Apr 6, 2022
Caused and Effect influencing Nigeria Agro Market
Factors influencing Nigeria Agro/Food Market
Agro supply chain has been undergoing serious disruptions ranging from covid restriction, fuel scarcity, and a lot more. Today we highlight four recent events which particularly affect the Agro supply chain and how they affect you and me.
First is the wheat shortage. This is aggravated by the escalation of war between Russia and Ukraine, which produces 25% of the world's wheat combined. Before you think: what about the other 75%? This 75% already has its market in the global supply chain. Unluckily, Nigeria is one of the top exporters of wheat from these two nations in conflict with each other. Note like we always mention here, an event has its cause and effect, especially in the Agro space. This will not just only push bread prices up but also that of corn as the alternatives will be affected as well.
Second is the ban on foreigners and any of their affiliates from direct farm purchases. This may look positive in theory, but with this market comes a lot of incentives for farmers. So, if the government successfully disallowed this, will the farmers’ capacities to produce remain the same? But really the question is: does the government have the capacity to enforce this ban under the guise of preventing unfair arbitrage in the same market?
On the other hand, the advent of rainfall is another cause that is the impetus to crop farmers to start clearing land in preparation for planting given that a lot of farming activities in our part of the world are still rainfall dependent. We should expect this to translate into improved farm yields barring negative shocks such as farmland flooding, erosion, and dam opening. The prospect of food availability tends to reduce food inflation, meaning that we should be able to buy more with the same amount of money.
Lastly, Nigeria is home to many who will want to observe the customary Ramadan fasting. This may put upward pressure on prices of some agro-produce as more households desire to increase their stocks of food. And as we depend heavily on human labour to move things, the supply of food might be slackened, which will further put more pressure on some agro supply during the days of fasting
On the whole, if the events above played out, it still offers little confidence in terms of food availability.
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