Import Bans & Nigeria’s Rising Food Prices
Callous policy-making or brutal foresight?
Inhabitants of the most populous African nation are becoming quite familiar with unsympathetic government ‘bans’ which impact their daily lives.
Just recently, the Lagos state government issued a ban on commercial motorcycles and tricycles, disrupting the lives of its 20 million city inhabitants almost overnight. These kinds of policies are quite frequent in Nigeria and are usually justified by policy makers in theory. However the perception of the people is often different; they have been traumatized way too many times from bearing the indefinite burden of poor policy decisions.
Agriculture in Nigeria is a sector which was largely neglected until a refocus by recent governments which may be a direct result of world oil price volatility. One of the most popular tools for boosting production in the agricultural sector seems to be placing import bans on certain products, which the policy makers believe will give domestic producers a chance to grow and compete and help to stimulate domestic production.
On the other hand, food prices in Nigeria continue to rise despite an observed global reduction in food prices.
In 2015, the Nigerian government completely banned the importation of rice, one of the nations staple foods, via it’s land borders. As expected, this announcement sparked something of a general upheaval as many rice importers and distributors begun to hoard old supplies (causing almost instant inflation). Much later, after exhausting their stock they were either forced to close down their business or turn to illegal rice smuggling. During this time, prices of locally produced rice nearly doubled; along with associated food products. Meanwhile, consumers were also concerned about the poorly processed ‘local rice’ that they were forced to buy.
The Central Bank of Nigeria supported rice farmers and processors with many incentives such as duty free equipment clearance and input credits through the ‘anchor borrowers scheme’ program. Eventually, rice production was reportedly upped from about 5.5 to 5.8 million tonnes which was/is still not enough to meet local demand of about 7 million tonnes, and although domestic rice prices have decreased by ~50% from the initial inflated price, prices are still yet to return to pre-ban rates. Hence rice smuggling through the borders remains a major challenge to the country.
Similarly, in 2019 when the government cracked down on its’s importation ban on frozen chicken, consumers were apprehensive. This ban had apparently been existing since 2003 but smuggling had still been an everyday occurrence and foreign ‘frozen chicken’ was freely available in the market. This was usually a cheaper and more reliable option for consumers and fast food chains. Chicken is the second major animal protein source following beef in Nigeria and according to the CBN, Nigeria’s poultry industry is the largest sub-sector in the agric industry, estimated at N1.6tr. Despite this, many people still depend on imported chicken due to the inability of local supply to meet the large demand, inconsistent bird sizes and high prices. Production of chicken in the country is expensive and risky because of high cost of feeds and proper veterinary care – making the final product less attractive (small in size) and costlier at the same time. On the other hand, the local chicken has been promoted as healthier and fresher; due to a lack of preservatives — even though studies have shown unregulated antibiotic use in the poultry production.
Following the government ‘ban’, chicken became scarce; many chicken-based fast food chains started running out of inputs and some households even decreased chicken consumption all together. Even though poultry production has now increased due to increasing profitability, the domestic product remains relatively expensive, and smuggling is still an issue.
The CBN governor recently introduced a University based poultry revival program to encourage more production and close the existing demand and supply gap. The gap currently lies at about 1.2 million tons.
The Minister of agriculture recently announced that Nigeria is set to completely ban tomato imports by 2021. Tomato is a staple in majority of Nigerian dishes from stew to jollof rice.
In 2016, when a tomato shortage caused by moths raised the price of tomatoes in the market, Nigerian families were hit with the reality of their dependence on this major crop. Despite being the 14th largest producer of tomatoes in the world, and producing nearly enough tomatoes to meet the local demand, about 45% of the produce is wasted before reaching the market. Hence, the remaining demand is met via imports.
Apart from the waste, there is also a huge gap in the productivity per hectare of Nigerian tomato farms compared to other tomato-producing countries. Presently, Nigeria is the world’s largest importer of tomato paste. Before the announcement of the proposed 2021 import ban, Nigeria had already increased import tariffs on tomato paste to 50% in 2017 to encourage domestic production.
An interesting point is that Dangote factories, the countries largest tomato processor operates well below it’s capacity and is sometimes shut down for months due to lack of fresh tomato supply. One has to wonder if these supply problems can be solved by an import ban rather than solving the problems with wastage and productivity. Regardless, there might be an opportunity here to tackle the issues of post-harvest losses — improving market access, storage and transport by encouraging services and solution providers within this area.
Most recently, the government has also imposed an import restriction on milk. The Central Bank of Nigeria has issued an objective restricting issuance of forex for milk imports (concentrates) to just six milk production companies.
Over 60% of milk consumed in Nigeria is imported, due to the very poor domestic production. Majority of cattle rearing in the country is done by traditionally nomadic Fulani farmers who lack the knowledge and practices to maximize milk production.
The government has made several attempts to improve this by setting up milk collection centers and providing free training programs for these cattle rearers on best practices to maximize yield. Only a tiny fraction of milk-producing cattle in Nigeria are raised in private ranches which produce a relatively higher yield than the Fulani cows but when compared to the global average still low due to limitations of the breed of cows being used.
Restriction in milk importation is being described by the government as a means to improve local production, although the aforementioned production problems are yet to be tangibly addressed. A popular news source cites the CBN governor as saying “The 6 major milk producing companies have been encouraged to source raw material locally, even if it means setting up farmer training schools and centers”. This is quite worrisome for the consumers & businesses who rely on milk and milk products, assuming the milk producers are unable to meet up.
In general, while import restriction is a basic, reliable solution in theory for increasing domestic productivity, the situation in Nigeria has shown the necessity for proper qualitative and quantitative analysis of each major agricultural policy to weigh the long-term effects of these import bans on the average consumer’s access to food. There is also a major gap in many African countries for stakeholder engagement during the policy planning stage — to involve consumers in these decisions in order to find better solutions and achieve synergy between individual policies which all affect the consumer at the end.
