Just thinking about the potential impact of rising world food prices on Nigeria and I decided to do a quick and dirty analysis.
According to Food and Agriculture Organisation (FAO), the world food prices index increased by about 3.4% from December 2010 to January 2011; however, the estimated annual year on year increase to January 2011 is about 24%.
The implication for Nigeria is worrisome. Based on FAO dataset, the value of Nigeria agricultural export is $486 million while import is about $2.3 billion resulting in a net import of about $1.8 billion. The impact of increase in world food price index will be $430 million dollars extra amount to be spent on food import in Nigeria. This is about N65 billion!
If our Government decides to subsidise this increase, it will need to divert the total budget allocation of Agriculture and more to close the gap. However, if the government allows free market to rule, the impact on Nigeria 140 million people will be increase in the prices of food, which in addition to fueling inflation, will deprive the masses access to fulfilling their basic need for survival. With about 9% of Nigerian population - an estimated 13 million people - currently undernourished, the changes in world food prices may worsen the situation if the potential impact is not adequately managed.
How do we manage the potential impact? It should start with a strategy to reduce our food import dependency, maximize our arable land (we are currently utilizing less than 10%, based on permanent crops), expand our agricultural sector which currently contributes a large chunk to our GDP and ensure that our food security programme is robust, implementable and is being implemented.
