Effects of food inflation on households’ nutritional outcomes: A case study of selected rural
and coastal communities in Delta State, Nigeria.
Abstract
This study will examine the effects of rising food prices households’ nutritional outcomes among
selected rural and coastal communities in Delta State, Nigeria. Cross and own price elasticities
will be calculated for the seven food groups, and it will be investigated if own price increase
leads to an increase or decrease in households budget share for the food groups examined. A
fixed effect model will 4be utilized for the whole sample and for the sub-sample. The outcomes
of the study are expected to influence fiscal and health policies as they relate to household
spending decisions.
1. Introduction
There is global hike in food prices with social and economic implications. The rise in food prices
may adversely affect the nutritional intake of households. Given the high prevalence of under
nutrition, a rise in food prices may worsen families’ nutritional intake and outcome. For
example, under nutrition can cause stunting and wasting of children under five. Juarez-Torres
(2015) posited that the burden of food price increases is borne more by the poor and vulnerable
households who spend up to 80% or more of their earnings on foodstuffs. When households face
massive negative price or income shocks, reduction in food budget is often their most immediate
response. This manifests in compromised dietary intakes in terms of quantity and quality, which
ultimately engender higher vulnerability to food insecurity, malnutrition, poverty and related
issues. It has also been found that a large proportion of households in the country consume less
varied and low-quality foods (Agada & Igbokwe, 2015).
Another effect of food inflation is malnutrition among children. Malnutrition at the early age of
child development has a long-lasting effect on children’s education and health outcomes. Arndt
et al. (2016) examined the effect of food price shock on child malnutrition using a household
level data from Mozambique. The study finds that weight-for-height and weight-for-age measure
of nutritional status deteriorate due to food price inflation. Their finding suggests that food price
rises results in a substantial increase in malnutrition among under five children. A study by Hou
et al. (2016) found that rising food price has a negative effect on school enrollment and it differs
by gender, economic status and the presence of siblings. Households may respond to the rising
food price by substituting across foods. Nutritional intake may not be affected if households are
able to substitute from expensive to cheaper food that contain the same nutrients. The challenge
for poor households is that they are already consuming low cost and low-quality foods. This
implies that the effect of food price rise on poor households is severe.
Jensen and Miller (2008) found that the impact of global food price rise on two Chinese
provinces is small because households were able to substitute to cheaper domestic staple foods.
Domestic food prices were low because of government intervention in the grain market.
Moreover, the effect of food price rise on rural households depends on whether the households
are net buyers or net sellers. Net seller households benefit from the rising food prices whereas
net buyer households lose. For net seller of labor, a higher wage increases the welfare of the
landless while reducing the welfare of net buyer of labor. The elasticity of food expenditure
share with respect to the change in the price of food can be negative or positive depending on
whether the substitution effect dominates the income effect or not. If the positive income effect
dominates the negative substitution effect, an increase in food prices will increase food
expenditure. The final effect of a change in the price of food depends on the marketed surplus.
Marketed surplus is positive for net sellers of food and negative for net buyers. This means an
increase in food price maybe leading to a fall in consumption for net buyers. The responsiveness
of food consumption expenditure to an increase in food price can be positive if the positive
marketed surplus is large enough.
Vu and Glewwe (2011) found that the overall effect of food price rise on average Vietnamese
household welfare is positive because the average welfare loss of net buyers was smaller than the
average welfare gains by net sellers. According to Lee et al. (2013), high food prices can be an
immediate threat to household food security, undermining population health, retarding human
development, and lowering labor productivity for the economy in the long term. The study
employ a panel dataset covering 63 developing countries from 2001 to 2010 to make a
comprehensive assessment of the effects of food price inflation and volatility on population
health measured by infant mortality rate, child mortality rate, and the prevalence of
undernourishment. The study found that rising food prices have a significant and adverse effect
on all three health indicators in developing countries. Furthermore, the impact of food prices is
severer in the least developing countries although the effect is moderated in countries with a
greater share of agriculture in gross domestic product.
