AFEX: Commodity Prices Grew by 70% in 2021, Output to Rise by 3%
A survey has revealed that Nigeria experienced 70 per cent increase in the prices of food commodities in 2021.
The survey also projected that the country would witness three per cent increase in crop production, which would not be enough to tame the upward price movement of food products for the rest of this year and early part of 2022.
These projections were contained in the AFEX 2021/2022 Crop Production Survey, which was unveiled online on Tuesday.
The Chief Operation Officer of AFEX, Mr. Akinyinka Akintunde, said that the key findings of the survey revealed that harvest would be marginally higher in 2021 than previous year; however, prices of commodities are expected to be higher when compared to previous years.
Akintunde also said that the survey showed that farmers do not have access to key infrastructures needed to enhance their productivity.
He said: “The ban in the import of maize caused the price basket to skyrocket. We experienced 70 per cent increase in the price of commodities in the local front. Lack of storage facilities in the country has also made price stability a difficult task for policy makers to achieve,” adding that hindrances to timely access to inputs by farmers constrained their ability to increase their yields.
A Senior Research Analyst at AFEX, Mr. David Ibidapo, who reviewed the survey, projected an average marginal increase by three per cent in crops production levels in 2021.
“For maize we are anticipating three per cent increase in production; sesame, 12 per cent; rice, 10 per cent; soybean, eight per cent; ginger, four per cent; sorghum, one per cent while the production of cocoa is projected declined by eight per cent.”
AFEX, which is a licensed commodity exchange operator, also projected that the price of paddy rice would decline by seven per cent in the remaining part of 2021 to N200.000/metric tonne (MT) while commodities like maize, sesame, ginger, soybean, cocoa, etc. would witness an upward trend in prices between now and middle of 2022.
Ibidapo said: “There is a surge in prices across all the commodities that were captured on our exchange. One of the major drivers of this surge is lowered supply for these commodities. There were increases in the exports of ginger and cocoa while huge demand for sorghum drove its prices up.
“We forecast a higher minimum base price of N170,000/MT in 2021 against N156,000 in 2020. By December 2021, maize price should range between N170,000/MT and N180,000/MT.During the season, May/June (2022), price would settle between N210,000 and N230,000/MT.”
The report also projected an increase in the base price of soybean this year at N320,000/MT, which would later surge to N350,000, adding that, “in May/June (2022), soybean price is expected to range between N400,000 and N450,000/MT.”
The survey said that the price of soybean witnessed a 40 percentage increase in Q4 2020 above its minimum base price of N199,000/MT during the period.
Similarly, it projected that the price of sorghum, a major raw material for brewers, would rise between the remaining part of 2021 and some part of 2022.
Ibidapo said: “Local demand for sorghum has surged amid declining production levels year on year. The price rose from between N160,000 to N170,000/MT in Q4 2020 to an all-time high of N266,950/MT in July 2021and slumped by 13.26 per cent in August following the entrance of new maize into the Nigerian domestic market.”
The AFEX survey also projected that the price of cocoa would witness significant increase due to low supply of the commodity. “We forecast that cocoa prices will settle around N1.3 million to N1.350 million/MT by Q4 2021. Price may go up as export increases while Naira depreciates,” Ibidapo said.
The report also said that the price of ginger would trend upward to settle between N1.1million and N1.2 million/MT this year and higher next year to reflect shortages in supply and increased demand for the commodity.
The survey revealed “strong demand for Nigerian ginger amid the effect of weakened naira will drive price this year. There already exists a large demand (with informal pre-contract terms already agreed in some climes) for ginger in large volumes.”