Stakeholders have decried the Federal Government’s proposed 5 percent tax on petroleum products, warning that it could worsen the rising cost of food and deepen Nigeria’s food security challenges.
Concerns are growing among players in the agricultural sector who say the proposed policy will raise production costs across the board. Agriculture in Nigeria, they argue, still depends heavily on fuel and diesel, not only for farming operations but also for post-harvest processing and transportation of produce to markets.
Prince Oyewumi Oyedele Oyetunde, Publisher, noted that the move will directly impact food affordability and farmer livelihoods.
According to him, the increase in fuel cost will affect irrigation, mechanisation, and logistics, leading to higher food prices.
His words: “If food prices rise beyond the average Nigerian’s purchasing power, demand will fall.
“This could create excess supply and force farmers to sell at a loss. Many farmers are already selling below production costs just to keep food flowing.”
He called for government intervention to cushion the effect of the tax. Among his suggestions were targeted subsidies for genuine farmers, tax reliefs for agro-processors, and investment in solar energy for hatcheries, feed mills, and irrigation systems.
Tunde Banjoko, Chairman of the Lagos Chamber of Commerce and Industry Agro Allied Group, shares similar concerns.
He pointed to the central role of fuel in moving inputs to farms and produce to markets.
“An increase in petroleum prices affects everything from seedlings to harvest,” Banjoko said. “Logistics becomes more expensive, and so do fertilisers, pesticides, and packaging materials. Eventually, all these costs are passed on to the consumer.”
He noted that efforts to introduce alternative fuel sources such as compressed natural gas (CNG) have been slowed by rising CNG prices. He urged the government to invest more in affordable CNG trucks and expand rail transport as a cost-effective alternative.
Banjoko also highlighted non-fuel challenges such as multiple levies and taxes on goods moved across state and local government areas. He recommended a review of these charges to ease pressure on food producers.
He stressed that if the government’s plan is to use the tax for infrastructure development, then road construction and repair should begin with farm roads, which are in poor condition in many rural areas.
“Bringing produce from farms is often difficult due to bad roads,” he said. “If farmers are going to pay this tax, the first benefit they should see is improvement in the roads they use daily.”
While many stakeholders are worried about the immediate effects, others say the policy should be viewed in a broader context.
Henry Olatujoye, a commodity expert and former President of the National Palm Produce Association of Nigeria, said the tax may offer long-term benefits if well managed.
He argued that if the funds generated are directed into rural infrastructure, agricultural finance, and technology upgrades, the sector could grow stronger in the long run.
“In the short term, farmers will feel the pressure, no doubt.
“But if the government invests wisely, the improvements will help reduce future costs. Patience is needed,” Olatujoye said.
He also remarked that fuel prices in Nigeria remain relatively low compared to other countries in the region. From that perspective, he said, the 5 percent tax should not be considered excessive.
Meanwhile, the Trade Union Congress of Nigeria has voiced strong opposition to the plan. On Monday, it warned of a nationwide strike if the tax is implemented, saying the timing is wrong given current inflation and the recent removal of fuel subsidies.
The Federal Government has said the tax is intended to fund infrastructure projects.
