NIGERIA Food Security Update February 2009

Transcription

1 NIGERIA Food Security Update February 2009 Overall food security conditions are good across the country due to the combined impact of high market and household stocks and relatively moderate prices of some basic food staples. In localized areas, however, the combined impact of low household stocks and high food and input prices are eroding household food security before the lean period. Figure 1. Estimated current food security conditions, January to March Market conditions are marked by high tuber and cereal prices in urban and rural areas. Prices are generally higher than their five-year average at this same period. However, levels of market stocks are also high across all markets. Because low-cost foods are still available on the market, higher prices are not expected to pose a significant threat to household food security. In some localized areas, where substitution options are limited due to production deficits and the parallel increase in the price of all food staples, moderate food insecurity might emerge. Resource-poor households are the most affected by the combined impact of rising prices and low stocks. The price differential between commodities facilitates For more information on FEWS NET s Food Insecurity Severity Scale, please see: Source: FEWS NET substitution as a coping strategy. Although the rise is affecting poor household ability to access food, it will not result in extreme food insecurity as current substitution options, dynamic production possibilities, and Nigeria s resilient markets are expected to mitigate issues of concern. Seasonal calendar and critical events timeline Source: FEWS NET FEWS NET Nigeria Abuja ytahirou@fews.net FEWS NET Washington 1717 H St NW Washington DC info@fews.net FEWS NET is a USAID funded activity. The authors views expressed in this publication do not necessarily reflect the view of the United States Agency for International Development or the United States Government.

2 NIGERIA Food Security Update February 2009 Food security overview Four months after the harvest, food security conditions are generally good in most areas of the country due to high market and household food stocks and relatively reasonable prices of some basic household food staples, such as millet and cassava. However, conditions have started to deteriorate in localized urban and rural areas due to the combined impact of increasing international food prices and the global economic downturn. Economic conditions have started to impact negatively the Nigerian economy through falling oil prices (the primary source of government revenue), devaluation of the Naira, and high food prices. Wholesale and retail prices for maize and sorghum on many markets increased sharply from December 2008 to January 2009 and remain significantly above the five-year average (2003/08) for the same period. Though nominal retail prices for millet and cassava, the two major food staples for the poor, remain slightly above the five-year average (2003/08) for the month of February, they tend to be below their levels during the same period in The availability of substitution options implies that high price levels for maize and sorghum is not expected to pose a significant threat to household food security. Middle and rich rural households replenished their food reserves either through own-production or purchase in November and December when prices were low. With the exception of some localized areas affected by production shortages, the rural rich and middle-income households are relying on their own production for consumption. They are less vulnerable to the current price levels. Food is widely available in most urban markets and the price differential between commodities facilitates substitution as a coping strategy. The general upward trend in prices is still negatively affecting resource-poor rural households, however. Reports from FEWS NET enumerators in the field indicate that poor households in Oyo state, Aba, and Lagos states in the South and Kaduna and Nassarawa states in the North are consuming less of those foods for which prices are currently high, such as maize and cowpea, and restricting their diet to the less expensive foods such as millet, cassava, fruits, and legumes. The depreciation of the naira and high international food prices has made access to imported rice, a staple food in urban areas, increasingly difficult. Urban poor and middle-income households are currently substituting rice for other, more expensive foods, such as cassava and yam. If the high prices spread to other basic foods in the urban diet, such as meat and bread, the share of the household budget spent on food will increase at the expense of disposable income. Middle-income and poor urban households could begin use resources initially allocated for other needs, such as education, to food. Poor rural households are coping with maize and sorghum prices not only by substituting cheaper foods into their diets, but also by selling food stores faster than normal in order to meet basic needs. Though household and market stock levels are seasonably high in most areas, reports from the FEWS NET field enumerators indicate dwindling market and household stocks in some localized areas of the country such as Ibadan and Aba in the South and Lafia in the North. According to FEWS NET field reports, the rate of household stock depletion is slightly higher this year than in a normal year in the areas most affected by production deficits due to excessive flooding during the 2008 growing season and the simultaneous increases in the prices of food and inputs such as Oyo state and Osun in the South and Nassarawa and Kaduna in the North. These households will likely resort to local markets for food as soon as April, three months earlier than normal. An earlier dependence on markets will make them more vulnerable to price hikes and the reduced availability of cereals and could trigger the erosion of assets. Localized low market stocks are the result of low carry-over stocks from the previous marketing year and high food demand in November and December from industries. If stocks continue to dwindle at this rate in these areas, localized moderate food insecurity might emerge as soon as May, a month or two earlier than in a normal year. The combined impact of high food prices, localized low household and market stocks, and high prices for inputs in the upcoming agricultural season are likely to result in localized moderate food insecurity over the next few months. The emergence of extreme food insecurity on regional or national level is likely to be mitigated by several factors, such as: Substantial human, technical and financial resources Dynamic market/trade system Famine Early Warning Systems Network 2

