
of food. One major surprise a first-time visitor to India would experience is the
abundance of food at every nook and cranny. During one of my visits to the country,
I found that monthly food expenditure at the cafeteria of my host university
was only about 2000 Rupees (approximately $30) for a very sumptuous
three-square meal, including appetizers, desserts and non-alcoholic beverages.
Low food prices have enabled the Indian government to offer safety nets, mainly
by way of giving poor households “food rations.” Nearly every poor household in
India has a government-issued “ration card,” which allows these households to
obtain free rice, bread, milk, eggs, cooking oil, sugar, fruits vegetables,
amongst other basic necessities. One potential problem in India is that
food prices may fall so low that farmers would be discouraged from increasing
output, or may be forced to seek non-farm employment.
Land reform under the Green Revolution has
enabled rural dwellers to have access to agricultural land, supported by
government-provided irrigation systems, rain-water catchments and extension
officers. India ’s
land reform placed a ceiling of 25 acres on land ownership per household, and
absentee landowners with surplus land were forced to relinquish portions of
their land for redistribution to landless farmers. Contrary to the myth that
commercial agriculture is the panacea for Nigeria ’s
food crisis, India ’s
agriculture is dominated by small and medium farmers. These farmers value their
farms more than their houses. It is not uncommon to find an Indian household
living in a very small house with several children, but with many acres of farm
land. Indians rarely build residential houses on farmland. This is in contrast
with Nigeria ,
where the elite purchase large areas of farmland from hapless and economically
desperate farmers for the construction of humongous mansions or other
unproductive projects. The lesson for Nigeria is simple: agricultural
development is not just about giving farmers subsidized fertilizers and
low-interest credit; it is also about institutional reform.
Perhaps the greatest boost to food production in India is the extremely cheap and
extensive transportation network in the country. Villages are connected to
major towns, cities and markets through paved roads and rail systems.
State-owned buses are very pervasive, and ply the most isolated regions of the
country. You could hear the sound of trains running 24 hours, hauling foodstuff
around the country. Transportation fares have been kept very low by competition
from the ubiquitous “autos” (or three-wheelers) and rickshaws. Because of easy
access to inexpensive transportation, farmers are able to bring their products
to the open market on a daily basis. Every evening, streets in India buzzle
with life, as farmers fill the streets with wares ranging from fresh
vegetables, fruits, potatoes, fish, etc. Food vendors, in turn, purchase
produce from local farmers, cook the food on the spot and sell directly to
people by the roadside or open markets. While Nigerian street hawkers sell recharge
cards, handkerchiefs, chewing gums and assorted items imported from China , their
Indian counterparts sell mainly agricultural products and agro-processed foods
produced domestically.
Rising agricultural productivity has been a
win-win phenomenon for both farmers and non-agricultural workers. Farmers’
incomes have been on the rise, while workers in other sectors of the economy
have benefited from lower food prices. Higher rural incomes has spurred demand
for manufactured goods, and in many cases has led to the location of factories
in rural communities, and hence generating employment opportunities for rural
dwellers. The complementarity between the industrial and agricultural sectors
is also manifested by the fact that Indian farmers supply an abundance of
inputs such as coffee seeds, tea leaves, fruits, vegetables, and leather
products to the country’s agro-processing firms, including global corporations
like Nestle, Tata Foods and Bata India — yes, Bata is still in India! It would
be recalled that Bata Nigeria closed shop almost 30 years ago.
In closing, I would like to offer some advice on how not to address the problem
of rising food prices in Nigeria .
When I heard that Osinbajo was about to form a task force to address the
problem of Nigeria’s food crisis, I muttered to myself: Gee, I hope they’re not
going to resort to the era of the 1980s when, in response to rising food
prices, the Shagari government (and later Buhari’s military administration)
resorted to the massive importation of the so-called “essential commodities.”
Those commodities were supposed to be sold at heavily subsidized prices through
designated supermarkets and other outlets. Companies, government ministries and
universities received “essential commodities” from the government, and sold
them to their workers at huge discounts. But we all know the end result:
racketeering, cronyism, emergence of a black market in “essential commodities,”
and corruption. There are no easy and quick fixes for Nigeria ’s food
crisis. India
started its arduous, but purposeful, journey to food self-sufficiency in the
1960s, and it took a very long time before its agricultural development
strategy began to pay-off. The way to solve the problem of food crisis in Nigeria
is through sound economic policies and institutional reforms that raise
farmers’ productivity, boost supply, and lower prices. I doubt that a task
force would succeed in accomplishing that task.
*Prof.
Onyeiwu wrote from the Swami Vivekananda Leadership Development Institute, Mysore , India .
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