The Battle to Rescue Nigeria’s Food Economy

As President Bola Tinubu declares a state of emergency on security, Nigerians are watching closely to see whether stronger protection can coax farmers back to their fields. Restored confidence and higher crop output are expected to ease the relentless pressure of rising food prices, writes Festus Akanbi

President Bola Tinubu’s November 27 statement featured strong language, calling for confronting criminals. Yet, the most consequential line authorised the Ministry of Finance to release funds immediately to recruit 20,000 new police officers and redeploy thousands more from VIP duties.

This was more than a security order. By approving an exceptional charge against a fragile balance sheet, the administration signalled its intent to defend the country’s most critical but vulnerable economic pillar: the food system, which generates roughly N12 trillion annually at the farm gate. Violence has turned farmland into a hazard, and the success of this fiscal move hinges on influencing three areas that drive Nigeria’s food economy: cultivation costs, the speed of produce from farm to market, and the integrity of price formation in commodity markets.

Silent Squeeze on Farmers Across the North

The first and most painful pressure is the cost of cultivation. In much of the North, farmers must negotiate with armed groups before planting. What should be routine fieldwork has evolved into an informal levy known as the bandit tax.

In Zamfara, Katsina, and southern Kaduna, surveys show farmers pay between N8,000 and N12,000 per hectare to plant, while harvesting costs N6,000 to N10,000 per tonne. In Benue and Plateau, where herder-farmer conflicts dominate, commercial maize growers set aside roughly N75,000 per season for private security or grazing access.

Analysts estimate the tax at N420 billion annually, nearly two per cent of GDP and more than a quarter of the federal agricultural budget. This hidden cost explains a strange market contradiction: yields barely change, yet prices soar. Paddy rice producer prices have risen by almost 50% since early 2023, while consumer prices have climbed by over 60%, reflecting the risk premium built into every step of the value chain.

The government plans to reduce the bandit tax by deploying fresh security personnel. Twenty thousand new officers may seem thin nationwide, but with roughly 8,500 operatives withdrawn from VIP duties, rural coverage becomes meaningful. Farmers said if strictly deployed to cultivation belts and harvest corridors, this force could cut extortionary levies by a third within two planting seasons.

Even modest improvement yields significant benefits. A one-naira reduction in security cost per kilogram of maize lowers the retail price of a fifty-kilogram bag by seventy kobo. A 30% cut in the bandit tax could soften cereal prices by almost ten per cent and trim headline food inflation by more than one percentage point. Given that food inflation dominates Nigeria’s Consumer Price Index, the macroeconomic impact would be immediate.

Arduous Journey from Field to Market

Even if farmers return safely, analysts argued that the economic dividend is lost if the produce cannot reach markets efficiently. Apart from the deplorable state of the roads, access from the North to the South has been crippled by insecurity.

The Lagos Chamber of Commerce’s Logistics Performance Index shows that the average truck journey from Kano to Lagos, which took 42 hours in 2019, now stretches to 68 hours. Nearly 40% of this delay stems from bandit checkpoints, ransom negotiations, and road insecurity. Each extra day adds about N42,000 to a 30-tonne truckload, or roughly N28 to a 50-kilogram bag. Over a marketing season, this adds N58 billion in costs, mostly passed to consumers.

Tinubu’s directive for the DSS to deploy trained forest guards to clear bush corridors is both a security and economic intervention. Reopening routes shortens travel by almost a full day, saving about N900 per bag and potentially reducing cereal inflation by over one percentage point.

Faster production movement also boosts government revenue. Efficient transport firms earn higher taxable profits, while increased truck activity raises VAT from diesel, tyres, and spare parts. Analysts estimate that improved haulage in 2025 could net federal and state governments over N4 billion in extra revenue.

How Fear Corrupted Nigeria’s Commodity Markets

The third pillar of the food economy is price formation in commodity exchanges. Markets like Dawanau, Bodija, and Mile-12 once signalled nationwide crop availability. But formal trading volumes have fallen by over a third since 2021 as traders shift to informal, phone-based deals to avoid risk.

This retreat created a damaging liquidity discount. Farmers now earn roughly 15% below published spot prices, while urban retailers pay nearly 20% more through intermediaries who add costs and biases. Shadow brokers capture the spread, pricing fear rather than fundamentals. Futures markets also reflect this: millers quote flour at fixed premiums months ahead, entrenching inflation expectations.

A credible security intervention could restore confidence in formal trading. After the Maiduguri-Damaturu road reopened in 2017, cereal turnover at Dawanau rose almost 30% within six months, while bid-ask spreads narrowed sharply. A similar recovery today could reduce the shadow premium by N500 per bag, cutting food inflation by more than 2% and increasing household purchasing power by over N100 billion, boosting GDP growth.

Fiscal Tightrope Behind the Security Gamble

However, economic watchers have begun to ask some questions. One of these is whether the government can fund this security push without worsening fiscal vulnerability. The 2024 budget already has a deficit exceeding N6 trillion, with borrowing limited by law. The operation needs at least N162 billion for recruitment, training, allowances, logistics, and assets.

Additional borrowing could breach fiscal thresholds, leaving internal reallocation as the main option. Sweeping the contingency reserve and trimming allocations to public housing and school feeding are politically feasible but involve a trade-off. The operation must yield higher returns than the programmes it displaces. Economic modelling shows that a 3.5 percentage-point drop in food inflation could boost household income by nearly N200 billion, exceeding the cost and generating a net fiscal gain.

How Corporate Nigeria Interprets the New Landscape

The private sector is adjusting. Agro-allied companies are repricing risk. Flour Mills of Nigeria expects improved security in the sorghum belt to significantly lower input costs in 2025. Okomu Oil, facing attacks on its plantations in Edo State, anticipates sharply reduced security spending as stability improves.

Banks watch closely, holding nearly N2 trillion in commodity-backed loans. Lower food prices reduce defaults. Central Bank simulations indicate that a 10% decline in food prices lowers agricultural non-performing loans by over 1%, freeing additional capital for lending.

What the Next Nine Months Will Reveal

Success depends on execution. Deployment speed is critical. If the first recruits do not reach rural flashpoints within three months, expectations remain unchanged.

VIP convoy withdrawals are equally important. Continued heavy security for politically exposed individuals while rural areas remain vulnerable will erode confidence. The Ministry of Agriculture’s N50 billion ranching loan scheme must achieve meaningful disbursement before the next planting season to reduce herder-farmer conflict.

Transport data will serve as another measure. Sustained north-south grain movement by Q2 2025 would confirm logistics improvements. Finally, the National Bureau of Statistics’ inflation reports in early and mid-2025 will show whether the intervention delivered economic relief.

A Strategic Gamble with High Economic Stakes

Nigeria has effectively taken a leveraged position on its food economy, borrowing fiscal space today to secure future returns. The logic is straightforward: safer farms, open roads, and transparent markets make food cheaper and strengthen the economy.

Conditions for success are strict. Swift deployment, withdrawal of VIP escorts, strengthened rural security, and free movement of produce are essential. If these align, the 2025 harvest could restore stability. If not, food prices will remain dictated not by supply and demand but by the dangerous kilometres separating farm from market.