3 NIGERIA Food Security Update February 2009 Good environmental and soil conditions Average long-term rainfall forecast High potential for production of a wide variety of crops, including cash crops, tubers, legumes Food supply relatively high even when prices are high The vast majority of households have a wide range of coping mechanisms available, even among the poor. Seasonal progress Four months after the main harvest, farmers are clearing their land in anticipation of planting which will take place between March and April in the South and May and June in the North. The combined cost of the equipment and wages for additional labor make land preparation the most cost-intensive activity of the growing season. These costs constitute a major constraint to production for both small-scale and commercial farmers. Resource-poor households resort to manual land preparation, a task which involves slashing, hoe-ploughing, and bush burning. Middle-income and wealthy farmers can afford to rent or own oxen and tractors. The financial burden of the high cost of land preparation on households is exacerbated this year by fallout from the economic slowdown throughout the country, which has affected the price of inputs. The cost of fertilizer rose in February 2009 when compared to last year at the same period. A 50 kg bag of fertilizer is now sold at 5,000 NGN in Kebbi state, northern Nigeria, up from 3,500 NGN at this time last year. Similarly, in Lagos state, southern Nigeria, fertilizer cost 4,700 NGN in February 2009, as opposed to 3,000 NGN at the same time last year. The sharp rise in fertilizer prices is mainly due to high international fertilizer prices and the recent devaluation of the Naira. Labor is particularly scarce in the southern part of the country due to increasing competition with the commercial and industrial sectors. The daily wage in the agricultural sector varies from 2,500 NGN in Abia State to 4,000 NGN in Imoh state in the South while wages in the oil industry, for example, are as high as 6,000 NGN. Although low relative to industrial wages, daily wages in agriculture are high for poor households whose resources are limited. Agricultural wages are a significant source of cash for lower wealth groups. In order to take advantage of the seasonal nature of land preparation, laborers work in southern farms in February and move to the North, when land preparation is at its peak in March and April. The combination of competition for scarce labor and the high cost of inputs will constrain the purchasing power and production capacity of farmers of all income groups over the next three to six months. Possible knock-on effects of these shocks include the reduced demand for agricultural labor and the possibility of reduced yields if insufficient fertilizer is applied, particularly among poorer households. As a result, poor households dependent on income from agricultural labor for food access and middle-income households dependent on own-consumption and production surplus for sale may become vulnerable to food insecurity from May to October. Markets and Trade Nominal prices of maize, cowpea, and, to a lesser extent, those of sorghum, millet, and cassava, are above the five-year average for the same period (cf. price annex). Maize prices are 30 percent above the five-year average for the same period in Dawanu market, Kano State, and 35 percent above the same average in Bodija market in Ibadan in the southwest. Demand for maize has been increasing steadily over the last years due to increasing demand from poultry farmers and fish farms. Maize is extensively used by poultry farmers as a raw material for making poultry feeds. Poultry farmers then transfer the high maize price to the price of poultry products. Last year the cost of chicken reached 700 NGN in Nassarawa following a surge in maize prices. Cowpea market stocks dwindled in the North following the Niger government s initiative to promote cash-cropping in cowpeas by buying directly from Niger s producers at high prices. The high prices offered by the government of Niger Famine Early Warning Systems Network 3