The potential costs of malnutrition include death, high risk of impaired child development, and
fall in productivity and economic growth. Moreover, it directly increased the cost of health care
and indirectly affect productivity and maybe leading to a fall in adult wage. Given the high
prevalence of malnutrition in Nigeria, rising food prices will negatively impact families’
nutritional intake and outcomes. There is need to investigate this crucial issue especially among
rural and coastal households, who are mainly vulnerable and economically excluded.
2. Statement of the Problem
Nigerians are experiencing the worst food inflation in decades amid a weakening naira,
insufficient domestic agricultural production, and an over-reliance on expensive imported food.
Rising inflation and slow growth have caused the number of impoverished Nigerians to rise from
89.8 million at the beginning of 2023 to 104 million (World Bank, 2023). In recent years, food
prices have been on the rise across Nigeria. The situation deteriorated due to the impact of
government policies such as the removal of subsidies on petrol, among others. Data from the
National Bureau of Statistics reveal that the annual inflation rate for imported food in Nigeria
increased from 18.49% in January 2023 to 26.29% in January 2024 (see Figure 1). Food imports
have increased in price as a result of the Russia-Ukraine war, supply chain disruptions in the
aftermath of Covid-19, and border closures introduced by the previous Nigerian government.
The country imports a significant amount of wheat, milk, and fish. The food inflation rate in
February 2024 quickened to 37.92 per cent on a year-on-year basis, which was 13.57 per cent
points higher than the rate recorded in February 2023 (24.35 per cent).
At the state level, the food inflation rate was the highest in Kogi (44.18%), Kwara (40.87%), and
Rivers (40.08%), while the lowest annual rates of food inflation were recorded in Bauchi
(28.83%) Adamawa (29.80%), and Kano (30.08%). It is clear, however, that food inflation is a
country-wide phenomenon.
Figure 1. Nigeria's inflation trajectory
45
40
35
30
25
20
15
Rate
10
5
0
April
June
August
April
October
January
February
March
May
July
September
November
December
January
February
March
May
2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2024 2024 2024 2024 2024
Year
All Items (Year on Change) All Items (12 Months Avg. Change)
Food (Year on Change)/1 Food (12 Months Avg. Change)/1
The upward trend in the prices of these staples and other products has weakened the purchasing
power of many citizens, making it difficult for many households in the country to afford daily
meals. The Food inflation rate in February 2024 was 37.92 per cent on a year-on-year basis,
which was 13.57 per cent points higher compared to the rate recorded in February 2023 (24.35
per cent). The bureau said the rise in food inflation yearly was caused by increased prices of
bread and cereals, potatoes, yam and other tubers, fish, oil and fat, meat, fruit, coffee, tea, and
cocoa. On a month-on-month basis, the Food inflation rate in February 2024 was 3.79 per cent
this was 0.58 per cent higher compared to the rate recorded in January 2024 (3.21 per cent). It
explained that the rise in food inflation on a Month-on-Month basis was caused by a rise in the
rate of increase in the average prices of bread and cereals, potatoes, yam & other tubers, fish,
coffee, tea, and cocoa. The average annual rate of Food inflation for the twelve months ending
February 2024 over the previous twelve-month average was 30.07 per cent, which was a 7.95 per
cent points increase from the average annual rate of change recorded in February 2023 (22.12 per
cent).
In Nigeria, a few studies have been done in this area. For instance, Shittu et al. (2018) examined
the welfare effects of food price spikes among households in the country. They found that higher
spike in the price of cereals consistently has negative effect on food quantities (including
calories) consumed, dietary diversity, and economic welfare of households, spikes of price of
other staples such as animal proteins, fats and oils, fruits and vegetables exert heterogeneous
influence.
Conversely, little is known about the potential impacts of food price spikes on nutritional
outcomes of households in Nigeria. Such information is crucial for the development of policies
and programmes targeted at the improvement of well-being of households in the country. The
highlighted concerns provide the motivation for this study. The study therefore seeks to address
the following specific questions: How do food commodity price spikes affect the nutritional
outcomes of households in Nigeria? Findings from this study can provide useful information for
redesigning existing policy actions and programmes or for the introduction of new ones for
improved living conditions of farm households in Nigeria. However, the economic evidence of
food price increases and poverty is inconclusive, with simulation studies finding that poverty
increases as food prices rise, and survey evidence finding the opposite, at least in rural areas
(Headey & Hirvonen 2023).
