The Paradox of Plenty: Why Food Prices Are Crashing Despite High Input Costs

 

We are witnessing a devastating paradox in Nigeria’s food market: prices for staple foodstuff are crashing, offering a fleeting relief to consumers, yet they are crushing the very farmers who produce them. This situation is counter-intuitive. As you rightly point out, the costs of agricultural inputs—fertilizer, seeds, tractor services, and even transport—remain stubbornly high or have continued to rise.

So, why the lower prices in the market, and what does this mean for the coming year?

 

The Factors Behind the Crash: Supply Overwhelming Weak Demand

The price of any commodity is determined by the balance of supply and demand. In the current market, three primary forces are overwhelming the high cost of production, leading to the collapse in food prices:

1. Seasonal Harvest Glut: The most immediate and traditional reason for a price drop is the harvest season. Large volumes of produce—maize, rice paddy, and tubers—enter the market simultaneously, creating a temporary supply surplus. In the absence of adequate, affordable storage facilities, farmers and middlemen are forced to sell quickly to prevent massive post-harvest losses, which can reach over 45% for some crops. This urgent, forced sale drives market prices down.

2. The Flood of Imports: In a bid to curb soaring food inflation, the government recently introduced policies, such as duty-free windows for licensed firms to import staples like rice and maize. This resulted in a massive influx of foreign commodities, further saturating the market. This imported supply, often sold cheaper than local produce (due to the farmers’ high local cost structure), creates fierce competition that local farmers cannot win.

3. Weakened Consumer Purchasing Power: The high inflation and economic hardship faced by Nigerian consumers have weakened their ability to buy food, even at lower prices. When consumers lack the money to purchase, the demand side of the equation collapses. Merchants holding large stocks are compelled to drop prices to move inventory, resulting in losses for those who hoarded grains at higher prices.

 

The True Crisis: The Squeeze on Farmers

The soaring prices of inputs—are the production cost realities that the market price crash is failing to reflect:

1. Fertilizer and Seed Costs: These are largely tied to the volatile foreign exchange rate, as many components or finished products are imported. High FX rates mean high input costs.

2. Mechanization (Tractor) Costs: The cost of acquiring and fueling tractors remains high, increasing the overall cost per hectare.

3. Transport Costs: Even if transport is momentarily cheaper than expected, the overall cost of moving inputs to the farm and produce to the market is still significant.

The crash in market price for staples like cassava and potato is tragic because farmers are selling at a price that does not even cover their rising expenses. Maize that sold for $\text{N}60,000$ per tonne may now sell for $\text{N}30,000$, leaving farmers unable to recover the capital they invested in inputs. At AyosifamHub, we believe this short-sighted cycle is the single greatest threat to our nation’s food security. We pity the cassava and potato farmers especially, as they are currently facing critical financial shortages.

 

The Dire Effect on the Coming Year (2026 Outlook)

The current crisis, though providing temporary consumer relief, is a disaster for food security in the medium term.

1. Reduced Production (The Harvest Gap): The primary effect is that farmers, having failed to break even this year, will be unable to afford the high-cost inputs (fertilizer, seeds) for the next planting season. Many will abandon production or significantly reduce the acreage they cultivate.

2. Deepened Food Insecurity: With fewer farmers planting and with lower yields due to reduced input use, the national food supply will be significantly smaller next year. This guaranteed scarcity, combined with the underlying factors of high input costs, will likely lead to sharper and more severe food price inflation in 2025 than we have ever seen.

3. Increased Dependency: If local production is crippled, Nigeria’s reliance on imported food will increase, making our food security dangerously dependent on global market prices and trade policies.

The current crash is a short-term market distortion, not a sustainable victory over inflation. For the sake of our food future, the government must shift its focus from temporary import waivers to urgently providing genuine, transparent subsidies and support that directly reduce the farmer’s cost of production. AyosifamHub advocates for policies that make farming profitable again, ensuring that those who feed the nation are not the ones going to bed hungry.