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Food Inflation: Why African nations need to rejig Economies

FOOD INFLATION

Introduction

With the soaring cost of food prices, the world is facing yet another daunting challenge after the covid- 19 crisis. It is essential for African countries to organize their economies differently. Current events in the food value chains have left many with different opinions about what’s happening; Recession? Inflation?  Or Stagflation? 

Some experts think that economic growth will fall sharply in the second half of 2022, as well as inflation, which will ease off quite sharply, which will, in turn, cause many countries to change plans. Others think that; both economic growth and inflation can all get to be wrong sometimes.

In Nigeria, food inflation rose to 18.37 percent in April 2022 amid an increase in staple food prices across the county. In its inflation report, the National Bureau of Statistics said the food inflation rate jumped from 17.2per cent recorded in March, on the back of increases in the prices of bread and cereals, food products, potatoes, yam, wine, fish, meat, energy, and oils.

On a monthly basis, the food sub-index increased to 2 per cent in April 2022, up by 0.01 per cent points from 1.99 per cent recorded in March 2022. Also, the average annual rate of change of the Food sub-index for the twelve months ending April 2022 over the previous 12 months is 18.88 per cent, 0.34 per cent points from the average annual rate of change recorded in March 2022 (19.21 per cent). From the reports, the highest increases were recorded in prices of gas, liquid fuel, cleaning, repair and hire of clothing, clothing materials, other articles of clothing, and clothing accessories.

 

State Analysis of Inflation In Nigeria 

In April 2022, the food inflation on a yearly basis was highest in Kogi (22.79%), Kwara (21.56%), and Ebonyi (21.45%). However, Sokoto (14.85%), Kaduna (15.55) and Anambra (16.68%) recorded the slowest rise in year-on-year food inflation. On a monthly basis, in March 2022 food inflation was highest in Ekiti (4.03%), Taraba (3.68%), and Osun (3.04%), while Anambra (0.66%), Kogi (1.01%) and Bauchi (1.08%) recorded the slowest rise on month-on-month inflation.

 

The Problem

The hunger and malnutrition problems in Nigeria and globally are more widespread and severe now than ever before. It has been estimated that the percentage of Nigerian households that are food insecure has risen from 18% in 1968 to over 40% in 1998 and over 70% in 2003. The statistics currently shows an increase of over 80% in 2016 and 2018. 

 

Poverty, inadequate investment in the social sector, inadequate dietary intake, and disease have been identified as the major causes of malnutrition in the country. In the recent past, the extent of malnutrition has increased as a result of economic hardships faced in the country, making it one of the important barriers to development. It is not only the result of insufficient intake or inappropriate feeding practices but also a consequence of other conditions such as healthcare. 

 

The rise of food banks: will they become the panacea?

The situation of food inflation has steadily paved the way for the emergence of food banks across the globe, which is seen as becoming a panacea to the lingering food shortage and inflation.

Major cities in Nigeria including Lagos, Kano, Porthacourt, Abuja and Enugu have created food banks.

Lagos Food Bank, for instance, is a non-profit initiative committed to fighting malnutrition and hunger through targeted programs that seeks to improve the nutrition/food intake of pregnant women and their infants, students in public primary and secondary schools and the youths in the underserved communities. The food bank’s work also focuses on reducing food waste and organizing entrepreneurship training and job placement programs that help beneficiaries become more self-reliant. The food banking network across Lagos State caters to vulnerable communities’ immediate and long-term needs.

 

The global picture of Inflation

The war in Ukraine brought a major shock to global food markets. The World Bank’s Food Commodity Price Index reached a record high in nominal terms during March-April 2022, is up 15% over the previous two months and more than 80% higher than two years ago.  Wheat and several edible oils led the surge (Ukraine and Russia are important exporters of these commodities). 

Food prices are expected to rise about 20% this year before easing in 2023. Risks to outlook include further supply disruptions, higher input costs, and policy restrictions.

A shortfall in the global wheat and maize market is projected to reflect lower projected crop yields in Argentina, Australia, and Ukraine.  Maize supplies are also expected to tighten due to reduced supplies from Ukraine and the United States.

 

Agriculture input prices

Further war-related disruptions and policy restrictions present additional risks to the outlook. Russia and Ukraine together account for 25.8% and 11.4% of global wheat and edible oil exports, respectively. 

Any further supply and trade disruptions in these countries could push prices even higher.  In addition to war-related disruptions, food export restrictions could also affect the outlook. 

 

Conclusion

In Conclusion, these realities occasioned by high food costs continue to bite so severe with additional pressures on family budgets and if not properly checked, would lead to more severe economic problems as such African nations need a serious policy direction targeted at increased food production.

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