The Nigerian government announced urgent support measures for farmers on Tuesday. Food prices have fallen below production costs in key markets. The Federal Ministry of Agriculture and Food Security confirmed the intervention. Minister Abubakar Kyari stated the government must act now. He emphasized the need to protect agricultural investments. The National Bureau of Statistics reported troubling price trends last week. Rice prices dropped 15% below farmer costs in northern states. Maize prices fell 12% below production expenses in the southwest. The price declines threaten Nigeria's food security gains. The country achieved 8% agricultural growth in 2023. This followed years of food import dependency. Now farmers face potential losses across multiple crops. The government's response includes direct subsidies and market interventions. The Ministry will work with the Central Bank of Nigeria. They plan to implement price stabilization mechanisms. The Nigerian Agricultural Insurance Corporation will expand coverage. Farmers can access low-interest loans through the Anchor Borrowers' Program. The program has disbursed ₦1.2 trillion ($800 million) since 2015. It supported over 4.8 million smallholder farmers. The new measures aim to prevent production declines. Nigeria's agricultural sector employs about 35% of the workforce. It contributes 25% to the national GDP. The price crisis could reverse recent progress. The government established emergency task forces in six states. These include Kano, Kaduna, Oyo, Benue, Niger, and Rivers. Each task force will monitor local market conditions. They will recommend targeted interventions within two weeks. The Federal Ministry of Finance will allocate ₦500 billion ($333 million) for initial support. This funding comes from the 2024 national budget. The Ministry of Agriculture will distribute the funds through existing programs. The National Agricultural Land Development Authority will assist with implementation. The government also plans to increase strategic grain reserves. The National Food Reserve Agency will purchase excess produce at guaranteed prices. This should provide immediate relief to struggling farmers. The agency currently stores 300,000 metric tons of grains. It aims to increase this to 500,000 metric tons by year-end. The price support program will prioritize staple crops. These include rice, maize, wheat, and sorghum. Nigeria produces about 8 million metric tons of rice annually. Maize production reached 12 million metric tons in 2023. The price drops affect all production scales. Large agribusinesses like Olam Nigeria and Dangote Rice face margin pressures. Smallholder farmers struggle to cover basic inputs. Fertilizer costs increased 40% in the past year. Transportation expenses rose 25% due to fuel subsidy removal. These factors squeeze farmer profitability. The government recognizes the complex challenges. Minister Kyari stated support must address multiple issues. He mentioned input costs, market access, and storage facilities. The Ministry will launch a farmer registration drive next month. This will improve targeting of assistance programs. The government also plans to strengthen commodity exchanges. The Lagos Commodities and Futures Exchange began agricultural trading last year. It could help establish more transparent pricing. The exchange currently lists maize and soybean contracts. It plans to add rice and sorghum contracts this quarter. Better price discovery might prevent future crises. The current situation results from multiple factors. Improved harvests increased supply in recent months. Reduced export demand from neighboring countries affected prices. Some West African nations increased their own production. Nigeria's border security improvements reduced smuggling. This kept more produce in domestic markets. Climate conditions favored good yields in many regions. The confluence created unexpected price pressures. The government must balance consumer and producer interests. Lower food prices benefit Nigerian households. Food inflation reached 35% in January 2024. Any price relief helps strained family budgets. But unsustainable prices threaten future production. The government aims for a middle path. It wants affordable food without destroying farmer livelihoods. This requires careful policy calibration. The announced measures represent the first phase. Additional actions may follow based on market response. The Ministry will review the situation monthly. It established a farmer hotline for feedback. The number is 0800-AGRICULTURE. Farmers can report price issues and seek assistance. The government hopes to stabilize markets within three months. Success depends on coordinated implementation. Multiple agencies must work together effectively. Past agricultural programs faced distribution challenges. The current administration promises better execution. President Bola Tinubu emphasized food security in his New Year address. He committed to protecting Nigeria's agricultural sector. The new measures test that commitment. International observers watch closely. The World Bank's Nigeria Development Update highlighted agricultural risks. It noted price volatility as a major concern. The report suggested targeted support mechanisms. Nigeria's approach aligns with these recommendations. Other African nations face similar challenges. Ghana implemented farmer price supports last year. Kenya established strategic food reserves. Nigeria's scale makes its response particularly significant. The country's population exceeds 220 million people. Agricultural policies affect millions directly. The coming months will reveal the intervention's effectiveness. Market responses will provide early indicators. Farmer planting decisions for the next season matter most. If confidence returns quickly, production may stabilize. Otherwise, Nigeria could face reduced harvests later this year. The government monitors these dynamics closely. It prepared contingency plans for different scenarios. The Ministry will adjust support levels as needed. This flexible approach aims to maintain balance. Nigeria's agricultural journey continues facing new challenges. Each requires thoughtful responses. The current price crisis tests the system's resilience. The government's rapid action shows recognition of the stakes. Farmers now await practical implementation. Their cooperation will determine the outcome. Nigeria's food security depends on getting this right.

Why it matters

Food prices falling below production costs threaten Nigeria's agricultural sector. Farmers may reduce planting if they cannot cover expenses. This could lead to food shortages and price spikes later. Nigeria imports about $10 billion worth of food annually. Strong domestic production reduces this dependency. The government's support aims to maintain production levels. It also protects millions of agricultural jobs. Nigeria's overall economic stability connects to farm viability. The sector's health affects inflation, employment, and trade balances. Successful intervention could prevent broader economic impacts.

What businesses should watch

Agribusinesses should monitor subsidy distribution timelines. Companies like Flour Mills of Nigeria and Nigerian Breweries rely on local crops. They need stable supply chains. Retailers should track price stabilization efforts. Changes could affect consumer purchasing patterns. Financial institutions should watch loan program expansions. The Central Bank may adjust agricultural lending policies. Commodity traders should observe government purchase patterns. The National Food Reserve Agency's activities will influence market dynamics. All businesses should note the broader economic implications. Agricultural stability affects consumer spending power nationwide. The situation's resolution will shape Nigeria's economic trajectory for 2024.