NIGERIA Food Security Update April 2007

Transcription

1 The food security situation is generally good, owing to high physical stocks and low prices of cereals, tubers and cash crops like cowpea. As the lean period draws near, poor households might face moderate food insecurity due to the gradual depletion of their food reserves and the financial burden related to the cost of undertaking seasonal agricultural activities. The rainy season is underway in the southern part of the country. Following the devastating impact in 2006 of the avian flu on the poultry industry and households depending on this livelihood, and the re emergence of the disease in 2007, recovery has proven difficult. Most medium and large scale poultry farmers are shifting to goat and sheep rearing. Rainfall started in southern Nigeria in February, and crop sowing began in the south from the 2 nd dekad of March. In Northern Nigeria, where the season usually begins in May or June, the weather is dry and hot, and no significant rain has been recorded as of the end of April. Prices of most food commodities are low relative to last year at this time, and markets are fully supplied. Although favorable to poor households who are resorting to markets for food at this time of year, the low commodity prices continue to reduce the profit margins of traders and producers, who still have significant reserves for sale and need income to plant for the current season. Current Risks Prices of cereals and cash crops in Northern Nigeria remain low relative to a normal season and to prices in April The low consumer prices are triggered by excess supply and low demand. While improving food access for households now dependent on the market for their food, the low prices continue to have an adverse impact on the sources of income of traders and surplus producers. The impact of the avian flu on the poultry industry and the livelihoods of household engaged in this sector has been minimal this year. However, the devastating effect of the disease last year, coupled with the first case of human death this year, is making recovery of the ailing industry very difficult. There is a need for government, the private poultry industry and financial institutions to come up with a consensual plan to monitor the epidemic and provide incentives to help the industry recover. Prices for fertilizer, one of the most critical inputs for crop production, are currently higher than last year at this time. The inadequate access to fertilizers might limit potential crop production this season. Urgent steps aimed at providing incentives to the fertilizer and seed market and improving the current subsidy program should be taken by government and its partners in order to facilitate timely access to these agricultural inputs for crop farmers. The consensual governmentprivate sector program could incorporate small loans, vouchers to farmers and subsidies. Start of the rainy season in Southern Nigeria Rainfall started in the southern Nigeria in February. The planting season in southern Nigeria began, as in a normal year, from the 2 nd dekad of March to the 2 nd dekad of April, according to the Nigerian Meteorological Agency (NIMET). Sowing commenced from the second dekad to the 3 rd dekad of March. FEWS NET Nigeria 3 rd Floor, Metro Plaza, Central Area District, Abuja fewsnigeria@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 According to NIMET s seasonal forecast, rainfall distribution will be adequate and well distributed in the southern part of the country this season. However, there may be long dry spells of between 7 to 10 days, which might take place and affect agricultural practices during the first 30 days after planting. Additional localized dry spells are expected throughout the season. Figure 1. Retail prices of millet in some urban markets Market situation characterized by high physical stocks and low prices Current food prices reflect the impact of the 2006/07 bumper harvest on food availability and access and the fact that the last harvest followed previous years of good harvests. In addition, low demand from Sahelian countries that have had consecutive years of good harvests has kept Nigerian prices low. While good for net consumers, the excess production and low prices greatly reduces the profit margin of cereal traders. With the lean season approaching, some slight upward movement in prices since last month has been observed for maize, millet, rice and cassava, with no substantial changes in the prices of sorghum and cowpea (except in Dawanau market in Kano). The average retail prices of cereals, pulses and roots and tubers are lower in April 2007 than in April 2006 by margins of about 14 percent for maize, 21 percent for millet, 15 percent for cowpea and 22 percent for cassava flour. Prices of sorghum and rice are, however, currently higher than in April Sorghum prices are particularly high in major markets in northern Nigeria due to strong industrial demand. Millet prices are lower now than in April 2006 (see figure 1), with some exceptions (Jigawa and Kaduna). Millet prices have been holding steady in northern Nigeria, although some upward movement of prices has been observed in some major cities in southern Nigeria (Ibadan and Port Harcourt), where this crop is not commonly grown. Sorghum prices are stable but higher than at this time last year (see figure 2). Cowpea prices are generally lower this year (figure 3), and are relatively stable. Rice prices, on the other hand, are higher than prices in April 2006, and are currenly rising on most markets (figure 4). Prices for processed cassava (gari) are lower than last year at this time, and have only noticeably increased since last month in the extreme north (Jigawa). Figure 2. Retail price of sorghum in some urban markets Figure 3. Retail price of cowpea in some urban markets Figure 4. Retail price of rice in some urban markets

