USAID warns Nigeria, other African countries as food inflation persists

The United States Agency for International Development (USAID) has warned Nigeria and other African countries to brace up for higher food prices, following recent developments that have temporarily halted Ukraine’s food exports to African countries.

USAID’s Deputy Administrator for Policy and Programming, Isobel Coleman, said this on Thursday at a virtual press conference.

According to her, Russia’s decision to withdraw from the Black Sea Grain Initiative had already begun to trigger higher food prices around the world.

Impact of Russia and Ukraine War

She noted the impact of this food price hike would be more felt in developing countries that were import-dependent and had conventionally relied on grain imports from Ukraine.

Russia’s invasion of Ukraine in February 2022 halted all maritime grain supplies from Ukraine, which was once a key exporter via the Black Sea.

Furthermore, Russia temporarily banned grain exports, worsening the issue. As a result, global food prices rose, threatening famine in developing countries such as Nigeria, Sudan etc.

More insight

In July 2022, Turkey and the United Nations brokered a deal between Russia and Ukraine allowing cargo ships to sail along a corridor in the Black Sea 310 nautical miles long and three nautical miles wide.

The corridor ran to and from the Ukrainian ports of Odesa, Chornomorsk and Yuzhny/Pivdennyi. It also allowed the Russian navy to check ships for weapons at the Bosphorus Strait, at the entrance to the Black Sea.

According to the UN’s Food and Agriculture Organization, almost 33 million tonnes of grain were shipped from Ukraine under the deal, and world food prices declined by roughly 20% as a result.

Russia on July 17, 2023, halted the breakthrough wartime deal that allowed grain to flow from Ukraine to countries in Africa, the Middle East and Asia citing worldwide sanctions as a barrier to agricultural exports.

Kremlin spokesman Dmitry Peskov said the Black Sea Grain Initiative would be suspended until demands to get Russian food and fertilizer to the world are met.

Ukraine is one of the world’s largest breadbasket, and as such is a major producer of crops such as sunflower oil, barley, maize, and wheat.

What you need to know

The ending of the deal has already had a severe effect on international food markets, with wheat prices rising sharply on both European and US wholesale markets.

Before the conflict, Ukraine was exporting roughly 25 to 30 million tons of corn a year, mostly through the Black Sea, and 16 to 21 million tons of
wheat.

Ukraine’s President Volodymyr Zelensky noted that the country will find alternative routes to reach Africa and Asia, in a bid to keep food prices down and prevent starvation in destination countries.

Nigeria’s food inflation is at an all-time high, increasing by 43bps to 25.25% in June from 24.82% in May.

We believe that Russia’s withdrawal from the Black Sea deal, alongside recent policy changes such as the Naira devaluation and removal of the PMS subsidy and, the persistent insecurity problems that continue to affect local food production imply food inflation may worsen in the coming months.