Nigeria May Suffer Inflation As Flood Destroys Farm Produce
Nigeria inflation may worsen as floods destroyed farm produce such as rice, groundnut, millet, guinea corn and maize worth up to N49 billion.
All these crops do not require much water and the flood has submerged most of the farms where such crops are planted in the country.
Rice one of the most consumed staple food in the country is mostly affected.
According to Bloomberg, “Above-normal rainfall in the country’s northwest region caused the banks of the Sokoto and Rima rivers to overflow in the Sokoto and Zamfara states, flooding rice plantations and destroying about 626,250 metric tons of the staple and same in Kebbi and Jigawa states, a combined 635,000 hectares of low-land, rain-fed plantations have been affected.”
Rice is a critical component of the Nigerian diet and a major consumer of the country’s foreign exchange.
Nigeria spent about N365 billion annually on importation of rice which is bleeding the country foreign reserves, according to former minister of finance Ngozi Okonjo-Iweala.
In the period 2012 to 2014 paddy rice production in the country grew from 4.5 million MT in 2012 to 7.89 million (metric tons) MT in 2013, and 10.7 million MT in 2014.
The capacity for integrated rice milling for the production of import-grade rice has also risen from 70,000MT in 2011 to over 800,000MT in 2014.
The number of integrated rice mills increased from only one in 2011 to over 24 by 2014.
Given the Central Banks restriction of 41 items from accessing forex from the interbank market which includes rice, it means that millers in the country may not be able satisfy demand and get paddy rice to feed their mills from local suppliers.
This may eventually lead to increase in the price of paddy rice and the millers having no option would pass the price increase on to consumers and thus, fuelling food inflation.