Yes! I Agree With You, Nigerian Food Sellers Are Greedy Sets Of People. Just give me few minutes of your time and I will expose their secret to you.
I’m very angry and the solution is for me to expose their little dirty secret. As I type this, I am in a car heading down to Benue State (Food Basket Of The Nation).
I took my smartphone, launched my Evernote App, so I can put this in writing and share it with you.If you intend to venture into the Agro Commodities Trading business, this article will help you plan better. I’m a farmer and also an Agro commodities trader. I guarantee you that after reading this article, you’ll have much knowledge about the food business in Nigeria.
I will be using Lagos State as the case study. I was in Lagos for a market survey/business meeting on 21/09/2020 and I was surprised that Yam was as expensive as gold. Being a practicing farmer and from a community where yam and other items waste daily, I knew instantly that food-sellers were extorting consumers.
Just a moment and we will return to our Lagos food sellers’ greediness. In Benue State, during yam harvest season, N10,000 can buy 100 tubers of yams that are of good sizes and the farmers will be happy that you are buying their produce.
During scarcity, N35,000 can conveniently pay for bigger sizes of 100 tubers of yam. These particular sizes are huge and have smooth bodies (people who eat yams will understand better).
Now, let me see how I can simplify this secret to you. Get a pen, a sheet of paper and follow me so we can catch these people today.
Let’s assume you bought 100 tubers of yams from Benue State valued at N15,000, which means each tuber costs N150 excluding other expenses. Let’s assume transportation costs N20,000 per 100 tubers. That is N20,000÷100=N200. It means you are paying N200 per tuber of yam to be transported to Lagos.
Again, loading/offloading of 100 tubers cost N10,000. Here is the calculation, N10,000÷100=N100. It means each tuber of yam is N100. Please, stay with me. The figures are much, but you must note them down so you can understand this magic.
Our direct cost per tuber of yam is,
Cost of yam N150
Cost of transportation N200
Cost of loading/offloading N100
Total Direct Cost is N450.
It means each tuber of yam cost N450 only. Now, multiply N450×100= N45,000. This means you bought 100 tubers of yams from Benue State at N45,000 only. I hope you are following? Good! Let’s proceed. Can we study the indirect cost attached to purchasing those 100 tubers of yam?
I believe it’s mandatory for a business person, so let’s dig those indirect expenses out and sum them up. You are a trader from Lagos, traveling down to Benue State to purchase yams. You don’t have a relative here, so you MUST pay for accommodation/feeding.
On average, a serene accommodation in Benue will cost you N6,000. For feeding, remember you are in Food Basket? I bet you, a plate of food worth N1,000 will fill your stomach. Let’s assume you spent two nights in the market. Accommodation will be N12,000 and feeding N3,000 on average. This means you had an indirect cost of N15,000.
Add the N15,000 to N45,000. Your 100 tubers are now valued at N60,000 cash. Which means each tuber of yam costs N600. Right there in the Yam market, there are other expenses you MUST pay for before you’ll be allowed to move a truckload of yam from Benue State to Lagos. You’ll spend huge cash on settling one association or the other.
When you add such expenses to the price of your yam, the selling price increases. There are other expenses in Lagos too. Let’s assume you rented a shop in a strategic location so that your yams will be visible to the general public who have purchasing power. The shop wouldn’t cost less than N400,000.
The cost of renting that shop will be added to the yams because it is from the profit you make after selling the yams that you will be able to pay your rent. Now, you are going to employ helping hands. This will increase the cost of each tuber of yam because it is from sales of yam that you’ll be able to pay wages.
Again, yam is a perishable commodity. If you purchase 1000 pieces of yam in Benue and transport it to Lagos, few among the yams will get damaged. And as a business person, you’ll add up to the remaining tubers so you can recover your capital and further make a decent profit.
After summing up all the expenses and adding a small profit for yourself, the cost per tuber will increase. I was shocked when I saw that a tuber was selling between N1,800 and N2,000 in Lagos.
You might call these retailers selfish and think they are exploiting you, but the truth is, the cost of production is high. Normally, the majority overcharge.
Conclusively, appreciate vendors who stress themselves to supply yams to you in urban areas for they pass through hell to feed you.
If you are a vendor, don’t overcharge your fellow Nigerian. We are in this together.