Consumer organisations have developed a new tool called ‘Fair Food Price Monitor’ to keep track of changes in food prices on every scale. The tool highlighted the risk of unfair food costs in Nigeria, which stem from a lack of competition in both domestic and international food supply chains. It issues a warning about the possibility that growing cost for Nigerian consumers are being driven by dominating market players who are taking advantage of the current situation to raise prices unnecessarily, in addition to the rising fuel costs and devaluation of the currency.
Utilizing data from sources like the National Bureau of Statistics and FEWS NET, the tool was created by Consumers International in collaboration with Nigerian consumer organisations (Consumer Advocacy and Empowerment Foundation and Consumer Awareness Organization). It tracks the relationship between food value at various stages of the Nigerian supply chain and identifies areas where the government may need to look into and take action. The first analysis using the tool discovered some important findings, including the fact that retail/consumer amount for a number of important food items have increased significantly faster than wholesale/market rates.
Increases for consumers are unavoidable.
For instance, the retail amount of yams increased by 74% between January 2022 and August 2023, but the wholesale increased by only 60.3%. While the wholesale amount of groundnuts increased by only 35.3% during the same period, the retail for groundnut oil increased by 56.3%. Throughout 2022, maize retail sums rose by 19.2%, but wholesale prices actually decreased by 4.1%. This demonstrates how consumers are unfairly and disproportionately burdened while costs are rising for all market participants.
The Fair Food Price Monitor examines a number of possible reasons for this discrepancy between retail and wholesale totals, including growing fuel expenses and a declining value of the currency. Although these factors might have played a role, they do not appear to completely account for the excessive increase in retail. Price increases for consumers are unavoidable consequences of rising production and import costs for food. Given that food producers, traders, retailers, and consumers share the burden, profit margins will likewise slightly decline in a competitive national market.
Global food commodity prices have been steadily declining.
In times of crisis, if the difference in costs of retail and wholesale stays the same or rises, it indicates that more competition would lead to more affordable prices for customers. Although global food commodity sums have been steadily declining since March 2022, consumers around the world are still experiencing increases, as per the UN Food and Agriculture Organization’s Global Food Price Index. A report by the National Bureau of Statistics found that in August 2023, monthly inflation of food amounts reached a 17-year high of 29.3%.
Food prices are increasing unjustly and excessively, according to numerous international experts. Reasons for this are varied and include disruptions to international trade brought on by the COVID-19 pandemic, conflict, and climate change. The UN Conference on Trade and Development (UNCTAD) observed in its 2023 Trade and Development Report that there is a clear difference between corporate profiteering and the mounting threats to the food security of millions of people in the backdrop of cascading crises.
Government’s commitment to curb costs needs support.
Furthermore, the organization recommended numerous measures the government can implement to tackle this threat of unfair food prices. In particular, it pointed out that the government’s commitment to taking action in order to curb unfair prices requires stronger support to enable enforcement – from financial resources to political mandate, to high-quality data. This could enable more decisive action to fortify competition in the marketplace, such as by authorizing anti-competitive practices, tackling monopolies, and supporting small and medium-sized businesses.
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