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Nigerian rural households spent N4 trillion ($10.5 Billion) on five food product categories (NBS Report). What does this imply for the private sector?

Nigerian rural households spent N4 trillion ($10.5 Billion) on five food product categories (NBS Report). What does this imply for the private sector?

Nigerian rural households spent N4 trillion ($10.5 Billion) on five food product categories (NBS Report). What does this imply for the private sector?

Nigerian rural households spent N4 trillion ($10.5 Billion) on five food product categories (NBS Report). What does this imply for the private sector?

According to the 2019 Consumption Expenditure Pattern (CEP) report from the National Bureau of Statistics (NBS), total rural household spending on food totalled N12.9 trillion making up 61% of total household expenditure for food and non-food items. Five product categories, namely, Rice (N1.1 trillion), Grains & Flours (N905 billion), Maize (N462 billion), Poultry & Poultry products (N473 billion) and Vegetables (N1.0 trillion), made up 31% of total rural household spending on food at almost N4 trillion.

Rural household spending in contrast outnumbered urban household spending by as much as 38% for the same five products, which is understandable. The poor spend more on food than the rich. Most foods produced in the rural areas are quickly evacuated to urban centers where gluts quickly occur thus depressing prices for the urban consumers. For the same period (i.e. 2019), urban households’ spending was as follows: Rice (N808 billion), Grains and flours (N377 billion), Maize (N210 billion), Poultry and poultry products (N406 billion), and vegetables (N726 billion). These made up only 26% (N2.5 trillion) of the total N9.8 trillion urban households spent on food in 2019, amounting to 52% of total overall spending for the period.

What do these statistics tell us and what are some key observations in all of this? Here are at least four (4) observations.

1)      Strong rural demand
Understandably, most consumption of these products may have come from the farmer’s own production. As we know, Nigeria’s agriculture is still subsistence. What this means is that the farmer produces and consumes most of what he or she produces. But even at this, optimizing production and processing in the rural area where the farmer resides will result in two things: Firstly, the farmer is engaged in commercial production where his or her resources are optimized and combined with other resources so he or she earns more. Secondly, with optimized production throughout grower production and other commercial production arrangements, the average farmer can earn more compared to his subsistence production. Earning more means he can spend more on these products. Overall, rural consumption of these five products is set to witness sustained consumption over the medium to long term all other things being equal. Of course, much of this optimism would have been affected by COVID-19, the lockdowns and the slowdown in production, consumption and the general economy.

2)      What efficiency gains are available to be tapped from this rural food consumption
How efficient and cost-effective are these rural spending on these five product categories? If households are spending most of their hard earned incomes on these foods compared to urban households, the question is 
a) what cost savings benefits, and b) what efficiency benefits can be made available through improved production and processing, packaging and distribution targeted at rural households, so that they eventually spend less on these foods, so they spend more on non-food items which may be used to improve their ability to be more healthy, more educated or to acquire a skill that can be used to improve their future earnings capability and welfare? This calls for further investigation in the nature of the rural consumption of these products as well as their source of production. If imported or produced in urban centers, logistics and transportation efficiencies needs to be considered as part of the efficiency investigation mix. How should the private sector respond to all of this? And what can the government do to facilitate local value addition closer to rural households?

3)      Dietary diversity and food improved food security
Food and non-food consumption is an influence factor in determining a country’s food security
status. It may be too early to conclude on this point yet, but one is tempted to want to observe that the statistics give a sense that the dietary composition of rural dwellers may have significantly improved over the years considering the type of food the average household spends money on or consume. Vegetables,
poultry and poultry products, grains, etc. are diversified dietary foods and gives a sense of food security. That said, more investigation is required to put
more light on this point.

4)      Impact of the Agriculture Sector Food Security and Nutrition Strategy (AFSNS)
The ten year AFSNS was launched alongside the Agriculture Promotion Policy (APP) in 2016 by the Federal Ministry of Agriculture and Rural Development (FMARD). AFSNS which is a key part of APP seeks to promote nutrition-sensitive agriculture which addresses forms of malnutrition across the country. I know it may be premature to conclude on the success or otherwise of the AFSNS as we await a formal review and report of the programs results, however, indications from the CEP report of the NBS gives a positive light. Again, it may be too early to conclude on this point. In conclusion, these observations may be premature, but they no doubt call for further studies as they give an indication of what may be possible to improve efficiency in food production, processing, packaging and distribution in a way that captures more benefits to the rural poor while creating opportunities and benefits for the private sector.

End note: The consumption pattern of a country depicts the aggregate demand of goods and services in the country, and in most cases, it constitutes about 60 percent of the total GDP of the country. Consumption pattern also depicts the level of welfare and poverty that a nation is experiencing. The NBS CEP report is based on the Nigeria Living Standard Survey (NLSS) 2018/2019.

This Article Was Written BY

Roland Oletu Oroh is the founder and director of the Nigeria Agribusiness Register. The opinions expressed herein are solely those of the writer and do not reflect those of the Nigeria Agribusiness Register.