Onion Sellers Strike: Another Layer of Concern

June 10, 2021/CSL Research

Image Credit: bbc.com

As we await the release of the May inflation report by the National Bureau of Statistics, the direction of food prices continues to be a source of concern. These concerns have worsened in the past two weeks, following the announcement of the halt in supply of onion and the threat to cut food supply by the Onion Producers and Marketers Association (OPMAN), and the Amalgamated Union of Food Stuff and Cattle Dealers of Nigeria (AFUCDN), respectively. According to the President of OPMAN, the Federal Government has refused to compensate its members to the tune of N4.5bn for the series of losses, which he attributed to the activities of hoodlums and other forms of Insecurity in Nigeria. Like OPMAN, AFUCDN also insists that if Insecurity is not curbed, its members might have to cut the supply of food on a national scale by the time they meet in the next three weeks.

Despite the decline in the food inflation index in April, food prices are still on the rise. In the recently released selected food price watch by the NBS for April, the weighted National Price per kilogram of Onions rose by 3.4%m/m and 29.6% y/y to N294.84 at a time of smooth supply flow. In April, a kilogram of Onion bulb sold the lowest at a cost of N115.84 in Bauchi State, while selling at the highest for N774.44 in Cross River state, a 6.85x multiple. With a strike and no alternative source of supply in the short to medium term, price per kilogram of onion bulb is set to record a significant surge.

The increasing insecurity in the country is a major reason behind the high food inflation we have seen in recent times. We acknowledge that farming activities were significantly affected in 2020 due to covid-19 movement restrictions during the planting season as well as abnormal rainfall patterns which led to flooding of farmlands. However, farmers/herders’ clashes and in recent times, banditry and kidnapping are a significant threat to agricultural productivity and distribution. The Nigerian consumer whose purchasing power has been severely squeezed by the impact of covid-19 and increasing utility costs has little or no capacity to take any further increase in food prices.

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