Latest SBM Jollof Index paints clear picture of rising food costs, accompanying ramifications

One of man’s most fundamental wants, according to Maslow’s hierarchy of needs, is food. However, getting access to and paying for this is become more expensive for many Nigerians.

Nigeria, along with five other countries, is on the highest alert level of those already experiencing critical food insecurity, according to an FAO-WFP assessment on hunger hot spots and early warnings of acute food insecurity from October 2022 to January 2023.

This research is being released while Nigeria battles the ongoing repercussions of the Ukraine-Russian conflict, the aftereffects of the coronavirus outbreak, limitations brought on by insecurity, and subpar macroeconomic policies.

Many Nigerians have been forced to spend more of their decreasing incomes on food as food inflation soars, reaching 23.34% in September 2022. In its new Jollof Index report titled ‘Brace for Impact,’ SBM Intelligence, a Lagos-based research firm, paints a clear picture of the problem of rising food costs and the accompanying ramifications, if left uncontrolled.

The SBM Jollof Index uses jollof rice, a delicacy enjoyed by all Nigerian households, to offer a straightforward explanation for food inflation. The cost of the most widely used components used to make the delicacy is used to create the Jollof Index. The Index shows that, for a household of five, the average cost of producing a pot of jollof rice jumped from an average cost of ₦9,220 in June to to ₦9,917 in September, showing a 7.6% increase.

According to the report, the main causes of these rising expenses are instability, sporadic energy shortages, rising fuel prices, and early flood forecasts in 13 states, including regions that produce food. Floods in Nigeria during the previous few months have caused many people to be displaced, left many dead, and disrupted food supply lines. For instance, the absence of access routes to Abuja, caused by the flooding in Lokoja, the Kogi State capital, is causing fuel shortages in Abuja and other northern states.

Costs in the Northern part of Nigeria are driven up by this, combined with insecurity that prevents farmers from working their farms. According to the SBM analysis, “Northern markets (Wuse II, Nyanya, Kano and Bauchi) had higher costs of making a pot of jollof rice than markets in other regions.”  According to the analysis, Wuse II had the highest cost of producing a pot of jollof rice at ₦13,150, while Onitsha had the lowest price at ₦8,510 throughout the 13 markets studied.

Nigerians are reacting to the rising food prices in different ways. Ifeoluwa, a Lagos resident, lamented the impact of the rising food prices on her income and food choices. She said: “I went to market recently and the prices of almost everything have increased. After spending so much on food, I always have little to spend on other things I desire.”

She added: “I’ve stopped eating many things. I can’t remember the last time I went to market and bought cereals or beverages. Sardines? That one is luxury. In fact, I eat protein sparingly because egg that I moved to is now very costly; from ₦60 in August to ₦80 now. And just last week, someone told me that one egg is ₦100, I just dropped it.”

Mama Betty, a petty trader who sells foodstuff in Lagos also expressed dissatisfaction saying, “I’m just coming to this shop to keep alive because my gain is very little. Most times, I have to add my money to restock because prices are going up every day. Imagine, a 50kg bag of rice I bought ₦28,000 early in September is now ₦36,000. The sale is not moving fast, yet when I finish selling this bag, my gain is just ₦200. I spend ₦350 as transport daily and sometimes, I don’t make up to that as profit in a day.”

She added that retailers no longer give discounts even to long-time customers. “Nobody reduces prices or puts fisi again. They will tell you to leave it if you can’t buy,” she said.

The price of rice has been on the rise due to a weakened naira and scarce forex, which affect imports, and egg – a major substitute to costlier protein meals – has seen a significant price increase, the SBM report said, adding that “many Nigerians are running out of ideas to cope with the situation as many are seeing similarities between this period and the period between 1984 and 1996 when Nigeria had the worst inflation rates.”

While there have been six consecutive months of reduction in global food prices, it appears that the situation will become worse in Nigeria as floods destroy large farmlands and cut off harvest for this season.

There is no better time than now for the government to reconsider its import substitution stance, suspend bans on essential food items, and decide to make forex available for the importation of grains and encourage importers to do so.

Download the SBM Jollof Index: Brace for Impact here.