3 Price trends in Dawanau Market Dawanau is the largest grain market in West Africa and supplies all major urban markets in southern and northern Nigeria. Changes in prices in Dawanau give some indication of price trends in other Nigerian markets and, when compared to prices in neighboring countries in the Sahel, determine the flow and volume of trade between Nigeria and these countries. April prices for maize, millet, sorghum and cowpea in Dawanau market are at their lowest since Maize and cowpea prices have increased since last month, while prices of sorghum and millet remain stable. Following last season s bumper harvest, food availability is strong, and over 500,000 MT of grains and cowpea are currently in stock in the market. Figure 5. Trend in prices of cereals and cowpea in Dawanau Market Source: Mistowa Most of the cereals in southern Nigeria are transferred from major northern markets such as Dawanau market. Low cereal prices in Dawanau market will translate into low prices of these commodities in the southern part of the country, thus making access to food easier for the poor households in southern Nigeria. The low prices will also stimulate demand for cereal from markets in Sahelian countries where stocks have diminished by this time of year. The flow of cereal, at low prices, from Nigeria to Niger, Chad and Burkina Faso could reinforce food availability and access for vulnerable groups in these countries. The subsequent attenuation of food insecurity in localized areas of the Sahel could reduce hardship for poor Sahelian households who usually have to resort to rural exodus and a reduction of their food intake from July to September. Retail fertilizer prices The average cost of fertilizer (NPK: and urea) is higher this month compared to same period last year (figures 6 and 7) by about 16 percent for both NPK: and urea. Prices have, however, declined since last month. A noticeable increase in price was observed in Benue state (Makurdi) in the Middle belt of the country, where the cost of fertilizer is about twice the cost in other areas. The higher prices of fertilizer and the instability of the fertilizer market are caused by a scarcity of fertilizer, its adulteration and the disruption of the market. Household access to subsidized fertilizer remains low, covering only 1/3 of household needs in some states. Planting is currently underway in southern Nigeria and will begin in May and June in the north. Unless access to fertilizer improves soon, crop yields and productivity will be adversely affected. Figure 6. Retail fertilizer prices (NPK-15:15:15) in some urban markets Figure 7. Retail fertilizer prices (urea) in some urban markets 3

4 Poultry market and industry struggles to recover from Avian Flu The first human death related to Avian Influenza was reported in January and was followed by a few reports of deaths of birds in Kano, Borno, Gombe, Kaduna and Nasarawa states between February and April Unusually cold temperatures and Newcastle Disease has caused massive deaths of poultry in January in Gujungu in Taura LGA of Jigawa state. Many households were selling their fowls in distress in the event that their stock would perish. Later, in March and April, some deaths were recorded in these states due most likely to heat stress. Low consumer demand for eggs (which is normal during the hot period of the year) has also reduced the profit margin of many poultry farmers. Commercial activities resumed nationwide as early as March as consumer confidence in poultry products improved. As a result, prices of poultry and poultry products quickly returned to their normal levels. Live chicken prices are rising and are currently higher than at same period last year (figure 8). However, the resumption of trade in March 2007 and the subsequent rise in the economic value of poultry will not in itself bring an immediate recovery to the industry and the livelihoods that support the industry. Most poultry farmers have not been able to re stock their farms to earlier levels nor pay back their loans. Figure 8. Price of live chicken (Naira/chicken) The outbreak of pathogenic avian flu in Nigeria, confirmed on February 6, 2006, put at risk the livelihoods and nutrition of many households who depend on the poultry and egg production as their sources of income and protein. The losses in revenue incurred by small, medium and large scale poultry farmers were estimated at billion naira according to the Poultry Association of Nigeria (PAN). The reemergence of the disease, coupled with the first human death in January and subsequent deaths of birds is hampering the recovery of the poultry industry. Insufficient technical support to traders for strengthening bio security measures, insufficient financial support, and difficult access of poultry farmers to loans and credit from banks have increased the risks involved in investing in the industry according to some large scale farmers of Kano. Impact of avian flu on the maize trade The development of the poultry industry in the 1990 s increased the demand of maize from poultry feed producers. According to stakeholders in the Dawanu market, the poultry industry absorbs about 20 percent of maize production at normal times. As a result of the increase in maize production during these last years following good harvests and governmental policies aimed at boosting production, markets have been well supplied, and prices of maize have remained low when compared to the years before the outbreak of avian flu. The overall indicative average price of maize across the selected locations shows that maize prices were generally higher during the same period of 2006 than in April 2007 and prices are generally stable (figure 9). Figure 9. Retail prices of maize in some urban markets Low consumer prices are favorable to poor households who depend on markets for their maize; however low producer prices significantly reduce the profit margins of producers and traders. The low profit potential for maize discourage farmers from planting maize, and farmers may shift to higher value crops such as rice or sorghum.

5 However, low maize prices in Nigeria could contribute to attenuate food insecurity in Sahelian countries by encouraging Nigerian traders to supply food deficit areas of Niger, Chad and Mali during the lean period, when prices are likely to be high and stocks low. Food stores and crop forecasts The Government of Nigeria (GoN) maintains a strategic grain reserve aimed at influencing market prices and supply and attenuating potential food crises. The GoN had planned in 2006 to buy 51,000 MT of cereals after the bumper harvest of These purchases are line with GoN policy of building up grain stores as strategic grain reserves and assisting in stabilizing market prices and encouraging continued production of target crops by farmers. Current data monitored up to the first week of April shows that the government had yet to meet its 2005/06 target of 51, 000 MT of grains in government stores. The quantity of grains stored as of the end of April included maize, sorghum and millet estimated at about 37,000 MT. It was explained that some stakeholders considered the government offer price of N35,000 36,000 MT to be low in 2005/06, and this coupled with the fact that pace of buying up grains usually slows with the coming of the rains affected the rate of supply to the reserves. However, because normal market prices are much lower now, the rate of buying and supplying of grains to the reserves has increased even at the same offer price. The GoN has, however, planned to buy up more grains and build up the national food reserves to about 200,000 MT of grains in This activity has been provided for in the 2007 budget, and grain purchases are expected to commence once the funds are released. There is the need for GoN to make timely and adequate grain purchases for the national food reserves to contribute significantly to post harvest management of crops and price stabilization.