The Silent Causes of Food Inflation in Nigeria

Has it occurred to anyone that the prices of food items are going up in the market even though there is no scarcity? A lot of reasons have been given and theories formulated concerning the inflation that hit Nigeria. The restrictions on importation of some goods, increase in PMS pump price, devaluation of Naira, dollar “scarcity”, and dependence of many Nigerians on imported products have been blamed for the present Nigerian condition. Concerning the continuous increase in the price of food items, there were speculations that insurgency, ban on importation of some stable food items, poor weather condition (of last year), and the pandemic were the reasons we were given for paying a lot of money for foods cultivated and produced in the country. Well, even though these factors are guilty of causing inflation in Nigeria, are they the only causes?

When my Economics teacher was explaining inflation to us back then in secondary school, she said that inflation is when too much money chases too few goods. In other words, there is a lot of money in circulation but, because there are insufficient goods, prices go up. Hence, inflation happens only when goods are not there to satisfy human needs. This was the ideology I have about inflation. Each time I think of it, I think of scarcity; I visualise inflation as a phenomenon that occurs when people could not find what they needed even though they can afford it. In other words, inflation should not happen when there is abundance.

Well, I hope my Economics teacher has changed her description of inflation to accommodate the type we are experiencing in Nigeria today. We actually have a unique type of inflation, where there are plenty of goods and too little money but the price of things is moving up with alacrity.

People may describe what we are having in Nigeria today as “Cost-Push Inflation”, where, as we were told, the rise in the price of essential commodities pushes up the prices of other commodities, both the essential and the non-essential ones. If we adopt this definition, it then means that what is happening in our country today is a chain reaction of some price hikes or scarcities. But then, what is that thing that we are reacting to? Initially, the PMS pump price was blamed. But when that couldn’t hold water, the blame shifted to the dollar-naira exchange rates. From there, people began to blame food import restrictions and so many others. But these fact remains that all these factors have not really explained why the prices of locally cultivated food items continue to rise in the market despite their abundant availability.

One key area people have not really considered as a possible cause of the hike in the prices of food items is the transaction that happens from the time the farmer sold his produce to the time it reached the final consumer. That little space between the farmer and the consumer is the major point of the hike in price. The actors that filled that gap are the ones that can explain why there is food inflation in Nigeria. The actors in this space are no other than the middlemen, transport companies, and executives of various market unions.

The influence of these people on food prices explains the sudden unexplainable increase in the prices of food items. Middlemen have access to local farmers, whom they buy from at very cheap rates. When they want to move their wares to the market, they pay the haulage company handsomely for their services. When they reach the market men and women, the middlemen assume the power of the gods and fix prices as they wish. This would not have been possible if there were many other middlemen that sell particular farm produce to traders in a market. But because these middlemen belong to a cartel, they reduce competition and control prices.

The executives of the different unions in the market contribute their own quota towards causing inflation by deciding the prices goods will be sold. These executives do nothing to battle the middlemen’s control over prices and availability of commodities but rather decide to increase the prices of goods sold by their members. This is why the price of a particular commodity is the same all over the market. The implication of this is that the prices of goods continue to go up with no one to checkmate those causing the hike.

So, what should we do to discourage this artificial food inflation? The answer resides with the experts. But one day, the middlemen will be bypassed, transportations will become cheaper, and all will be well.