Nigeria: Learning from South Africa’s food security task force

FOLLOWING the adoption of a motion on October 17, 2016 under matters of urgent public importance moved by Honourable Orker Jev on the need to address food insecurity in the country, it was observed that “Nigeria does not have a sustained policy on food security and thus exposing our country to needless food importation.”

Also speaking on the same matter, the leader of the House, Honourable Femi Gbajabiamila, warned that if the government did not do something urgently, “we may be battling with the issue of cannibalism, where people will begin to eat themselves. We have a blueprint that we need to follow. This constitutional review period present an opportunity for us to move agriculture from the concurrent list to residual list,” he said.

Sceptic might dismiss Gbajabiamila’s warning as political rhetoric, but the reality is that the law of sowing and reaping does not change-“you reap what you so.” But where a country did not sow anything, what will that country reap?

The National Bureau of Statistics (NBS) said Nigeria’s Consumer Price Index (CPI), which measures inflation dropped to 17.78 percent (year-on-year) in February 2017. A report released by the bureau stated that the figure represents 0.94 percent points lower from the 18.72 percent recorded in January. Analysts at Financial Derivatives Company Limited are also predicting further reduction to 16.4 per cent for March inflation.

The February drop in inflation coincided with the period when the Federal Government set up a task force on food security. The objective was to look at the causes of increase in the prices of food items across the country and address them.

As the price of imports increase, prices of domestic goods using imports as raw materials also increase, causing an increase in the general prices of all goods and services known as imported inflation. It follows that foreign price increases or depreciation of a country’s exchange rate may be the major causes of imported inflation. Available records from the NBS show that imported food item grew 1.3per cent Month on Month (M-o-M) and 18.8per cent year on year (Y-o-Y) as Nigeria remains reliant on imported products for consumption.

Questioning relevance of food prices task force

Members of the Task Force, include the Minister of Agriculture and Rural Development, Audu Ogbeh; Minister of Finance, Kemi Adeosun; Minister of Industry, Trade and Development, Dr Okey Enelamah; Minister of Transportation, Rotimi Amaechi; Minister of Water Resources, Suleiman Adamu; and Minister of Labour and Employment, Dr. Chris Ngige.

A week later, the task force submitted an interim report to the Federal Executive Council (FEC). It identified that the hike in cost was “not due to shortage but high cost of transportation.”

This first observation made by the task force, that prices of food stuff are rising because the cost of transportation is rising requires another look. They recommended fixing the rail system so that trains can transport goods from the hinterland to the market.

According to the Minister of Agriculture and Rural Development, Audu Ogbeh, “our food production is very robust and we are doing pretty well,” saying food items were generally moved across Nigeria with heavy trucks and the price of diesel which had gone up had, therefore, led to an increase in prices. The minister said the government had, therefore, decided to “start using railway wagons to transport food items.”

Now in the second month, Nigerians are yet to experience any sign of reduction in the cost of food items. Some even wonder if the prices will ever come down given the theory which explains that when prices go up, they hardly come down (prices are sticky up).

Other recommendations of the committee are to: work with state governments to reduce delays experienced by trucks along the roads through all sorts of taxes by local governments and trucks distributing food items will be given special label, encourage over 75,000 tomato farmers to plant tomato round the year; use both tariff and non-tariff measures to address the issue of dumping,

The two sides of the coin here is either to question relevance of the committee, or effectiveness of its recommendations. Meanwhile, despite criticisms, a number of Nigerians however, think that the task force is doing great job. According to this group, it is not necessary for railway tracks to pass through each local government in Nigeria. From the functional railway tracks they believed, goods can be moved to nearest railway stations.

The Federal government in partnership with private sector, they reminded Nigerians, had started moving cattle from the North to Lagos. The narrow gauge that is functioning can still be used to move goods.  “If your company wants to address a problem in your organization they will set up a committee to look into it and recommend solutions. If the Acting President had made a pronouncement on this issue without recourse to formal process in organization structure, people would point it out. Administratively, that is the way to go. It is standard practice in government all over the world, “one of the analysts who preferred anonymity said.

In response to the above idea, Wale Oyekoya who was the former Chairman, Agricultural Sector, Lagos Chamber of Commerce and Industry (LCCI), said that given the present situation of over reliance on importation, transportation is the least problem faced by farmers in Nigeria today.

An analyst, Sunday Ugwu did not think the committee has done thorough job. According to him, Nigeria has a rail network that is non-functional at best. The question is: is it better to start planting now, or to start fixing the rail system?

Another question is: will the minister of agriculture and the ‘food prices team,’ move yams from Shendam, and rice from Kebbi, tomato from Jos, and palm oil from Owerri on a non-existing railway? The rail tracks, where they exist, mainly pass through the state capitals and a few LGAs, and the farms are sometimes more than 200km from these rail lines. “Does he want to move the foodstuff from the farm to the train station by Bluetooth?” Ugwu asks.

