October 3, 2024/FBNQuest Research

The World Bank recently released the latest edition of the Food Security report. The report provides recent developments in the global agriculture market and the market outlook for agricultural commodities. Referencing the 2024 mid-year update of Global Food Crises, the Bank noted a worrisome pattern of severe food insecurity and malnutrition as of August 2024. This food crisis could be attributed to ongoing conflicts in Sudan and the Gaza Strip, resulting in heightened food shortages and increased mortality risks.

• The bank noted that despite the relative stability of global food markets, extreme weather and geopolitical tensions continue to pose risks to global food security.
• According to the bank, food prices remain high in many countries, especially in low-income nations, adding to their ongoing challenges.
• While progress has been made in reducing food crises in countries such as Afghanistan, Guatemala, and Kenya, these nations remain in acute food insecurity.
• Furthermore, nations including Nigeria, Ethiopia, and Yemen, among others, reported extreme food insecurity this year relative to the prior year, driven by heightened conflict and climatic shocks.
• On global commodity markets, production of maize is expected to be reduced due to heat concerns in the European Union, Mexico, and Ukraine.
• In contrast, the Bank’s market monitor anticipates a rise in soybean production owing to favourable conditions in the United States.
• In comparison to 2023 output, the bank projects an increase in wheat production this year, thanks to higher contributions from the US, Argentina, and China.  
• On the other hand, maize production expectations were reduced due to lower output projections from the European Union, Mexico, and Ukraine.
• Notably, the forecast for rice output was raised higher primarily because of optimistic expectations for Bangladesh and Vietnam, which is expected to offset a slight decline in rice output in China and Indonesia.  
• In West Africa, severe weather conditions were highlighted as the primary cause of food insecurity in the region, leading to the announcement of states of emergency in several countries.  
• While ongoing security challenges remain a significant threat to food security in Nigeria, reported severe flooding, which has rendered citizens homeless and farmlands destroyed, have emerged as a potential risk to crop production and food supply.
• Although Nigeria’s food inflation has moderated for two consecutive months in August due to the high base effect and the seasonal impact of the food harvest season, it remains elevated compared to pre-inflationary levels.
• Given that food inflation accounts for the largest component (about 51%) of Nigeria’s inflation basket, concerted effort by the fiscal authority towards improving food security in the country is paramount in further bringing down the nation’s elevated headline inflation.