…A Policy Imperative for Sustainable Food Security, Rural Livelihoods and National Economic Stability
…Nigeria cannot afford a policy regime that undermines confidence and discourages investment in agriculture—one of the most strategic sectors of the economy
…The Centre for the Promotion of Private Enterprise (CPPE) is of the firm view that Nigeria urgently requires a clear, rules-based and market-friendly Farm Price Stabilisation and Farmer Income Protection Framework.
By CPPE
MON FEB 02 2026-theGBJournal| The Federal Government’s recent food security strategy has produced troubling trade-offs and unintended consequences.
While consumers have applauded the sharp decline in food prices and the notable moderation in food inflation, investors and producers in the agricultural sector are lamenting heavy losses arising from the collapse in prices of key commodities.
The welfare gains from cheaper food have been profound and should be acknowledged. However, the cost to farmers and other investors across the agricultural value chain is equally significant and cannot be ignored.
There is therefore an urgent need to strike a sustainable balance between two critical national objectives: keeping food affordable for consumers while protecting farmers’ incomes and safeguarding investment in agriculture.
This development presents a major policy dilemma that demands urgent attention.
Nigeria cannot afford a policy regime that undermines confidence and discourages investment in agriculture—one of the most strategic sectors of the economy, a major source of livelihoods, and one of the country’s largest employers of labour.
There is therefore an urgent need for policy recalibration and rebalancing to ensure that farmers remain productively engaged, rural incomes are protected, and investor confidence across the agricultural value chain is sustained—without compromising the equally important objective of keeping food affordable for Nigerian households.
Recent import surges of food crops—especially staples such as rice, maize and soybeans—have caused serious dislocations in the agricultural investment ecosystem.
This has inflicted severe hardship on farmers, weakened incentives to produce, and undermined Nigeria’s broader food security objectives. Although consumers have welcomed the decline in food prices, the long-term consequences are adverse: farmer incomes fall, production declines over time, investment confidence weakens, and the country risks returning to cycles of scarcity and higher prices.
The Centre for the Promotion of Private Enterprise (CPPE) is of the firm view that Nigeria urgently requires a clear, rules-based and market-friendly Farm Price Stabilisation and Farmer Income Protection Framework.
Such a framework should prevent import-induced price crashes, reduce harvest-time price collapse, discourage distress sales, protect farmer livelihoods, strengthen value chains, and provide stable supply conditions for processors and consumers.
There is a need for a coherent programme grounded in global best practices and adapted to Nigeria’s fiscal and governance realities.
The Problem: Why Farm Prices Collapse in Nigeria
The immediate factor driving the collapse of farm product prices in Nigeria has been the surge in imports of grains, adopted as an emergency response to extremely high food prices experienced nationwide.
However, beyond the import factor, there are structural and seasonal conditions that recur annually and worsen price instability.
First, harvest glut remains a major challenge. Many farmers harvest the same crops within the same period, causing sudden oversupply.
Second, the limited availability of storage facilities, drying centres and cold-chain systems forces farmers to sell immediately regardless of market conditions.
Third, weak rural logistics—poor roads, insecurity, high transport costs, and limited aggregation hubs—makes it difficult to move produce efficiently from production zones to high-demand markets.
In addition, Nigeria’s agricultural markets suffer from inadequate processing capacity. When surplus produce cannot be absorbed by processors, raw commodities flood open markets, leading to sharp price declines.
The combined effect is a recurring pattern: farmers sell at very low prices immediately after harvest, only for prices to rise sharply months later when supply drops. This volatility harms producers and consumers alike and reflects deep structural weaknesses in market organisation.
Need for a Rules-Based Farm Price Stabilisation Framework
CPPE calls for the establishment of a National Farm Price Stabilisation and Farmer Income Protection Framework as a national priority.
The framework should be anchored on principles that reduce uncertainty, promote investment, and encourage private sector participation. Specifically, it must be:
-Rules-based rather than discretionary
-Targeted rather than universal
-Market-friendly rather than command-driven
Digitally enabled to strengthen transparency and accountability
Nigeria’s efforts should focus on correcting market failures—particularly in storage, logistics, finance, processing, and market information—rather than crowding out private enterprise through excessive government control.
Minimum Guaranteed Prices for Selected Priority Crops
A key pillar of the stabilisation programme is the introduction of Minimum Guaranteed Prices (MGP) or price floors for selected strategic commodities.
This is a global best practice for protecting farmers against severe price collapses.
CPPE recommends that Nigeria begins with four priority staples such as:
-Maize
-Rice (paddy)
-Sorghum
-Soybeans
The MGP system should not become an open-ended government purchase programme. Rather, it should operate strictly as a stabilising backstop. When market prices fall below the support price, government can intervene through licensed agencies and aggregators to purchase at the support price.
Support prices should follow a transparent methodology reflecting:
-Cost of production
-Storage and logistics costs
-Fair farmer margin
CPPE cautions, however, that MGP without adequate storage capacity and institutional discipline can become fiscally and structurally unsustainable. Therefore, MGP must be combined with reforms in reserves, warehousing, commodity trading systems and transparent governance.
Reform of Strategic Grain Reserves and Buffer Stocking
Nigeria’s Strategic Grain Reserves require urgent reform to serve as effective stabilisation instruments.
CPPE advocates converting the current reserves into a modern, professionally managed and rules-based buffer stock system.
