June 28, 2024
Beyond the Supermarket Price: Unveiling The Hidden Costs of Food
Remember those carefree grocery shopping trips? Tossing your favorite ingredients into the cart without a second thought of the final bill? Those days might feel like a distant memory. Now, every purchase requires a mini mental math session at the checkout, and our once-proud bargaining skills feel useless against the rising cost of food.
Food prices are on the rise, not just in Nigeria, but across Africa. Compared to the same period last year, food prices in Sub-Saharan Africa rose by a staggering 20.6% and 19.56% in Nigeria. This means the average Nigerian family needs almost 20% more naira this year to buy the same amount of food they bought last year. That's a significant chunk of household income going towards basic necessities.
The truth is, this surge isn't solely driven by local factors, and the price we pay at the supermarket reflects only a fraction of the story. There's a whole world of hidden costs lurking beneath the surface, silently impacting the final bill. For instance, the recent hike in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria is a factor driving up prices. The increase in interest rate makes borrowing more expensive, impacting farmers, food processors, and distributors. The combined effect of increased costs throughout the supply chain leads to higher prices for last mile consumers.
Other hidden culprits inflating the costs across the supply chain include:
- Input Costs: Input items like fertilizers, seeds, and pesticides are crucial for bountiful yields. However, global disruptions (like the Russia-Ukrainian war) to fertilizer supplies, for instance, have sent prices skyrocketing. So a bag of rice once sold for N25,000 months back, now goes for an average of N80,000, partly because fertilizer is a key ingredient in its growth. These rising input costs directly translate to higher production costs, squeezing farmers' margins and ultimately pushing food prices upwards.
- Post-Harvest Losses: Sadly, a significant portion of food never reaches your plate. Spoilage during storage, transportation, and handling leads to massive losses, with estimates suggesting fruits and vegetables in Nigeria can experience post-harvest losses as high as 50%. This translates to wasted resources with a resultant limited supply and the struggle to get the available which forces up prices naturally.
- Processing and Distribution: Once harvested, food undergoes the necessary transformations and offtake before reaching supermarket shelves. While these steps are essential, inefficiencies within the system, including multiple middlemen, can affect their costs. For instance, a tomato traveling from a Northern farm to a Lagos market will incur a layer of cost with each intermediary handling it.
Rising hidden costs create a ripple effect throughout the economy. As food prices climb, food security weakens, particularly for low-income households, which spend a larger portion of their income on essentials. This, in turn, fuels inflation, pushing up the cost of living across the board.
Addressing these hidden costs isn't just about saving money on your next bag of rice – it's about ensuring a stable, healthy and affordable food supply for everyone.
Addressing hidden costs requires a collaborative effort. Here's how different players can contribute:
Farmers:
- Embrace climate-smart practices: Techniques like crop rotation, cover cropping, and integrated pest management can improve yields and reduce reliance on expensive external inputs.
- Explore local sourcing: Look for local alternatives for fertilizers, seeds, and other inputs to minimize dependence on global market fluctuations.
Processors & Distributors:
- Embrace technology: Utilize technology to streamline processes, optimize logistics, and minimize waste throughout the supply chain. Platforms like ThriveAgric's digital marketplace - AOS - connects farmers directly to consumers, reducing inefficiencies and costs.
Policymakers:
- Support alternative financing: Advocate for microloans and grants to help farmers break free from expensive traditional loans.
- Invest in infrastructure: Prioritize improvements to storage facilities, transportation networks, and irrigation systems. This includes exploring mechanization solutions to enhance efficiency.
- Target vulnerable populations: Implement social safety net programs or subsidies for essential food items to ensure affordability for everyone.
Consumers:
- Plan your meals and portions: Planning meals and buying only what you need drastically reduces food waste, saving you money.
- Go seasonal and local: Seasonal produce is often cheaper and fresher. Look for local farmers' markets or farm-to-table initiatives.
By working together - policy makers investing in infrastructure, farmers adopting efficient practices, and consumers making informed choices – we can create a food system that's not only efficient and resilient but also ensures everyone has access to affordable, nutritious food. This isn't just a Nigerian phenomenon; it's a continental challenge demanding our attention.
Join the conversation - What can be done about food inflation to ensure everyone has access to healthy, nutritious and affordable food?
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