A Critical Analysis of the Implication of Fuel Hike on Food Production and Supply in Nigeria
CHAPTER ONE
OBJECTIVES OF THE STUDY
The following are the primary objectives
- To investigate the causes in the hike of fuel prices in Nigeria
- To investigate if the causes in the hike of fuel prices affect agriculture and food production in Nigeria
- To investigate how much it has affected the economy of the nation
CHAPTER TWO
LITERATURE REVIEW
Concept of Price hike
According to a report published in New Age on Sunday, quoting statistics available with the Trading Corporation of Nigeria, the prices of coarse rice, electricity and fuel oil have all gone up by 60 per cent and more between 2009. Meanwhile, the Consumer Association of Nigeria reports that house rent in the capital spiked by a staggering 80 per cent in the past six years. The association also reports that the cost of living increased 6.82 per cent, from 2013 to 2014, on the back of rising house rent, utility bills and prices of some essential commodities. Among all those commodities the sharp volatility in food prices over the last couple of years has raised serious concerns about the Food and nutrition status of the poor in developing countries like Nigeria. Most importantly, soaring food prices implies that a higher share of the family income is allocated for buying food. The most recent estimates from FAO show that 75 million more people were thrown below the hunger threshold due to the impact of high prices in 2014, and another 40 million in 2013, bringing the total number of undernourished people to 963 million (Blein and Longo 2013). In 2014, the food price index calculated by World Bank rose by 19 percent, compared with 12 percent the year before. Soaring of price levels have different effects across the countries and population groups.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
In this chapter, we would describe how the study was carried out.
Research design
Research design is a detailed outline of how an investigation took place. It entails how data is collected, the data collection tools used and the mode of analyzing data collected (Cooper & Schindler (2006). This study used a descriptive research design. Gill and Johnson (2002) state that a descriptive design looks at particular characteristics of a specific population of subjects, at a particular point in time or at different times for comparative purposes. The choice of a survey design for this study was deemed appropriate as Mugenda and Mugenda (2003) attest that it enables the researcher to determine the nature of prevailing conditions without manipulating the subjects.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of One hundred and twenty (120) questionnaires were administered to respondents of which 100 were returned. The analysis of this study is based on the number returned.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
CONCLUSION
In this study, our focus was to carryout a critical analysis of the implication of fuel hike on food production and supply in Nigeria. The study specifically was aimed at ascertaining if fuel price hike affects food production and supply in Nigeria.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are residents in Lagos State.
Based on the findings, the paper concludes that the economical effects, without auguring for or against subsidy removal are negative. The Government of Nigeria would have to consider these effects now or deal with it In the near future. The growth of real GDP has reduced because of the hike in the price of fuel in Nigeria. In addition, the rise in petrol price and the certainty of uneven prices across all 36 states of the federation, will add anywhere from 3 to 5 percentage points to consumer price inflation since 2012 to date 2014.Households’ income and spending have both been affected by the rise in petrol prices. More so the value of minimum wage compensation will depreciate further (assuming it is finally at N18, 000) combined with the increase in inflation. At the same time, the average household’s annual spending on energy goods and services will rise by about N75, 000, and their saving rate dropped sharply.The fall in the saving rate, will erode about half of Nigeria’s present middle-class citizens and further dampen the negative effects that higher prices would ordinarily have had on the economy in the short run. Consumer spending will be diminished greatly over the next few years, as citizens try to adjust and build up new savings.
Paying high prices for petrol and using less of it will affect the demand for goods and services. Nigeria is known more as a consuming nation than a producing nation. The few production industries In Nigeria will face a daunting challenge to stay in business (cost of production will go up and demand will drop).
The effects on demand, however, have by far the greater potential impact on GDP in the short run. In a perfect world, using less energy has only a small direct effect on production because, out of all the inputs to production (labor, structures and equipment, energy, and other raw materials), energy costs account for a relatively small share of output, but In the case of Nigeria, energy is a major share of output, as organizations have to provide for their own power in- house, such as generators sets etc and are exposed to the market as it relates to energy prices with the subsidy gone.
Recommendations
Based on the conclusion the following recommendations have been slated:
- Government should retain fuel subsidy while expediting the construction of the three proposed refineries.
- Fuel subsidy should be removed as soon as these new refineries are commissioned.
- The proposed rehabilitation of the existing refineries should be expedited.
- Government should vigorously pursue the revitalization of the railways. If only Nigerians had alternative to road transport, all this noise about fuel subsidy removal would not have been there.
- Private companies should be encouraged to start building refineries now with the assurance that subsidy would be removed before they start production.
References
- Abang I. S. et al (2012). Enlightenment to the Impact of Fuel Subsidy Removal In Nigeria. Afolabi, J. 1999 “The Oil Price of Hike Blunder”, Newswatch, January 18, pp. 8–16.
- Arinze P. E. 2011: “The impact ofoil price on the Nigerian economy”www.transcampus.org/journals.www.ajol.info/journals/jorind JORIND (9)1
- Allwell, O. (2012). State and Local government subsidy reinvestment program www.punchang.com retrieved April23, 2012 Central Bank of Nigeria 2003: Annual Report and Statement of Account, Vol.12, CBNPublications.
- Central Bank of Nigeria 2005: Economic and Financial Review, Vol.14, CBN Food and Agriculture organization (2012) FAO bulletin 2012.
- Gyoh, S. (2012) Nigeria The case against fuel subsidy and the argument for deregulated petroleum sub sectorhtt//awarenessfor. Retrieved March 19, 2014.
