Household demand for basic foodstuffs in a recessed economy: a case study of Southwest Nigeria
| Pages | 1-19 |
| Published date | 06 January 2020 |
| Date | 06 January 2020 |
| DOI | https://doi.org/10.1108/WJSTSD-06-2019-0029 |
| Author | Fatai Abiola Sowunmi,Oladunni Akinwande Daramola,Ishaq Adewale Tijani |
| Subject Matter | Public policy & environmental management,Environmental technology & innovation |
Household demand for basic
foodstuffs in a recessed economy:
a case study of Southwest Nigeria
Fatai Abiola Sowunmi, Oladunni Akinwande Daramola and
Ishaq Adewale Tijani
Department of Agricultural Economics, University of Ibadan, Ibadan, Nigeria
Abstract
Purpose –The economic recession that Nigeria recently passed through caused distortions in economic and
well-being of Nigerians. The purpose of this paper is to examine the effects of the economic recession on
households’demand for basic foodstuffs in Southwest Nigeria.
Design/methodology/approach –Data were collected from 380 respondents drawn from urban areas of
Lagos, Osun and Oyo states using multistage sampling technique. Descriptive statistics and Quadratic
Almost Ideal Demand System were employed to analyze data collected.
Findings –The study showed sharp i ncrease in the prices of basic f oodstuffs during recession . Households
were compelled to spend hi gher percentage of their monthly inc ome on basic foodstuffs. Also, 51.1 per cent
of the respondents were government workers w ho experienced inconsistent or modulat ed monthly salary
during the period. The perc entage of households that were food ins ecure was 36.4 percent. Osun State had
the highest monthly pe r capita expenditure ( ₦5,147.13) on foodstuffs, followed by Lagos and Oyo states
while rice had the highest expenditure share (0.26), followed by yam (0.18), beans (0.106), vegetable oil
(0.104) and garri (0.101).The breakdown also showed that 11.7, 18.1 and 17.7 percent of the total household
monthly expenditure s in Lagos, Osun and Oyo states, respective ly, were spent on basic foodstuffs.
Research limitations/implications –There purchasing power of naira reduced significantly during
recession, thus compelled households to spend more on basic foodstuffs compared to similar purchases before
economic recession.
Practical implications –The reduction in purchasing power of naira affected the formal and informal
sector. Irregular salary for civil servants reduced their expenditure on goods and services.
Originality/value –The study is original and topical, serving as literature of accounts that transpired
among the households as far as demand for basic foodstuffs is concerned during the economic recession.
Keywords Economics, Economy, Food security, Agricultural management, Food price inflation
Paper type Research paper
1. Introduction
The economic recession structurally heralded significant decline in investments, trade,
employment and real earnings. Hence, the end results were increase in food prices, food
insecurity and levels of inequalities (NBS, 2016; Eaton et al., 2016; Trading Economics, 2016).
Prior to 2016, there was growth in the Nigeria economy although not steady. However, in the
second quarter of 2016, the nation’s gross domestic product (GDP) declined by −2.06 percent
(year-on-year) in real terms. This was lower by 1.70 percent points from the growth rate of
−0.36 percent recorded in the preceding quarter, and also lower by 4.41 percent points from
the growth rate of 2.35 percent recorded in the corresponding quarter of 2015 (NBS, 2016).
The two consecutive quarters of declining growth signaled the commencement of economic
recession. According to National Bureau of Economic Research (2003), economic recession is
defined as “a significant decline in economic activity spread across the economy, lasting
more than a few months, normally visible in a real gross domestic product (GDP), real
income, employment, industrial production and wholesale-retail sales.”The sharp drop in
the price of crude oil in the international market coupled with restiveness of youths in the
Niger Delta was among the factors that lead to the economic recession. Crude oil accounts
World Journal of Science,
Technology and Sustainable
Development
Vol. 17 No. 1, 2020
pp. 1-19
© Emerald PublishingLimited
2042-5945
DOI10.1108/WJSTSD-06-2019-0029
Received 2 June 2019
Revised 7 September 2019
Accepted 18 October 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2042-5945.htm
JEL Classification —B21, B22, C01, C1, D11
1
Basic
foodstuffs in a
recessed
economy
for 95 percent of the foreign exchange earnings. The price of crude oil dropped from $112
per barrel in 2014 to less than $50 per barrel in 2016 (EIA, 2015).
Despite the diverse and rich vegetation that can support crop and livestock production
(Chauvin et al., 2012; Lipton, 2012), Nigeria’s trade imports were dominated by foods and
raw materials. According to Abubakar (2016), Nigeria spends over ₦1 trillion on the top 4
food imports (rice, wheat, fish and sugar) annually. The disaggregation revealed that
Nigeria was the largest importer of US hard red and white wheat worth ₦635bn annually;
world’s number 2 importer of rice at ₦356bn; ₦217bn on sugar and ₦97bn on fish while rice
alone accounted for substantial percentage of the food import bills. The neglect of the
agricultural sector aggravated the negative effect of recession on households since the
available foreign exchange cannot sustain massive importation of foods.
Food securityand insecurity dynamicshave been a global issue and generated widespread
concernsover the years especially in the developingcountries like Nigeria. Humanbody needs
energy to be able to carry out its normal physiological and productive activities and, hence,
basic food needs topthe hierarchy of needs for individualsin the household. It is, therefore,a
major area of policy concern for governments around the world, Nigeria inclusive.
Aromolaran (2004)found a strong link between food intake, human health and productivity.
However, despite the importance and undoubted relevant role of food security to an
individual,the household and the nation as whole,it is under a structural and technicalthreat
in Nigeria owing to the economic recession. Specifically, in Southwest Nigeria where this
study was carried out, more than 60 percent of the statesowed civil servants at least four to
eight months unpaid salaries (Vanguard, 2016). Without doubt, the purchasing power and
capability ofthe workers was under unquestionable attack as stagnantand unsteady earning
were the norms in the southwestern states in Nigeria.Against this backdrop, the mechanism
and dynamics of demand for foodstuffs in the region (Southwest) requires prompt appraisal
which necessitated this study to be carried out at the recession period. Basic foodstuffs are
crops used asfood or used to make food. Each regionin Nigeria has its basic foodstuffswhich
are obtained from crops grown within the agro-ecology zone. The basic foodstuffs in
Southwest Nigeria are garri, rice, yam, palm oil and beans among others:
RQ1. Therefore, the questions in the minds of the authors are that: what was the
response of the residents of Southwest Nigeria to foodstuffs demand considering
highlighted situations above?
RQ2. What was the extent of reduction in the purchasing power of naira of the
households compared to periods before recession?
RQ3. What was the average equivalent amount that the household would have spent on
the same quantity of basic foodstuffs before recession?
RQ4. What was the structure of the price elasticity mechanism in the region during
this period?
RQ5. What are the factors influencing households’expenditure on foodstuffs during
economic recession?
Various studies (Akinyele, 2009; Aromolaran, 2010; Ojoghoand Alufohai, 2010; Jayasuriya
et al., 2012; Akerele et al., 2013; Udoh, 2013; Abdoulaye et al., 2015; Mkhawani et al., 2016;
Syazwani et al., 2017) on food demand, food price increasing volatility, behavior of
consumption expenditure of households, consumer price index (CPI) and food security and
effects of rising food prices on household food security among others have been conducted.
Specifically, most studies in Nigeria on food were in state, regional or zonal levels and
undertaken when there was no shock attributed to recession in the economy. However, there
has been a dearth of studies on the effect of economic recession on households demand for
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