Commodity prices dropping since COVID-19 outbreak but cassava flour defies trend
... rice, maize prices drop over 20%
Commodity prices in Nigeria soared across virtually every farm produce in the five months since Covid-19 outbreak gained traction across the country around March.
However, with new harvest coming from the farms (mostly in the Northern region where substantial food produce emanates), prices have started to reduce, although in some cases, still higher than pre-covid-19 era.
Most significant, perhaps, are maize and rice, with prices dropping well over 20 percent, depending on the market. Other grains have mostly recorded the same trend in price decrease in recent weeks, following months of high prices that have put considerable strain on both consumers and processors.
At the Tsiga Market in Bakori LGA, Katsina State, New White maize sold for N14,000 for a 98kg bag while the Old White Maize sold for N17,000 for 100kg. New Paddy rice sold for N14,500 from as high as N23,000.
“Farmers are now harvesting and the likelihood is prices are going down,” Bello
Dogondaji, national general secretary, Federation of Agricultural Commodity Associations of Nigeria (FACAN), told Businessday. About 2-3 weeks ago, a ton of maize was sold for N180,000 but has now reduced to about N140,000 simply because new maize is coming, he explained.
All types of grains are trickling out from the farms, and with every new arrival in the markets, the law of demand and supply takes hold; prices adjust, in this case, downwards.
“Farmers are taking their produce to the markets which are (in turn) getting flooded.
So, automatically prices will go down,” Dogondaji reiterated
Mohammed Augie, chairman, Rice Farmers Association of Nigeria (RIFAN), Kebbi State, also told Businessday the price of paddy rice, which sold for as much as N20,000 for a 75kg bag was now down to N14,000.
“It is natural for price of rice to increase along with that of other commodities because it is not only rice that has gone up in price,” said Augie, explaining the increase in price of rice when produc
tion should be increasing and prices coming down.
He explained that with the Covid-19 outbreak that grounded almost all businesses, some businessmen who wanted to save their money decided to buy paddy and hoard. Also, rice merchants laid siege on farm gates to buy from farmers, and naturally also making prices go up as demand appeared to be overwhelming.
The exchange rate also contributed to initial spike in prices, as increase in price of other goods meant rice farmers had to charge higher so that they could afford other things they needed. From N12,000 per bag before Covid-19, to N20,000 at its peaks, the price has now reduced to N14,000 although it is unclear what the future holds in stable pricing.
While commodity prices appear to be generally coming down, that of cassava flour is proving to be an exception. A ton of the product was sold for about N150,000 around March before Covid-19 outbreak, but now sells up to N300,000, doubling the old price.
“Price of cassava flour is not likely to come down anytime soon, at least not with this season,” said Nike Tinubu, immediate past president, Industrial Cassava Stakeholders Association of Nigeria, in a phone interview.
While the cassava flour is itself a by-product of the tuber crop that is a source of widely consumed staple foods in Nigeria, its defiance to reducing commodity prices Businessday learns is attributable to a cycle that started with some floods last year. The resulting scarcity meant production for this year was to be affected, while this year’s production that has already been challenged is the only hope for prices to come down next year.
Availability of cassava for processing was also worsened this year because of the Covid-19 pandemic, Tinubu explained that a lot of the cassava that processors would have utilised was being converted into garri for use as palliatives. This meant that where a farmer would have sold 100 tons of cassava to a processor, they are selling less than that because they are making garri to sell as Covid-19 relief.
“This has made this year exceptionally different,” said Tinubu, who is also MD of Eagleson Cassava. “I don’t know if prices will increase next year, because cassava prices are supposed to be coming down now (which is not), but it most likely will not decrease and I don’t know how stable it will be.”
One of the main solutions, which she said, already showing a high positive impact is the anchoring of farmers to processors where the processors and farmers go into partnership and the farmer knows that there is an outlet for their produce, likewise, the processors are assured where their raw materials will come from.
As equally explained by Dogondajii, most industrial users buy from their aggregators and some have signed off-taking arrangement with the producers who are in clusters. They engage in anchor borrowing, which ensures farmers must have an off taker that will be purchasing from them at harvest. If the model is strengthened and made even more widespread across the country, stakeholders see it as a way of stabilising prices, and giving farmers the confidence to scale up production.