Food Price Shocks and Supply Response of Staple Foods (Maize, Rice and Wheat) in Nigeria

Abstract

This study investigates the impact of global food price shocks on the supply response of staple foods such as maize, rice, and wheat in Nigeria. Using time-series econometrics, the study estimates the global food price shocks and examines the factors influencing supply responses. The weighted Global Food Price Index (GFPS) was calculated at 387.064, with maize, rice, and wheat contributing weighted values of 93.938, 193.118, and 100.008, respectively. The Autoregressive Distributed Lag (ARDL) model reveals a positive and statistically significant long-run relationship between global food price shocks and staple food supply (GFPS = 0.365, p = 0.011). Additionally, domestic food prices (PD = 0.218, p = 0.042), agricultural credit (CRED = 0.172, p = 0.035), and government subsidies (GSUB = 0.149, p = 0.034) positively affect the supply response. Inflation (INF = -0.121, p = 0.027) has a negative effect, limiting farmers' ability to increase production due to rising costs. In the short run, global food price shocks (D(GFPS) = 0.156, p = 0.014) and domestic food prices (D(PD) = 0.071, p = 0.003) significantly impact supply. The study’s findings highlight the need for policies to stabilize food prices, enhance production capacity, and address inflation and exchange rate volatility to improve Nigeria's food security.