By Theophilus Abbah & Daniel Adaji
In December 2021, the price of family size Grand loaf, one of the popular breads in Abuja, Nigeria, was N600 ($1.43). As of April 2022, the price jumped to N850 ($2.02), an increase of about 41 per cent. The reason for this rise is not related to domestic economic factors, but as a result of the Russia-Ukraine war, which started when Russia invaded Ukraine on February 24, 2022. In April 2022, the Nigeria Bakers Association, announced 50 per cent increase in the price of bread, which was expected to take effect from May, 2022[i]. This is because the wheat used in baking bread in Nigeria is imported from Russia and Ukraine. It is not only the price of wheat that has increased in the last two months due to the war in Eastern Europe. The price of milk, also imported from Ukraine and Russia, has increased. For instance, a 400g of powdered Peak Milk, which used to sell for N1,150 ($2.74), is now increased to N1,300 ($3.10).
Food security, according to World Food Summit 1974, is availability at all times of adequate world food supplies of basic food stuffs to sustain a steady expansion of food consumption and to offset fluctuations in the production and prices. In 1983, Food and Agriculture Organisation (FAO) expanded its concept to include securing access by vulnerable people to available supplies, thus that a balanced attention between the demand and supply side of the food security equation: “ensuring that all people at all times have both physical and economic access to basic food that they need.”
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As a response to Russia’s invasion of Ukraine, the international community has imposed sanctions on Russia, while many economic activities, including food production, have been halted in Ukraine. Also, Ukrainian seaports have been bombed and damaged to the point that export of goods from the Eastern European country to other parts of the world is inhibited. One of the significant sanctions is the freezing of the Russian central bank’s access to its reserves in the European Union (EU), United Kingdom (UK), United States (US), Canada, Switzerland and Japan. Further, in a recent sanction, the United States, Canada and UK banned Russia energy imports, while the EU has pledged to end its dependence on Russia gas. Sanctions so far exclude payments for food commodities and fertilizers. (World Food Programme, WFP 2022)
The sanctions are biting hard on the Russian economy with Russian interest rate raised to a staggering 20 percent. The Russian Ruble has lost nearly 40 percent of its value against the U.S dollar within two weeks.
The obvious effect of the conflict on world food security comes through the impact on global grains and energy markets. A noticeable increase is felt in the international food and fuel prices since the war began; this significantly affects local food prices as well as access to food at the right quality, quantity and time.
According to WFP, grain and oil prices hikes increased the cost of WFP operations reducing the ability to serve those in need just when it is most needed.
Both Russia and Ukraine rank among the top five exporters of wheat and maize globally. The two countries supply 30 percent of the world’s wheat and 20 percent of maize to global markets. In addition, Russia and Ukraine are key exporters for sunflower oil and barley, accounting for more than three-quarters and one-third of supplies to international markets respectively.
The Russian military has brought movement of food to a halt and paused Russian grain deals amidst uncertainties around the sanctions. An estimated 13.5 million tonnes of wheat and 16 million tonnes of maize are frozen in the two countries – 23 and 43 percent of their expected exports in 2021/2022.
What is the implication of this conflict on Nigeria food security?
Nigeria’s reliance on Russian imports for both food and raw materials makes them particularly vulnerable to the impacts of Russia’s unprovoked invasion. As the conflict between Russia and Ukraine persists, Nigeria may be affected in terms of capital importation and some foods imported from these countries. According to the National Bureau of Statistics, NBS Nigeria has received 84.4 million USD in capital imports between 2019-2022.
The country’s import of durum wheat was worth N346.2 million in 2020 and N123.96 bn (297.8 million USD) between January and September 2021 from Russia. And milk worth N721.5 million (1.7 million USD) from Ukraine in 2021.
The ongoing crisis has a potential negative impact on Nigeria’s imported food inflation rate, which is currently over 18%. Analysis from the ONE Campaign shows that Nigeria’s wheat and maize bill could increase by about $1.4bn, assuming that prices don’t continue to rise. According to FAO data, the price of wheat increased from 5.7 percent to 9.347 percent in March 2022, following the conflict.
Qu Donggu, the Director General of the Rome based FAO, stated that, it was not clear if Ukraine’s farmers will be able to harvest wheat ready for market in June due to massive population displacement and destruction of major routes and farms.
