Business & Investment

A ban on selling dollars to BDC appears due to rising cooking costs of Jollof rice

According to the latest report, the average cost of cooking a pot of jollof rice for a family of five has increased from N7,618 to N8,000.50 within the last three months. SBM Intelligence Jollof Rice Index Forex reporting and government policy have been added to the issue.

According to a geopolitical research firm focused on Africa, the suspension of FX sales to BDC and the closure of websites offering parallel rates are informative as most importers source FX from parallel markets. Asymmetry and panic-led price spikes. Regarding information from such web pages, the report said.

Read again: Nigerians spend 25% of the minimum wage to cook jollof rice pots

According to the report, the average cost of making jollof rice pots fell in July, but rose again in August and September.

“According to an interview with Forex traders, most traders have raised the price of Forex to the” safe “side because there was no central means of determining parallel rates. Some components of JollofIndex. Rice and Turkey are being imported because demand replaces domestic production, “the report further states.

Information asymmetry (inequality or bias) affects the cost of food prices. The lack of actual market information about parallel rates further boosts the cost of Forex being passed on to the end consumer.

Ayorinde Akinloye, a consumer analyst at United Capital Plc, pointed out that continued spikes exacerbate consumer pressure on pockets.

“Inflation is still in the double digits, and we haven’t seen a corresponding increase in revenue yet, so consumers are expected to continue to feel pressure.”

In July, the Central Bank of Nigeria said it had discontinued FX sales to BDC operators, making the parallel market a conduit for illegal FX flows and grafts.

Before FX banned BDC, factors such as instability, bad weather, lack of storage facilities, higher energy prices, border closure policies and the Covid-19 pandemic led to higher food prices.

The country’s food inflation rate has experienced a slight decline, but it is still high at 19.57 percent as of September 2021 compared to 16.66 percent in September last year. Recently, the World Bank pointed out that the country’s surge in inflation has driven 7 million Nigerians into poverty.

According to the World Bank, there were 82.9 million poor Nigerians before inflation began to rise steadily, but that number has grown to 90.1 million.

SBM Intelligence uses jollof rice, a common delicacy enjoyed by most Nigerian homes, as a proxy to measure food inflation (price) across the country.

The products that make up the Jollof Index are: Rice, curry, thyme, kunor seasoning peanut / vegetable oil, turkey / chicken (chicken), beef, seasoning, pepper, tomato, salt, onion.

In addition, data on the most common ingredients used in the production of jollof rice are collected from 13 markets each month across the six geopolitical zones of Nigeria.

“When trying to find a reason for the constant increase from traders and sellers of these commodities, they said it was simply due to the current dollar rate for naira, especially commodities imported from abroad.”

A US merchant in Lagos, who argued hostilely, said, “Prices have to rise to the break-even point because it’s not her fault that the price has risen from the source.”

Another reason traders cited for fresh foods, especially tomatoes, peppers and vegetables, is due to the current security situation in the states in which these items are produced.

The report recommends improving market information to address the continued rise in food prices. “Information asymmetry should be the government’s first concern as it affects the cost of food prices and can be useful in the long and short term.”

Other recommendations include investing in agricultural interventions aimed at increasing the production levels of actual farmers with built-in monitoring and evaluation techniques, encouraging and reducing risk of investing in agriculture, and investing in food storage infrastructure. And the removal of import restrictions on essential foods.

“Apart from the” government’s “recommendation, solving the problem of food insecurity is not a top-down approach, but a’society-wide approach’with the participation of various stakeholders throughout the food supply chain. We recommend that you take this, “said the report. Further advice.

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A ban on selling dollars to BDC appears due to rising cooking costs of Jollof rice A ban on selling dollars to BDC appears due to rising cooking costs of Jollof rice

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