State of Nigeria’s Food Reserves
As the federal government mobilises to release food from the national strategic reserves in the face of worsening hunger in Nigeria that is resulting in looting of warehouses and trucks conveying food stuff, Dike Onwuamaeze looks into the state of Strategic Food Reserves in Nigeria
Preparations are in their final stages for the release of 42,000 metric tonnes of assorted food commodities to Nigerians who are experiencing hardship as a result of high cost of food in the markets.
The 42,000 metric tonnes of assorted food commodities would be released from the National Strategic Food Reserve (NSFR) to the National Emergency Management Agency (NEMA) for onward delivery to the masses.
According to an update that was recently released by the Special Adviser to the President on Information and Strategy, Mr. Bayo Onanuga, the food commodities are being bagged and would be delivered without taking any payment from Nigerians.
Onanuga added that this would be complemented by the 60,000 metric tonnes of milled rice to be purchased by the federal government from the mega rice millers.
However, the effort of the federal government to assuage the growing hunger due to high cost of food items in the market has necessitated a look into the state and management of the country’s NSFR delivery system.
Evolution of Food Reserves
A report titled the, “Strategic Food Reserve in Nigeria: An Assessment of Optimal Stock Levels and Storage Capacity,” that was published by the Federal Ministry of Agriculture and Rural Development (FMARD), in collaboration with the AGRA, in 2023 gave a detailed account of the state of Nigeria’s food reserve system.
The report stated that the Food Strategic Reserve Programme in Nigeria was designed to provide food relief in times of emergencies, both locally and internationally, and to provide a ready and accessible market for locally produced food items through the Buyer of Last Resort (BLR), and to maintain price stability to enhance food security.
The report stated that the actual stock in the Nigeria’s emergency reserve was 100,000MT, which is just 7.6 per cent of the required six months provision of 1,323,000MT for minimum food security requirements.
The report further stated that the “storage capacity of 225,000 MT held by the FGN is grossly inadequate. However, the maintenance cost of keeping a high proportion of the food grains in reserve will not only be too colossal but also unsustainable, given the present economic reality of the country.
The report recommended that the optimal stocks of 414,425 MT to offset historical shortfalls in supply while the optimal capacity of emergency reserve should be 2,564,098 MT for vulnerable groups.
It further recommended a Buffer Stocks Capacity (BSC) of 1,323,000 MT for minimum food security requirements. “Having an optimal stock in the buffer stock can help the country ensure a certain level of price stabilisation and cater for vulnerable groups and other relief programs at minimum cost.
“In a year, the buffer stock capacity requirement is 2,646,000 MT which, according to the third model is the minimum stock that will give the country food security.
“The foregoing shows that with a provision of 2,646,000 MT in a year or a provision of 1,323,000 MT twice a year in the buffer stock, the country can cope with its price stabilisation, vulnerable groups and emergency reliefs.
“However, given the high cost of keeping a large physical stock, the government should consider keeping both the physical and financial stocks to optimise the use of resources in stocking physical reserves,” the report said.
Food Reserves Capacity
Nigeria has a combined total storage capacity of 1,336,000 MT when fully utilised and 51 warehouses with a combined capacity of 108,000MT. However, given the need to optimally utilise the excess silo capacity, and the need to involve the private sector in the management of the silo programme, the government decided to concession some of its silo complexes.
Therefore, the management of 17 out of these 33 strategic food reserves has been transferred to private companies while 16 are retained by the federal government for strategic food reserve and price-stabilisation.
Only six out of the 16 reserves that are retained by the federal government were operational as at the time the report was published in 2023. Also constructions are still ongoing in six reserves that are sited in Maiduguri, Uyo, Jalingo, Okigwe, Damaturu and Yenagoa, which were in various stages of completion and have not been completed due to insurgency, civil disturbance and topographical reasons.
Reserves in Bauchi, Bauchi State, Lokoja in Kogi State and Irrua in Edo State have been completed but not operational for various reasons.
The 17 strategic reserves under private management are not faring better. Only three reserves, one of them in Gombe under Independent Grain Handling and Storage Limited and others in Ibadan and Ikenne, Ogun State under the management of Serve well Agriculture Service Limited and Agro-Universal Consortium respectively were reported to be operating at full capacity.
Those that are operational and their equipment in good condition are reserves in Balasa, Kebbi State and Jahun, Jigawa State, which are managed by Matrixville Limited. Others are the reserve in Sokoto, which is managed by Agro-Universal Consortium and the strategic reserve in Makurdi, Benue State under the management of Upland Grains Production Company Limited, which is operating at 70.48 capacity.
The reserves in Jos, Plateau State are operational, but the equipment is in bad condition while the reserves in Ogoja, Cross River State and Gaya, Kano State were not fully operational even though its equipment was in good condition. It was said to be undergoing renovation and repairs. These three reserves are under the management of Agro-Universal Consortium.
Also the reserves in Lafiaga, Kwara State and Kwali, FCT, are not fully operational even though their equipment is in good condition.
However, reserves that are not operational are in Ado Ekiti, Ekiti State and Akure, Ondo State, under the management of Agro-Universal Consortium. Others are in Kaduna, Ezillo, Ebonyi State and in Igbarim, Anambra State, which are being managed by Matrixville Limited, Ebony Agro and Coscharis Farms Limited respectively.
Strategic Reserve Department
Apart from the operational state of the reserves, the report revealed that there is no law or an Act of the National Assembly that established the reserve. It was originally established as a unit in the office of the honourable minister, Federal Ministry of Agriculture and Rural Development in 1994 but was later upgraded to a full department in 2000 that operated within the civil service structure.