“Based on the 2021 grain production data released by the foreign affairs service of the United States Department of Agriculture (USDA), Nigeria’s wheat production increased to 99,000 metric tonnes from 55,000 metric tonnes in 2020. this led to 8.9 percent decrease in importation as Nigeria imports 6.0 million metric tonnes so far in 2022 from 6.6 million metric tonnes in 2020”.
According to Wheat Farmers Association of Nigeria (WFAN), the country spends over N4.2 billion yearly on the importation of wheat to meet local demand of over five million metric tonnes, yet the country is blessed with both human and material resources to meet her local demand and also export excess. Wheat is used for flour milling industries; bread band other confectioneries take more than 80 percent of the total flour produced in Nigeria.
According to an expert in agricultural economics, Dr. Unekwu Onuche of the University of Africa, Bayelsa state, considering the present difficulty to import milk from Ukraine, the price of milk and milk products will very likely to rise in the medium and long term.
He said further that, if Nigeria can no longer import wheat and maize from Russia due to sanctions, it is very likely the prices of products made from wheat and maize will rise thereby, creating more hardship for more Nigerians, arguing that Nigeria’s dependence on foreign food supplies is uncalled for. The World Food Programme HungerMapLive estimated that 19 percent of Nigerians have insufficient food consumption as of May. The percentage could jump higher if there is no alternative to wheat and maize import from now war-torn Russia and Ukraine.
According to Dr Onuche, “You cannot continue to rely on another man to feed your house. What happens the day they stop to supply you food?” Dr. Onuche described the over dependence of Nigerians on foreign food supplies as an interplay of international politics; a situation where some selected countries decide to share global markets among themselves at the expense of local production in the dependent nations.
He advised Nigeria to look inward to strengthen her local production to meet up with the increasing demand in both wheat and other food needs.
Nigeria should provide favourable financial and political environment for farm business to thrive and also provide monitoring and evaluation team that will ensure the government’s effort at ensuring adequate food production is not jeopardized by the unfaithful few.
It is not only the prices of food items that have gone up. The prices of many other products which Nigeria imports from Russia and Ukraine have jumped up, among them iron and steel, electrical and electronic items, plastics, pharmaceutical products, fertilizers, arms and ammunition, and diverse kinds of tools. Worse hit is the moribund Ajaokuta Steel Company, which was billed to be revived through an agreement between the Nigerian government and Russia, a signature project of the Buhari administration. The Chief Executive Officer of the Centre for the Promotion of Private Enterprises (CPPE)[ii], Dr Muda Yusuf, announced this in March, when he stated that the project worth N20.4 billion ($50 million), was being stalled by the war. The project was to commence in 2020, but the COVID-19 pandemic halted the coming of expatriates to Nigeria to kick-start the revival process. With the pandemic almost behind the country, Ajaokuta Steel Complex project should have commenced in early 2022. But with the ongoing war, the gigantic steel company cannot be revived.
Yusuf explained further how the war affects Nigeria: “Additionally, the cost of flour, price of bread and other confectioneries may also take a hit. The summary is that if the conflict is protracted, these would be the downside risks to the Nigerian economy. Ukraine and Russia are major producers of wheat and they account for about 30 per cent of the global wheat export used for bread and some other confectioneries. Therefore, the current development is going to disrupt the supply of wheat in the global market. There is, therefore, a risk of a hike in the cost of wheat which will affect the price of flour and a knock-on effect on the price of bread and other confectioneries. Nigeria also imports a substantial amount of wheat which would also suffer some disruption and impact on prices.”
This piece was produced in partnership with the ONE Campaign, a global campaign and advocacy organization. For more information on the impacts of conflict, climate change, and COVID’s impacts in Africa, subscribe to ONE’s Aftershocks newsletter or explore the data.
[i] The full story is published in: Consumers in Calabar beg Master Bakers not to increase price of bread – Daily Post Nigeria
[ii] The government official spoke to journalists about the effect of the war on Ajaokuta steel project: ‘Russia-Ukraine crisis may stall resuscitation of Ajaokuta steel plant’ | The Guardian Nigeria News – Nigeria and World News — Business — The Guardian Nigeria News – Nigeria and World News