Government should:
-Buy grains during harvest periods when prices collapse
-Release grains in lean seasons when prices spike
This will reduce volatility, stabilise supply, and strengthen food security.
Buffer stock operations must be guided by strict rules, including:
-Procurement caps
-Quality assurance standards
-Modern storage practices
-Transparent inventory management
-Public reporting and disclosure
Where reserves are managed without clear rules, the system becomes prone to wastage, rent-seeking, corruption and inefficiency.
Scaling the Warehouse Receipt System Nationwide
A major driver of price collapse is farmers’ lack of liquidity. Many farmers sell at low prices not because they want to, but because they urgently need cash. CPPE therefore recommends nationwide expansion of the Warehouse Receipt
System (WRS)—one of the most sustainable global solutions to distress sales.
Under WRS:
-Farmers deposit produce in certified warehouses
-They receive receipts which serve as collateral for loans
-Farmers can sell later when prices improve
WRS also improves commodity grading and standards, enhances transparency, and supports structured commodity trading.
Nigeria must move beyond pilot schemes to a robust national WRS programme supported by:
-Certification and regulation of warehouses
-Digital traceability systems
-Insurance cover
-Credit guarantees to encourage bank lending
Institutional Procurement and Guaranteed Offtake
Government can support market stability without dominating the market by using institutional demand strategically.
CPPE recommends structured procurement that links farmers and aggregators to programmes such as:
-School feeding programmes
-NEMA relief operations
-Food supply chains of the military and paramilitary
-Hospitals and other public institutions
Procurement should follow clear rules, including:
-Local sourcing during harvest periods
-Transparent and competitive digital procurement processes
-Supply through cooperatives and registered aggregators
This strengthens farmer incomes, stabilises markets, and improves food security outcomes.
Investing in Storage, Cold Chain and Agro-Logistics
Farm price stabilisation is impossible without addressing Nigeria’s deficits in storage and logistics. CPPE calls for urgent investment in:
-Aggregation centres
-Rural storage and warehousing infrastructure
-Modern silos and drying systems
-Cold rooms and refrigerated storage
-Refrigerated transport—especially for perishables
Government should prioritise Public-Private Partnerships (PPPs) in agro-logistics and provide targeted incentives such as:
-Tax reliefs
-Concessionary finance
-Viability gap support where necessary
Expanding Processing Capacity to Absorb Harvest Gluts
The durable solution to commodity price collapse is agro-industrial development.
When processing capacity is weak, harvest gluts translate into price crashes. When processing capacity is strong, surplus is absorbed—stabilising prices and creating value-added jobs.
CPPE recommends the development of processing clusters near production zones supported by:
-Reliable power supply
-Improved access roads
-Reduced regulatory burden
-Investment incentives
Priority processing areas include:
-Tomato paste
-Cassava starch and ethanol
-Rice milling
-Soybean crushing
-Dairy processing
-Animal feed production
Insurance and Farmer Income Protection
Beyond price floors and buffer stocks, Nigeria should adopt modern farmer income protection instruments. CPPE urges strengthening of agricultural insurance, including:
-Weather-index insurance
-Revenue insurance pilots combining yield and price risk coverage
Insurance subsidies should be targeted at smallholders and anchored on credible farmer registries and digital verification to minimise abuse.
Trade Safeguards and Market Information Systems
CPPE further emphasises the importance of predictable trade safeguards to prevent import-driven price crashes.
While Nigeria must comply with regional trade obligations, it is necessary to adopt rules-based safeguards during import surges, enforce quality standards at borders, and strengthen anti-smuggling coordination.
Equally important is a National Agricultural Market Information Service providing:
-Daily commodity prices
-Demand forecasts
-Logistics cost updates
-Storage availability nationwide
Better market information improves bargaining power, strengthens market transparency, and enhances efficiency.
Reducing the Cost of Farm Inputs
Government should deliberately and urgently reduce the cost of farm inputs as a core food security strategy. Current input costs are prohibitively high, including:
-Fertilisers
-Improved seeds/seedlings
-Agrochemicals
-Farm machinery and equipment
-Livestock feeds and vaccines
-Storage and packaging materials
There is also an urgent need for:
-Single-digit loan facilities
-Improved technical support and extension services
Reducing the cost of inputs and financing will boost productivity and lower production costs across value chains.
Conclusion: A Market-Friendly Framework for Sustainable Food Security
CPPE believes Nigeria’s agricultural transformation cannot be achieved without stabilising farmer incomes.
Price collapses destroy incentives to farm, reduce production over time, and worsen rural poverty.
Nigeria must adopt a framework that combines:
-Price stabilisation tools
-Buffer stock reforms
-Storage and logistics investment
-Processing expansion
-Structured trading systems
-Financing solutions
-Insurance mechanisms
CPPE calls on the Federal Government, State Governments, commodity exchanges, development finance institutions, and private investors to work collaboratively in establishing a Farm Price Stabilisation and Farmer Income Protection Framework that is rules-based, transparent, fiscally sustainable, and supportive of private enterprise.
A stable agricultural market will not only protect farmers; it will strengthen food security, reduce inflationary pressures, expand rural employment, and improve Nigeria’s national economic resilience.
DR Muda Yusuf is CEO, Centre for the Promotion of Private Enterprise (CPPE)
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