3. Justification for the Study
Delta State presents an interesting case study for analysing the relationship between food
inflation and the households’ nutritional outcomes. Not only is evidence on this relationship is
largely lacking, the state has rising inflationary trends, and this has worsened in most recent
times due to the Covid-19 pandemic.
This study is important in that it contributes to an important literature by examining food
inflation to households’ nutritional outcomes. The importance of the households’ nutritional to
households’ welfare cannot be over-emphasized and as a result, it is important to investigate how
food inflation affects nutritional outcomes. This also will have an impact on the health status of
households. Ascertaining the nature of this relationship at a micro level will add to the richness
of the debate on the determinants of households’ nutritional outcomes in the country and can be
used to design appropriate interventions to avoid such productivity losses orchestrated by
nutritional malfunctioning due to food inflation. Focusing on the study’s subjects is appropriate
since these individuals are usually marginalized and vulnerable to harsh economic conditions and
relatively excluded from government’s palliatives to cushion the effects of food inflation.
4. Objectives of the Study
This study, specifically, will examine the effect of rising food prices on households’ nutritional
outcomes. The study will also investigate household’s responsiveness to the change in food
prices. Specifically, is there a shift from high price food item to low price food item? If so, what
is the impact on nutritional outcomes of households? Given the nature of the data, one can see
the dynamics over time, by region, and different socioeconomic groups. This will be done by
estimating a seemingly unrelated regression for the quadratic almost ideal demand system
(QUAIDS) and calculating the cross and own price elasticities for the seven food groups
(cereals, fruits and vegetables, meat, milk, salt and sugar, tuber and stem, and pulses) in Delta
State. Furthermore, a fixed effect model will be estimated to examine the effect of food price rise
on households’ nutrition outcomes.
5. Literature review
A range of studies examined the effect of food price increase on household welfare and
nutritional outcomes. The effect of food price rise varies by region. For instance, Ferreira et al.
(2013) examined the effect of food price rises on household welfare in Brazil using a spatially
disaggregated monthly data. The study found that a rise in food price increases extreme and
moderate poverty in Brazil. The magnitude of the effect of food price rise in reducing welfare is
higher in urban areas than rural areas due to the income effect of food price rise in rural areas.
The study examined the effect of food price rise by controlling for market income effect, the
expenditure effect, and the transfer income effect.
Ivanic and Martin (2008) argued that the short run impact of rising food price on poverty in nine
developing countries vary by country and by commodity. Similarly, Levin and Vimefall (2015)
examined the effect of higher maize prices on different socioeconomic groups and regions in
Kenya. The study found that a rise in maize price reduce household’s welfare. It also found that
poor households lose a larger proportion of their welfare than relatively wealthy households and
rural landless households lose. But households that owns five acres or more land gain from price
increase.
Attanasio et al. (2013) analyzed the welfare effect of food prices rise in Mexico. The study
evaluated the effect of conditional cash transfer program and subsidy policy as a means of
mitigating food price rise. The result suggests that food price rise results in welfare loss and the
loss is not uniform among different groups of households. Shimeles and Woldemichael (2013)
opined that rising food prices negatively affect the welfare of urban households and rural
landless households, whereas it benefits land rich rural households.
Hadley et al. (2012) conducted a qualitative study on rising food prices and food insecurity in
Jimma town in Ethiopia. The result shows that the rising food prices negatively affect different
community level support systems. The rising food prices and food insecurity leads to poor
mental health, stress, and deteriorating physical health. Woldemichael et al. (2017) also found
that food price inflation has a negative effect on child weight and height in Ethiopia.
Woldehanna and Tafere (2015) pointed out that price control measures may exacerbate the rising
food prices by reducing supply while consumer associations help to stabilize food prices.
