Experts in Nigeria and globally are warning that some market actors are making record profits in this time of food crisis, at the expense of overcharged consumers and underpaid farmers.
A new tool created by consumer organisations has highlighted the risk of unfair food prices in Nigeria, driven by insufficient competition in national and global food supply chains.
The Fair Food Price Monitor warns how rising prices for Nigerian consumers are potentially being caused not only by factors such as increased fuel costs and currency depreciation, but also by dominant market actors taking advantage of this crisis to increase prices excessively.
A statement jointly signed by the Executive Director, Consumer Advocacy and Empowerment Foundation Professor Chiso Okafor and President, Consumer Awareness Organization (CAO) Professor Felicia Monye notes that the tool, developed by both organizations uses data from sources such as the National Bureau of Statistics and FEWS NET to track the relationship between food prices at different stages of the supply chain in Nigeria, and to highlight where investigation and action may be needed from government as they decried the growing evidence of unfair prices using the Fair Food Price Monitor .
The statement notes that weak competition may be causing unfair food prices for consumers in Nigeria, as retail prices rise significantly faster than wholesale prices.
According to the Group, Food products such as yams, garri, and groundnut oil are flagged as markets of concern as the consumer awareness groups are appealing to federal government to investigate and act.
The statement notes that between January 2022 and August 2023, the retail price of yams increased by 74%, while the wholesale(heap) price rose by just 60.3%.
In the same period, the retail price of groundnut oil increased by 56.3%, while the wholesale price of groundnuts(oil) rose by only 35.3%.
The retail price of maize increased by 19.2% throughout the course of 2022, while wholesale(bag) prices in fact fell by 4.1%.
It notes that while costs are increasing for all market actors, consumers are bearing an unfair and excessive burden.
The statement by consumer awareness groups notes that the Fair Food Price Monitor explores several potential explanations for this divergence in retail and wholesale prices – such as rising fuel costs and a weakening exchange rate – but finds that while these factors may have contributed, they do not appear to be sufficient explanation for the excessive rise in retail prices.
When the cost of producing and importing food increases, it is inevitable that consumers will have to pay higher prices. However, in a competitive national market, it is expected that profit margins will also decrease slightly, as the burden is shared between food producers, traders, retailers, and consumers.
Consumer organisations recommend a range of actions that the government can take to tackle this threat of unfair food prices. In particular, it is highlighted that while authorities in Nigeria are committed to taking action against unfair prices, they need stronger support to enable enforcement – from financial resources, to political mandate, to high-quality data. This can enable more decisive action to strengthen competition in the marketplace, such as by sanctioning anti-competitive practices, tackling monopolies, and supporting small scale farmers that produce a significant proportion of food in Nigeria as well as small scale and medium-sized businesses.