Onome Amuge
Global food commodity prices fell for the fifth straight month in January, led by declines in dairy, sugar, and meat products, according to the Food and Agriculture Organization of the United Nations (FAO). While this trend is expected to offer temporary relief for Nigerian consumers facing high food inflation, analysts warn that structural vulnerabilities in the country’s agriculture and import dependency remain pressing challenges.
The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally traded food commodities, averaged 123.9 points in January. This represents a 0.4 per cent decline from December 2025 and a 0.6 per cent drop compared with January 2025, bringing the index 22.7 per cent below its March 2022 peak after the global shock caused by Russia’s invasion of Ukraine.
Nigeria, heavily dependent on imports for staples like wheat, sugar, and edible oils, is closely monitoring global price movements. Declines in international sugar, dairy, and some meat prices may relieve pressure on domestic markets, even as the Central Bank of Nigeria (CBN) continues to tighten monetary policy to curb inflation. However, rising prices for rice and vegetable oils could counteract these benefits, creating uneven impacts for households.
Cereals: Record output offsets volatility
The FAO Cereal Price Index increased slightly by 0.2 per cent from December, despite marginal declines in wheat and maize prices. Ample wheat stocks globally have offset weather-related concerns affecting dormant crops in the Russian Federation and the United States, while sufficient maize supplies have mitigated the impact of adverse weather conditions in Argentina and Brazil. Strong ethanol demand in the United States has also played a moderating role.
Meanwhile, the FAO All-Rice Price Index rose 1.8 per cent month-on-month, reflecting firm demand for fragrant rice varieties, which are popular in Asia and the Middle East. Nigeria, as a major rice importer, remains sensitive to these price shifts. The spike in international fragrant rice prices is likely to translate into higher import bills for the country, potentially raising food inflation in the short term.
The FAO’s Cereal Supply and Demand Brief projects global cereal production in 2025 at a record 3.023 billion tonnes, driven by exceptional harvests of wheat, coarse grains, and rice. Improved wheat yields in Argentina, Canada, and the European Union, alongside expanded maize plantings and higher yields in China and the United States, have contributed to the upward revision. Rice production is also expected to rise in India, Bangladesh, Brazil, China, and Indonesia.
Global cereal stocks are set to expand by 7.8 per cent in the 2025/26 season, lifting the world cereal stocks-to-use ratio to 31.8 per cent, the highest level since 2001. World trade in cereals during the same period is forecast to grow by 3.6 per cent year-on-year. For Nigeria, these developments offer both opportunity and risk. While abundant global stocks may moderate import costs, continued reliance on imported staples underscores the urgent need to boost domestic production.
Vegetable oils: Price pressures persist
The FAO Vegetable Oil Price Index rose 2.1 per cent in January, driven by higher prices for palm, soy, and sunflower oils. Palm oil prices rose due to seasonal production slowdowns in Southeast Asia and robust global import demand. Soy oil prices rebounded as tightening export availabilities in South America coincided with expectations of strong biofuel demand in the United States. Sunflower oil prices increased as supply in the Black Sea region remained constrained.
For Nigeria, which imports a significant portion of its edible oil requirements, these developments could affect both retail prices and trade balances. While domestic production of palm oil and soybean remains underdeveloped relative to demand, rising international prices may encourage investment in local processing and mechanised production, an area where policy support has been inconsistent.
Among food commodity categories, dairy prices recorded the heaviest decline, with the FAO Dairy Price Index falling 5 per cent month-on-month. The drop was largely due to lower international cheese and butter prices amid ample global supply. World skim milk powder prices, however, firmed due to renewed import demand from the Near East, North Africa, and parts of Asia.
Meat prices eased 0.4 per cent, driven by a decline in pig meat quotations. Poultry prices increased slightly, mainly due to strong international demand for Brazilian exports. Ovine and bovine meat prices remained broadly stable, although increased shipments from Brazil to China partially offset the rapid exhaustion of the United States’ tariff-free quota.
Sugar prices fell one per cent in January, reflecting expectations of higher global production. India, Thailand, and Brazil are all projecting stronger output, underpinning a generally positive outlook for the 2025/26 sugar season. Nigeria, as an importer of refined sugar, may benefit from these global supply trends, potentially moderating domestic retail prices.
Implications for Nigeria’s food security
While declining international prices may provide short-term relief, Nigeria’s long-term food security remains constrained by structural and institutional challenges. The country’s agricultural sector continues to struggle with low mechanisation, limited access to quality seeds and fertilisers, poor rural infrastructure, and insufficient storage and processing facilities.
Rice and wheat imports, which are essential for household consumption and industrial food production, remain highly sensitive to international market fluctuations. For example, the uptick in fragrant rice prices globally could raise costs for Nigerian millers and consumers. Similarly, high vegetable oil prices may challenge local industries seeking to expand domestic production of refined oils.
Experts argue that these trends highlight the urgency of boosting local production through targeted policies, including improved irrigation, mechanisation, modern seed distribution, and finance for smallholder farmers. Enhanced storage and logistics networks would also help stabilise domestic prices, reducing vulnerability to global price shocks.