Adekunle et al. (2020) examined the effects of food price spikes on the quantity and quality of
the dietary composition of farm households in Nigeria using the 2010/2011, 2012/2013 and
2015/2016 household survey panel data. The fixed effects models were estimated while
controlling for participation in non-farm livelihood activities. Analysis indicated that seasonal
comparisons of the average per capita daily calorie intake is lowest in the post-harvest season of
2011 (2511.44 kilocalories), which is higher than the average recommended intake. The results
also showed that rural households had lower per capita calorie intake and dietary diversity than
urban households, which may be an indication of a shift in the calorie inadequacy from urban to
rural farm households’ setting in Nigeria.
Obiora et al. (2023) examined inflation's effects on Nigeria's food security, using comprehensive
literature review to scrutinize their relationship. The study focuses on its effects on food costs,
purchasing power, production, distribution, and household consumption patterns in Nigeria. The
research underscored that inflation escalates food prices, diminishing consumer purchasing
power, especially among low-income individuals, resulting in inadequate nutrition and health
issues.
Anugwa and Ugwu (2022) examined the perceived effects of food price inflation on the food
security status of rural farming households’ in Enugu state, Nigeria. The 18-item USDA
household food security survey module was used in determining the food security status of the
respondents. Mean scores were used to analyze the perceived causes and effects of food price
inflation, respectively. The results showed that the majority of the households were food
insecure, and the cost of production of major crops and prices of major stable foods had been on
the increase. The major cause of food price inflation identified was climate change while its
major effects on household food insecurity were reduction in caloric intake, among others. In
addition, eating foods that are less preferred were the most frequently used coping strategy in
cushioning the effects of food insecurity.
A review of the literature revealed a huge gap in empirics especially as regards studies at rural
and other vulnerable groups who are at most times excluded from government palliative
programmes to alleviate the ravaging effects of food inflation. This study seeks to investigate
this in Delta State of Nigeria.
6. Methodology
6.1. Empirical model
A quadratic almost ideal demand system (QUAIDS) will be estimated in this study. This model
is an extension of the almost ideal demand system (AIDS). This method has several desirable
properties. The AIDS model satisfies the aggregation restriction, it is simple to estimate, and
with simple parametric restrictions, homogeneity and symmetry can be imposed. The AIDS is
derived from the indirect utility (Deaton & Muellbauer, 1980). Banks et al. (1997) suggested the
quadratic almost ideal demand system (QUAIDS) which allows expenditure shares to respond
more flexibly with respect to total expenditure.
Specifically, the quadratic term implies goods can be luxurious at low levels of total expenditure
and necessities at higher levels. The QUAIDS is given as:
[ ( )]
2
i
( )
v ¿=α i + ∑ φ ij ln ( p jt ) + β i ln
Xt
+
γi
x (P) y (P)
ln
Xt
x (P)
(1)
where v ¿ is the expenditure share of food group i at time t ; p jt is the price of food group j at time
t; Xt is the total food expenditure at time t, and P is a translog price index. In order to examine
substitution possibilities due to the rising food price, the empirical strategy is estimating a system
of demand equation of the form (1) including household size, and age. A seemingly unrelated
regression (SUR) will be estimated. Since the error terms are contemporaneously correlated, we
cannot estimate each equation separately, and the own and cross price elasticities will be
calculated. The elasticities are calculated for the seven food groups. The QUADS model will be
used to generate the predicted value of expenditure share for the seven food groups, which will
be utilized as a proxy for households’ nutritional status. The study will, therefore, estimate the
following model:
^v ¿=α 0 +α 1 HS¿ +α 2 AGE¿ + α 3 FMHEAD¿ + α 4 NETB ¿ +α 5 PRICE ¿ + d i+ ε ¿ (2)
Where ^v ¿ is predicted value of the expenditure share of food group i at time t; HS is the
household size; AGE is the age of the household head; FMHEAD =1 if household head is female,
0 = otherwise; PRICE is the log of food group i price at time t; NETB is net buyer which is 1 if
the household is a net buyer, and 0 if the household is a net seller; di is the individual time
invariant fixed effect, and εit is the error term. Food price rise may not immediately affect
household’s nutritional outcome. To control for the effect lag, the lag of all the food prices and
policy variables is used in all the regressions.
