Tackling Food Inflation in Nigeria: Why Farmers Should Focus on Farming, Not Hoarding

Food inflation in Nigeria has reached alarming levels, exacerbating the already severe economic pressures faced by millions of Nigerians. According to the National Bureau of Statistics (NBS), the country’s food inflation rate surged to 24.13% in June 2024, driven by the escalating cost of essential commodities like maize, rice, wheat, and soybeans. While various factors contribute to this crisis, one significant but often overlooked cause is the hoarding of agricultural produce by farmers seeking to benefit from artificially inflated prices. This practice, though profitable in the short term for a few, is detrimental to the economy, exacerbating food scarcity and driving prices beyond the reach of the average Nigerian.

To address this, it is imperative that Nigeria enacts legislation compelling farmers to focus solely on farming and ensuring that their produce is swiftly moved into the market. Rather than hoarding, farmers should be required to deposit their harvests, especially staple commodities, into accredited commodity warehouses. These warehouses, in turn, should be linked to an electronic trading platform where commodities traders can purchase the produce remotely. The traders would then have up to three months to allocate the produce to food processors, ensuring timely processing and preventing unnecessary delays in getting food to the market. This approach has multiple benefits, both for the economy at large and for the farmers themselves.

The Case Against Hoarding: A National Imperative

Hoarding, the practice of withholding goods from the market to artificially inflate prices, is a major contributor to the rising food inflation in Nigeria. When farmers hoard their produce, they create an artificial scarcity that drives up prices, making food more expensive for consumers. This practice is not only economically damaging but also morally questionable in a country where over 70 million people live below the poverty line, according to the World Bank.

Moreover, hoarding exacerbates the volatility of food prices. When hoarded produce is eventually released into the market, it often leads to a sudden drop in prices, creating a boom-and-bust cycle that destabilizes the agricultural sector. This volatility discourages investment in agriculture, as both farmers and investors are uncertain about future prices and returns.

Encouraging Farmers to Focus on Farming

Farmers should not be involved in market speculation; their primary role should be to cultivate and harvest crops. By focusing on farming, they can improve productivity and contribute to food security. However, for this to happen, farmers need a reliable and efficient way to monetize their produce without resorting to hoarding.

Accredited commodity warehouses provide a solution. By depositing their produce in these warehouses, farmers can have their produce certified and sold, without waiting for physical buyers. This system ensures that farmers are paid promptly after harvest, reducing the temptation to hoard.

Technological Integration: The Role of Electronic Trading

The integration of technology into agricultural trading is a game-changer. By using an electronic trading platform, farmers can connect with commodities traders from across the country without needing to transport their produce to distant markets. This system not only reduces transaction costs but also opens up a larger market for farmers, ensuring they get fair prices for their produce.

The commodities traders who purchase the produce should be legally required to allocate the produce to food processors within three months (does not imply delivery to food processors within three months). This ensures that the produce is processed and made available in the market promptly, preventing artificial shortages. It also creates a predictable and stable supply chain, which benefits both consumers and the agricultural sector.

Legislative Action: A Necessity for Economic Stability

To ensure the success of this system, the Nigerian government must pass legislation that mandates the use of accredited commodity warehouses and electronic trading platforms for staple commodities. This legislation should include penalties for hoarding and provisions that incentivize prompt processing and distribution of food products.

Such legislation would have far-reaching benefits. It would stabilize food prices, reduce inflation, and ensure a steady supply of essential commodities in the market. For farmers, it would provide a reliable and efficient way to monetize their produce, reducing the risks associated with price volatility and eliminating the need for hoarding. For consumers, it would mean more affordable food prices and improved food security.

Conclusion: A Call to Action

Nigeria is at a critical juncture. The country’s agricultural sector has the potential to feed not just its own population but also to become a major player in global food markets. However, this potential will not be realized if the current cycle of hoarding and price manipulation continues. By enacting legislation that encourages farmers to focus on farming and ensures the swift movement of produce to market, Nigeria can tackle food inflation, stabilize its economy, and improve the livelihoods of millions of its citizens.

It is time for policymakers to take decisive action. Farmers should farm, traders should trade, and food should reach the tables of Nigerians without delay. The future of Nigeria’s food security depends on it.