FXCoral

Taking An Economic Look At The Costliest Commodity In Nigeria Right Now.

IMG_20200703_105201-01-01.jpeg

Image owned by me


ons is an average Commodity and a regular day vegetable used in cooking but then in the past six weeks, two things has made the prices of onions skyrocket; one, continuous increase in price of every commodity as a result of covid-19 and the scarcity of onion by this time of the year, every year in Nigeria. Considering these two factors the average users of onions have completely stopped buying it because in the past you could get a chicken egg sized onions for like 6 cents (20 Naira) but now, you get them for like 25 cents about 95 to 100 Nigerian naira. The truth is, the the demand for onions is naturally elastic but then there's something strange; as much as people are refusing to buy it due to the unbelievable cost the more the price keeps increasing now why is this?

Onions are naturally grown in the dry seasons where there are not much rainfall and they're stored to be sold all throughout the rainy season. So by the time the rainy season is out again, the onions that has been stored throughout the raining season would have been depleted by consumers and then farmers would then need to plant again which means at that period of planting there will be scarcity. Naturally we have people who would enhance this scarcity: for example if a small sized onion sold for 20 Naira during the raining season when it begins to deplete from the market and scarcity has started normally the increase and price of onion should not be more than 10 Naira which should actually make it 30 naira in total and still affordable for consumers but then there are retailers who would take their bags of onion off the market creating premature scarcity and making bigger profits.

Onion farming isn't as lucrative as oil and so the government do not really take interest in growing local vegetables such as onions and this is why bigger subsistence farmer takes it upon themselves to grow and store onions but then the kind of onions they will store wouldn't still be enough. This means that their will be need to acquire larger storage facilities which is often very expensive to purchase. Nigeria is a country that consumes vegetables a lot and onions and tomato are one of the highest vegetables that are consumed in Nigeria and if there aren't enough storage facilities then there will be huge spoilage of the crop since you would need to store it in a well ventilated space which would also protected from rodents. Onions is a rather perishable crop when you do not store it well and the lack of storage makes it impossible to have enough onions to go all year round before planting begins in the dry season and this is one of the reason why the cost of onions also increases.


IMG_20200816_180600-02.jpeg

MVIMG_20201119_123445-01.jpeg

these Image owned by me

Apart from these two rather important reasons why onions become expensive during this time of the year, the incursion of covid-19 and inflatory prices that comes with it now makes onions one of the costliest commodity in Nigeria. we are used to experiencing inflatory prices for onions during this time of the year but then it has taken a parabolic increase. Imagine from buying a commodity at 20 naira to now buying it at a 100 naira for the smallest size, that is "a 5-times increase in price" making it one of the costliest commodity in the country currently. Now it is quite normal that when there is higher supply and lower demand then prices will actually decrease. However no one actually knows the supply of onions or the amount of supplies since there is the presence of artificial scarcity.


images (3).jpeg

Source

Nevertheless a lot of people have stop consuming it which means that there is suppose to be lesser demand for it but then there is also another factor that keeps making the price increase and that is the fact that it is almost Christmas and the demand for onions will 100% skyrocket again. There are so many narratives to this, inasmuch as Nigeria is becoming one of the highest inflated country in the world the artificial scarcity always created by people to enjoy selling their commodities at high prices is one of the problems we have in the country. I have created this blog post for future Nigerians who would search the internet as to why the price of onions keeps increasing during this time of the year. However we must understand that 2020 is a year where things have economically happen differently due to covid-19 and the prices are somewhat 5x rather than 1x or 2x as we see In other years.



Images all mine except the last one

Finance

Future reading