AFEX Unveils Crop Production Report, Says Flooding Will Worsen National Food Security

…Urges Govt To Support Poorer Households Facing Higher Food Prices

…Advocates More Agric Investments To Tackle Looming Inflationary Pressures

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Nigeria’s leading commodities market player AFEX on Wednesday unveiled its 2022 Wet Season Crop Production Report, with a projection of an average decline in production of up to 11.5 per cent across commodities like maize, paddy rice, sorghum, and cocoa.

It, however, forecasted that soybeans and sesame will experience about 6.5 per cent increase in production levels.

The Company stated in its Report that Nigeria’s most consumed grains are currently faced with declining food balance sheets as consumption levels rise than production levels, thereby worsening food insecurity.

The Report was released in a hybrid event hosted at the AFEX office in Abuja and it seeks to provide accurate reliable data to aid the understanding of national food system through farmer survey measurement of transaction level.

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The Report tracked data from six key commodities and their performance in the preceding season. The commodities are maize, paddy. soybeans, cocoa, sesame and sorghum.

It stated that price and market changes across maize paddy, sorghum, soybean, cocoa and sesame have been affected both by predictable seasonal effects and activities in the agricultural value chain as well as larger macroeconomic and events.

Presenting the Report’s findings, AFEX’s Head of Market Data and Research David Ibidapo, stated that higher prices were forecasted across all commodities in the report.

Specifically, he said maize which faces a projected decline in production levels of up to 14 per cent is subsequently projected to reach a higher average price point ranging between N214.980/MT and N220.000/MT by end of Q4 2022. compared to an average price of NGN210.229/MT in the fourth quarter of 2021.

Also, he said soybean price is projected to rise by six per cent by May 2023, adding that the projected price hikes across commodities in the report were also tied majorly to incidence of flooding resulting from incessant rainfall in key producing regions.

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This, he added, is expected to heighten the gap between production and output levels by farmers.

He also said the effects of the Russia-Ukraine crisis is still being felt in the local agricultural commodity market especially because of the hike in the price of fertilizer.

The report forecasted that paddy will be the most susceptible to production and output pressures, facing close to a 22.47 per cent in production volumes this year in the wake of the crisis-induced fertilizer price hike.

The Report reads in part, “In the last three to five years, Nigeria’s journey towards achieving food security has been confronted with major global shocks, climatic changes and more, with implications for food affordability, availability, and accessibility. Nigeria’s most consumed grains are currently faced with declining food balance sheets as consumption levels rise faster than production levels, worsening food insecurity.

“We expect to see further decline in food balances in some key commodities caused by the ongoing Russia-Ukraine crises and recent flash floods experienced in several states. The war in Ukraine has caused major supply disruptions and led to historically higher prices for several commodities especially in the global space.

“On the back of higher price effect on fertilizers, and further worsened by floods across states, Nigeria is expected to grapple with lower output in the new season as farmers consumed less fertilizer during the 2022 wet season planting as revealed by our survey. This is a major insight of the report.

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“Our survey also revealed that combined with farmers’ reduced ability to access and afford fertilizer during the planting season, most farmers were unable to increase the number of hectares compared to the previous year. However, farmers resulted to using more herbicides and more local seeds varieties to compensate for low fertilizer usage to protect their yields.

“We expect to see some level of sustained rally in the prices of commodities in the new season especially in Maize, Sorghum and Paddy on the back of key factors like slump in production level, increased international demand, weakening of the naira and higher energy prices with impact on logistics.”

On measures that could be implemented to mitigate the impact of the food crisis, the Report urged the government to come up with a short-term priority that would provide targeted support to poorer households facing higher food and energy prices.

Also, it recommended a dual approach to moderate prices across commodities while stemming inflationary pressure on food in the coming season by addressing overall production levels as well as seasonality of supply.

The Report also stated that there is need to intensify efforts to spur production levels, adding that reserves could be held across all grain commodities and released strategically during the season.

On the back of lower production output this year, it added that investors could be well-positioned to take advantage of possible price appreciation in the new season across commodities.

“We believe investment in commodities in the new season remains a better hedge against looming inflationary pressures compared to other asset classes.

“Against the commodities market, investors could be exposed to downside risks amid the CBN’s hawkish monetary stance in the battle of inflation and pre-election bearish effects on equities performances. Also, the Nigerian fixed income space is still largely characterized by a negative return environment,” the report added.

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