Wednesday, April 24, 2024

Stakeholders Lament Effect of High Cost of Logistic on Food Inflation

Agricultural stakeholders have related the current increase in the price of food to the high cost of logistics due to the hike in diesel prices, following its disruption in supply chains as a result of the ongoing war between Russia and Ukraine.

Agricultural stakeholders have related the current increase in the price of food to the high cost of logistics due to the hike in diesel prices, following its disruption in supply chains as a result of the ongoing war between Russia and Ukraine.

Mr. John Olateru, Managing Director of Terudee Farms and former Oyo State Chairman of the Poultry Association of Nigeria (PAN), explained that the high cost of transportation was caused by poor road networks, extortions of food aggregators and dealers on the road, and food inflation.

The current rate of diesel at N600/700 per liter and the deplorable state of the roads connecting food-producing rural communities across the country that are mostly untarred, ungraded and largely deplorable have contributed to an increase in the cost of long-distance food transportation, especially from the northern to the southern part.

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According to Kolawole Adeniji, a food processor, the cost of diesel is central to food production, processing, and transportation. Tractors, harvesters, trucks, and food-processing machines are diesel-powered. The situation, he said, affects landing costs for distributors, who, in turn, add their profit margins before selling to the consumers.

The Managing Director and founder, Vertex Rice, Lokoja, Kogi State, Afis Oladejo, on his own, added that transporting a 50kg bag of rice from his factory in Lokoja to Bodija market, Ibadan, in Oyo State, costs N1,100. Hence, a truck-load of 600 bags costs N660,000, up from about N300,000 in April 2021.

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“Processing the rice in the factory is done using diesel generators. This affects not only the price of the product but also our profitability and sustainability of the business,”

“Cost of transportation along the value chain is huge. With the processing and packaging costs, they affect pricing, profitability, sustainability and affordability,” Oladejo lamented.

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