The department has the responsibility for the procurement and distribution of the mandated food grains (maize, sorghum, paddy rice, millet, and soybean) and “garri” in collaboration with the procurement department of the ministry.
It also has the responsibility to implement the Buyer of Last Resort programme and the Guaranteed Minimum Price (GMP). It is also saddled with the responsibility for silo construction and management.
In addition, the department implements the food relief programme, and the rotation of food stocks after the ideal storage period to cushion citizens from the effect of food price volatility and the high cost of food. It also carries out emergency and regular procurement.
Reserves’ Operational System
In its policy objective, the FSRD aim is to procure and hold 5.0 per cent of food grains produced in Nigeria such as maize, sorghum, millet, soybean, paddy rice, and garri (grated cassava tubers, fermented and fried to a moisture content of about 8.0 per cent for storage.
This is enabled by the collaborative efforts of various governmental organisations like the National Bureau of Statistics, the Central Committee on Grains and other commodities prices in the Office of the Secretary to the Government of the Federation and the market price monitoring unit of FSRD that provide informed decisions on when to procure (stock) and release (destock) food from the reserve.
Food procurement is done through Licensed Buying Agents (LBAs) after the GMP InterMinisterial Committee of FMARD completes a market survey and establishes a GMP at which LBAs are expected to buy from the farmers and deliver the grains to assigned silos.
Food releases are done either for price stabilisation or emergency purposes on the approval of the Presidency while released food commodities are conveyed by registered contractors sponsored by the beneficiary or government as may be necessary. Stabilisation releases are primarily made to the public in such a manner that the releases protect consumers and processors against price hikes.
As a matter of policy, grains that have attained the maximum storage period of three years are usually released to individuals and companies based on the approval of the Honourable Minister and recommendation from the Department. In some cases, the distribution of released food commodities during emergencies and disasters is carried out by NEMA, which has the statutory mandate.
Strategic Reserve Performance
The Food and Strategic Reserve scheme, according to the report, has performed well since its establishment. It has been able to keep a reasonable quantity of reserve despite several challenges which range from budgetary constraints, institutional issues, staff capacity, harsh conditions within which the staff of the silo operates etc.
The current stock as of May 2022 is 100,000 MT. There have been intermittent stocking and de-stocking of food commodities during the period under review. These activities have not been as regular as expected due to scarcity of funds, lack of enough grains to procure (as a result of low production, or the avoidance of government to procure in order not to exert further pressure on the market. It shows the emergency release in 2020 during the COVID-19 period and the releases to vulnerable groups affected by floods, violent insurgency, and the IDPs in various camps, this was highest in the 2012/2022 periods.
GAPS AND WEAKNESSES
One of the noticeable weaknesses in the management of the strategic food reserve in the country is absence of any legal instrument to back up its operation as an autonomous government agency.
Moreover, as a department in the Federal Ministry of Agriculture and Rural Development, its authority is limited and subject to the bureaucratic procedures of the ministry.
Moreover, some of the silo complexes are currently facing technical (structural and machinery) challenges due to the ageing and obsolescence of some equipment, and non-strict routine and preventive maintenance occasioned by the scarcity of funds.
In addition, their laboratories are not adequately equipped to carry out advanced and complex food analyses like mycotoxin analysis as well as a series of food analyses to establish its safe consumption for human and animal consumption.
According to the report, government’s intervention in price stabilisation is not very impactful due to its limited scope both in terms of funds and quantity of stored grains.
Based on the total supply in 2021 and regarding the 5.0 per cent grains considered in this report, the government was holding less than 0.4 per cent while over 99.6 per cent is being held by grain traders and merchants.
The operation of the food reserves is affected by lack of political will among the state governments to pull through the Buffer Stock Scheme for price stabilisation and serve as the second level of the National Food Security Program. This may also be due to a lack of initial (capital) investment by the state governments.
The report noted that there is little synergy among government institutions that are charged with data generation and management. Accessibility to up-to-date data on food grains production, market prices, weather report and others, becomes a bit cumbersome.
It stated that the mechanism for stocking the silos through the Guaranteed Minimum Price (GMP) is weak and subject to abuse. “There is a need to rejuvenate the system, from the composition of the National Committee on GMP, its operations, the time of announcement of the GMP, and the profit allowance(s) made for the suppliers,” it said.
It added that “presently, there is no distinction between food aid (emergency) stock and price stabilisation stocks; hence it becomes difficult for the government to recoup a substantial part of the cost of stocking and management of the food grains meant for the stabilisation program.
The report further noted that “some of the silo projects are still under construction and have overrun their initial contract time and cost while some of the equipment are obsolete and this impacts the operational efficiency of the system.
“Some of the completed silos have challenges: the one at Ilesa was forcefully entered during a civil disturbance resulting in the vandalisation of some equipment; the newly completed silo complex at Bauchi has been partly destroyed by a windstorm.
“Some silo projects are affected by environmental and natural issues such as ravine encroachment, erosion and windstorm damage,” the report said.
Another weakness noted in the report was that “the silo sites are not linked by the railway system, thus limiting the transportation of grain by road, which is expensive due to the high cost of fuel as well as the total overhead cost.
“Most of the roads linking the Trunk A roads from the farm to the aggregation centres and the silo facilities are in a bad state, thus increasing the transport cost and unduly increasing the turnaround time of grain delivery to the silos.”
