The call by the government of President Buhari to halt the release of Forex for the importation of food items to Nigeria sounds like a very radical approach to agricultural development. It is an hydra-headed issue with implications for various social, cultural and economic variables at micro and macro levels.
The structural ban will appeal to the common man enthused about growth in agricultural production; based on the speculation that such will create market for the locally produced food items and enhance the livelihood of the farmers. This will be true for commodities that are produced in large quantities and are subject to market glut at certain times of the year, for example, cassava. It will also open the local market for commodities like wheat that consumes huge forex simply because the production in the country is not competitive in terms of price and quality. Largely, the initial response of the food market may be that of increase in price following structural shortage; such shortage will be short lived as it will trigger response from new entrants into farming and could be cover over two to three cropping seasons. The conventional response in large economies like Nigeria is a dietary shift to alternative sources of food that are available in relative abundance. I envisage a bigger market for commodities like sorghum and millet, sweet potato, Hungary rice and cocoyam etc. The livestock industry will certainly experience a huge shock as key commodities that service livestock feed industry (Maize and soybean) will experience shortage in the short run pushing up the price of poultry products. The natural response will be an increase in production of these commodities locally to meet the shortage.
The horizon for this policy ordinarily looks good, save the response of the civil society, which is often an evasive and highly unpredictable variable. The likely response is a social crisis and cries from hunger pangs following the short run consequences. At this point the resolve of the policy makers to make a change by insistence will determine the ultimate success of this drastic policy. It thus behooves the policy system to have made good preparation before enacting this drastic policy. One action issue is to ensure that the strategic grain reserve is functioning at optimum level; the granaries should be revamped to act as government own release point to lower the imminent hike in grain price by the forces of demand and supply. The reserve system should also be well funded to buy over grains at a competitive price from farmers at harvest, good thoughts should be given to the issues of livelihood compliant price for commodities to prevent unbearable pricing. A second action that should precede the enactment of this policy is a seamless input market for commercial farming. Efforts in this direction should include affordable fertilizers, agrochemicals and small machineries. The efforts of the state government should go towards the establishment of farm estates; such estates should be driven by the private sector and only moderated by the public sector actor. Allocation of lands should not be politicized whatsoever. A smart and holistic approach that embraces the value chain should be used. Largely, incentives should be made available for establishment of agro-based industries by the citizens; a cautious approach that ensures real values are generated and retained within the country is imperative.
On the global scene, the government monetary systems need to reflect on the trade balance issues with countries that Nigeria trade with on importation of food items. What will be trade off effects of abrupt stoppage of wheat importation from the West on their propensity to buy Nigeria petroleum? Adequate preparations need to be made for this shock.
Certainly, every external change will trigger the development of a new equilibrium. Best wishes to Nigeria in its endeavor to take the bull by the horn in the crave for food sovereignty.
An opinion piece by Wole Fatunbi (PhD)
Forum for Agricultural Research in Africa