Household size is expected have a negative effect on its nutritional outcome. Food price rise can
be negative or positive depending on whether the households is a net seller or a net buyer. Net
seller households are expected to have a better nutritional status relative to net buyers. Female
headed households are expected to have lower expenditure share and nutritional intake relative to
male headed households.
Food price will be generated from amount the household spends on food items the data as
follows. Information is available about the amount of money spent on 25 purchased food items
(55 food items in the third round) and their respective quantities. First, I generated the median
price for the 25 food items by dividing the total amount of money spent with the total quantity
consumed. The average of the median price for a given enumerating area is used as a food group
price. Second, using the quantity of food consumed from own production, gift and other sources;
the value of food consumed from own production and gift is generated. Total food consumption
is the sum of purchased food, own production, gift and other sources. The expenditure share for
each food group is calculated based on this information. The food group includes cereals, fruits
and vegetables, meat, milk, salt and sugar, tuber and stem, and pulses. Own and cross elasticities
are calculated for each food group.
6.2. Data and Sources
6.2.1. Research Instrument
A questionnaire will be constructed following the structure of that of the General Households
Survey (GHS) of the World Bank. The questionnaire will include all the variable of interest.
6.2.2. Scope of the Study
The study will cover the rural and coastal/riverine communities of Delta State of Nigeria. The
research instrument will be distributed across communities to elicit robust information on food
prices and households’ nutritional outcomes of the respondents.
7. Contribution of the Research to Knowledge
This research work will unveil untapped knowledge as far as food prices and households’
nutritional outcomes are in Delta State, Nigeria, especially rural and coastal communities. No
previous study has been carried out at a micro level to estimate the impact food prices on
households’ nutritional outcomes. This is owing to the fact that labour statistics are largely
scanty at this level. This study is poised to fill this gap by investigating this relationship at a state
level. To the best of my knowledge, this study is the first to conduct a simulation of this kind.
References
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Nigeria. European Journal of Nutrition and Food Safety, 5(3), 150–55.
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households’ food security situation in Enugu State, Nigeria. Innovare Journal of Agricultural
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Arndt, C., Hussain, M. A., Salvucci, V., & Østerdal, L. P. (2016). Effects of food price shocks on
child malnutrition: The Mozambican experience 2008/2009. Economics & Human Biology, 22,
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Attanasio, O., Di Maro, V., Lechene, V., & Phillips, D. (2013). Welfare consequences of food
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Deaton, A., & Muellbauer, J. (1980). An almost ideal demand system. The American Economic
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Ferreira, F. H., Fruttero, A., Leite, P. G., & Lucchetti, L. R. (2013). Rising food prices and
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in food production. Nature Food, 4(8), 699-706.
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Research Plan
The research work is expected to commence from December, 2021 and to terminate January,
2022. The detail of research plan is shown as follows:
S/ Action Duration
N
1. Sourcing of relevant literature papers/journals 1 month
2. Consultation with relevant representatives of communities 2 months
3. Recruitment and training of field officers and assistants 1 months
4. Field work 2 months
5. Econometric analysis of data 1 month
6. Report writing of research findings, recommendations, conclusion 2 months
7. Editing and binding of final report 1 month
Total 12 months
Estimated Budget
Below are the propose expenses of the study
S/N Action Amount (N) Amount (N)
1. Pilot Survey/preliminary Study
a. Mapping of proposed rural communities xxx
b. Mapping of proposed rural communities xxx
c. Miscellaneous logistics xxx
Sub Total xxx.00
2. Field Work
a. Printing of questionnaires xxx
b. Transportation and accommodation cost for xxx
administering and collection of questionnaires in rural
communities in 24 local government areas
c. Transportation and accommodation cost for xxx
administering and collection of questionnaires riverine
communities
e. Feeding allowance xxx
f. Recruitment and training of field officers and assistants xxx
Sub Total xxx.00
3. Software, Data Processing, Report Writing and Publication
a. Stata 13 software xxx
b. Data editing, entry and processing xxx
c. Final report writing xxx
Sub Total xxx.00
4. Report Dissemination
a. Publication of paper xxx
b. Conference attendance xxx
Sub Total xxx.00
Grand Total 5,000,000.00