4 NIGERIA Food Security Update February 2009 discourage producers from selling to traders who would ordinarily export to Nigeria. The low cowpea export to Nigeria has contributed to low cowpea stocks and high cowpea prices in some markets bordering Niger such as Dadume and Gujungu in Jigawa. Domestic trade of cowpea from north to south is currently slow due to low stocks in the north. Prices of other major cereal crops such as millet and sorghum are also above their five-year averages for the same period, though the difference is more moderate than that of maize and cowpea. For millet prices, may be attributed to a strong 2008 harvest coupled with low industrial demand. Sorghum is the last major cereal crop to be harvested. Sorghum prices fell in virtually all market with the arrival of the new harvest in November and December. However, prices spiked unseasonably in many retail and some assembly markets in January due to high industrial demand especially from breweries which use sorghum as a raw material. Yam and cassava prices remain relatively reasonable for this period of the year. In Mile 12 market, yam prices have dropped by 23 percent in the past month due to significant supplies from southern states. However, in Southern markets where excessive flooding had resulted in production shortfalls such as Oyo and Abia state, yam prices are higher than their fiveyear average (2003/08). Trade of cassava from south to north is currently limited by high prices in the South as its hunger season approaches. Yam and cassava supplies are likely to dwindle as the lean period draws near in the South, further driving prices in deficit areas upward. Prices are likely to continue rising slowly until June when new stocks will arrive in the markets following the first round of harvest. Yam is a staple food for middle-income and wealthy households. As the price for yams increases these households will likely switch to lower-cost foods in order not to compromise their food security. Beginning in January, the level and direction of international trade in foodstuffs along Nigeria s three trade corridors (to the north with Niger and the Chad Republic, to the southwest with Benin, and to the southeast with Cameroun) depend on the price differential between countries, the currency exchange rates, and production levels. Nigerian traders are not currently importing from neighboring countries due to the depreciation of the Naira. As of February 2009, foreign traders have been buying less than normal due to the high food prices in Nigeria and good harvests in neighboring countries. Over the next 3 months, prices are expected to continue to rise slowly as more and more households consume their stocks and become dependent on markets. However prices are not likely to reach the historically-high levels observed last year and in 2005 due to the calming of industry demand and current high market supplies. High production areas with easy access to transportation and water are likely to experience slower price increases. The harvest of irrigated and off-season crops is likely to have an insignificant and/or localized impact on prices. The low value of the Naira will continue to restrict food imports. Finally, foreign traders are likely to import more food from Nigeria as terms of trade in their favor make it easier to fill deficits in their countries. Famine Early Warning Systems Network 4

5 ANNEX: Nigeria Monthly Price Bulletin February 2009 Monthly prices are supplied by FEWS NET enumerators, local government agencies, market information systems, UN agencies, NGOs, and other network and private sector partners. Sorghum, maize, millet, cowpea, gari (fermented cassava starch), and rice are all found in Nigerian markets. Sorghum, millet and maize are widely consumed by most households, but especially in the north, and are used by various industries. Maize is mainly used by the poultry industry as a raw material for feed while sorghum is used by breweries for producing beverages. Sorghum and millet are important for households in the north, particularly the border markets where millet is also heavily traded with Niger. Gari is widely consumed by households in the south and some in the north. Rice is produced and consumed throughout the country. The north is a major production and consumption area for cowpea which flows to the south for use by households and food processing industries. Ilela, Maidua, and Damasak are all critical cross border markets with Niger. Saminaka, Guiwa, Dandume, and Kaura are important grain markets in the north, which are interconnected with the Dawanu market, the largest wholesale market in West Africa, and some southern markets such as Bodija in Ibadan. Millet, sorghum, maize, and cowpea are among the most important cereals traded at Dawanu, while cassava and some cereals are traded with Bodija. Famine Early Warning Systems Network i

6 ANNEX: Nigeria Monthly Price Bulletin February 2009 Famine Early Warning Systems Network ii

7 ANNEX: Nigeria Monthly Price Bulletin February 2009 Famine Early Warning Systems Network iii

8 ANNEX: Nigeria Monthly Price Bulletin February 2009 The Dawanu Market in Kano (wholesale prices) Famine Early Warning Systems Network iv