As Nigeria’s inflation rate declined to 15.10 percent in January 2026, a new concern has emerged over the possible consequences of cheaper food on agricultural producers.
The Centre for the Promotion of Private Enterprise (CPPE) has cautioned that while easing prices offer relief to households struggling with the cost of living, they may also expose farmers to financial strain if proactive steps are not taken.
In a policy paper released this week, the economic policy group noted that the recent moderation in headline inflation signals improved purchasing power for consumers.
However, it warned that declining food prices at the point of sale could translate into reduced earnings for primary producers, particularly smallholder farmers who already operate on thin margins.
According to the organisation, protecting rural incomes must now become a central focus of economic policy to prevent a downturn in food production.
The think tank stressed that falling commodity prices, if left unmanaged, could weaken incentives for cultivation in the next planting season.
When farmers are unable to recover production costs or earn reasonable returns, they may cut back on acreage or shift to less risky ventures.
Such a response, the group argued, could set the stage for supply shortages in the medium term and ultimately reverse the current progress on price stability.
To address these risks, the organisation proposed the introduction of guaranteed minimum prices for selected staple crops.
It explained that such a framework would provide a safety net for farmers during periods of weak market demand, ensuring that harvests do not sell below sustainable levels.
The brief also called for expanded investment in processing facilities to absorb excess produce.
By strengthening agro processing capacity, surplus output can be converted into finished or semi-finished goods rather than wasted or disposed of at distress prices.
In addition, the Centre recommended the reinforcement of national buffer stock systems.
Building up strategic food reserves during periods of abundance would not only support producers through structured offtake arrangements but also enhance the country’s ability to respond to future supply disruptions.
This approach, it said, would help maintain stability across the agricultural value chain.
The policy document further urged authorities to increase support aimed at improving farm productivity.
Access to improved seedlings, irrigation, mechanisation, storage infrastructure and affordable financing were identified as critical interventions that could lower production costs and protect farmer profitability even in a softer price environment.
By raising yields and efficiency, farmers would be better positioned to remain viable despite lower market prices.
The Centre concluded that the current phase of disinflation should not be viewed solely through the lens of consumer benefit.
It emphasised that a careful balance must be maintained between affordability for urban households and sustainability for rural producers.
Safeguarding national food security, the report argued, requires policies that recognise both sides of the equation.
