By Abdulwasiu Hassan
Abubakar Ibrahim has been trading grains at Nigeria's largest open-air marketplace for as long as he can remember.
Yet, as he steps out for work now, nothing quite prepares him for the uncertainty each market day seems to hold.
In theory, the recent plunge in food prices in the West African nation should have been a relief after a long, debilitating cost-of-living crisis. Ibrahim attributes it to "divine intervention" that the opposite has happened.
His stall at Kano's Dawanau International Grains Market has lately turned into one of the quieter corners of the trade hub.
Standing amid stacks of maize and beans, Ibrahim contemplates the paradox of lower prices failing to ignite demand, as liquidity remains scant and international buyers scarcer still.
In a country where nearly 40% food inflation scorched household budgets last year, this unexpected deflation is both a relief and a riddle, leaving stakeholders to ponder the forces — from government policy interventions to currency shifts—behind the sudden change.
"A 100kg bag of maize that sold for over 70,000 naira (US $46.2) last year is now around 50,000 naira ($33) or even less," Ibrahim tells TRT Afrika. "The price drop has also affected produce like beans, rice and soya beans."
Trigger mechanisms
Dr Usman Bello, who teaches in the department of economics at Ahmadu Bello University, Zaria, identifies the appreciation of the Nigerian naira against the dollar as one of the reasons for the decline in food prices.
The current exchange rate is around 1,500 naira to a dollar, improving from 1,700 naira until recently.
"The government imports grains and distributes them on credit to major buyers. This includes poultry feed producers, who consume a significant portion of the grains," Dr Bello tells TRT Afrika.
"Once they hit the targeted turnover, these buyers will repay their debt to the government. The system makes it more advantageous for them to source from the government than the open market."
Nigeria's Minister of Agriculture, Abubakar Kyari, explains the price drop as an outcome of the government's efforts to increase market supply through local farming rather than imports.
"We faced high demand and low supply previously. In 2024, we had a good harvest, leading to greater supply than in previous years," he says. "It was a move initiated by the President (Bola Ahmed Tinubu) to minimise food inflation, and we are continuing this effort."
Local production cycle
Kyari cites the success of government-backed dry season farming for deciding to extend another round of support before the wet season.
"Some people claim we imported food, but we didn't. We had an import window, although it wasn't utilised," he says.
While the government remains optimistic about its strategy, some analysts warn that persistent low grain prices might discourage farmers from investing in staple production if profits are inadequate.
"Farmers may be discouraged unless fertiliser prices drop from last year's high levels," warns Dr Bello.
The agriculture minister seeks to dispel the perceived gloom, assuring stakeholders that all government interventions will be focused on boosting local agricultural production.
We are looking at price stabilisation mechanisms. We plan to further reduce prices within the next two weeks without discouraging local production," he says.
Disgruntled producers
Grain dealers who stockpiled during last year's bumper harvest are not pleased with what's happening in the marketplace.
Ibrahim, for one, can't comprehend why demand remains low despite prices plummeting.
Agriculture minister Kyari observes that some "hoarders" have begun releasing their stocks due to the ongoing price decline, leading to excessive supply.
Analysts argue that the government needs to course correct. "Massive imports at this time are unsustainable, especially with prices peaking during the rainy season," Dr Bello tells TRT Afrika.
"The continuation of this approach depends on the provisions in the 2025 budget, which the President recently signed."
Free market principles
The Nigerian food sector has long been protected, with imports of staples like rice banned to safeguard local producers.
However, this policy hasn't reduced prices to affordable levels for most Nigerians.
According to the United Nations World Food Programme, Nigerians spend 65% of their earnings on food.
As grain merchants wait for prices to rise, the government continues to support production to increase market supply.
Consumers, on the other hand, hope for favourable market dynamics to come into play. With eight years of protectionism failing to make food cheaper, some wonder if a free market might be a better approach.
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