 Why food prices are rising

To Ugwu, food prices are rising because the economy is being mismanaged. Food prices are rising because of the hypocrisy surrounding the manner those in authority proffer solutions to problems in Nigeria. The government is not addressing the real issues: inflation is unacceptably high; farmers are unable to farm or harvest their produce because they are either being chased by herdsmen or waiting for free food in Internally Displaced Persons (IDP) camps; prices of farm inputs and diesel has doubled; the ease of doing business index is about the worst in the world; 50 per cent of harvests go to waste, agricultural research institutions are disconnected from farm and farmers, loans meant for rural farmers are given to political agriculturists,  every state governor focuses on oil money to the neglect of agriculture. And yet, the federal government wants food prices to go down.

South African example

Like Nigeria, South Africa suffered the same fate Nigeria is suffering now. The sharp depreciation of the Rand against all major currencies in the world at the end of 2001 as well as the rising commodity and food prices triggered a process, which sent inflation spiralling out of the targets of 6per cent set by the South African monetary and fiscal authorities.

As the prices of basic foodstuffs increased, many households found themselves in a situation where they could not afford the basket of basic foods required for a balanced diet. With large unemployment numbers and with 52 per cent of the population living below the poverty line, the negative impact of the high food prices on food security took on dramatic proportions.

A team of experts was appointed to investigate the cause of the price increases in the agricultural and food sector. This process resulted in a report, which provided an explanation for the increase in commodity prices and also suggested policy proposals. Unlike that of Nigeria where political appointees (were selected into the committee, South Africa assembled a team of agriculture and economic experts to first of all, investigate or gather data.

The authors concluded that the increase in the farm gate price of basic food commodities came about as the result of a unique combination several factors and profered solutions to these challenges.

Based on the committee’s recommendation, the government adopted a two-pronged approach that deals with targeted social development interventions and market based initiatives. In order to improve the purchasing power of poor households, cabinet decided to increase old age pensions by R20 from R620 to R640 and the Child Support Grant by R10 from R130 to R140. This complemented the intensified campaign to register all citizens who are eligible for social security grants. This initiative was lauded as an urgent step to cushion the effect of high cost of food and prevent people from dying of hunger, among others.

In terms of medium to long-term measures, the government also decided to evaluate the merit of re-establishing Strategic Grain Reserves, which would act as buffer stocks in times of food crises. It also envisaged that South Africa would cooperate with other SADC countries, on strategies to reduce food shortages in the region. The government committed itself to work towards encouraging the introduction of incentives for expanded food production in the region, as well as the lowering of food tariffs within SADC as part of its Free Trade Agreement.

On the other hand, tariff regulations that are already in existence, which come into effect within particular domestic price ranges, was applied more effectively and expeditiously. As in the past, this was done in a manner that protects South African farmers from unfair competition.

 

Food Price Monitoring Committee

After all these short term and long-term measures were taken, that the cabinet meeting in October 2002 approved the establishment of a food price monitoring mechanism (Food Pricing Monitoring Committee), equivalent of Nigeria’s task force on food security, in accordance with the Agricultural Marketing Act.

It was envisaged that such a committee would have the infrastructure and the authority to monitor the whole food production and supply chain, and ensure public awareness of, and appropriate publicity and debate around retail prices and their relation to actual costs and, thus, the mark-ups along the chain. Consequently, on November 28, 2002 the Minister for Agriculture and Land Affairs announced that cabinet had approved the establishment of a Food Pricing Monitoring Committee as one of the strategies addressing the problem of high food prices.

Most of the role players in the food industry gave their full co-operation and supplied what is normally regarded as confidential and proprietary information. The success of the committee’s activities also relied on the inputs from the public.

How to bring down food prices

According to experts, there are no shortcuts to reversing the high prices of foodstuff. It only lies in visionary management of the economy. Roads must be built, both rural and urban; small businesses must find the environment easy to carry on; post-harvest losses must be addressed; more hands must be encouraged to embrace agriculture; national food security policy must be enunciated and implemented in such a way that it outlives the present government. The federal government should set up demonstration farms in every state, bring in Chinese or Israeli farmers if it cannot make use of a lot of Nigerian commercial farmers to drive those farms.

The most reasonable and urgent thing for Nigeria to do now is to start planting and building world class storage facilities so that in a few months’ time, harvest will commence and there would be sufficient food for sale and storage. The storage facility will be built to accommodate both farm produce from government farms, and supply from smallholder farmers who will now sell to government or to flourishing companies that convert these agricultural products to various finished food items.

Countries that thrive on agriculture have vibrant agroprocessing companies that are ready market to farmers. As the smallholder farmers are assured of ready market for their farm product,  the farmers will put more effort. The CBN invented the Anchor Borrowers’ Programme, and for a start, deployed a- N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) to mobilise only eager farmers.