Analysis of Factors Affecting Cereals Pricing in Abia State of Nigeria

The current world food crisis is the result of the combined effects of competition for cropland from the growth in biofuels, low cereal stocks, high oil prices, speculation in food markets and extreme weather events. The crisis has resulted in a several-fold increase in several central commodity prices, driven 110 million people into poverty and added 44 million more to the already undernourished. This has necessitated this study on the factors affecting cereals pricing in Abia State of Nigeria. Specifically, the study examined the socioeconomic characteristics of the farmers, the price trend of cereals and factors influencing the price of cereals in the market. Multistage sampling technique was used in selecting the respondents used for the study. Both primary and secondary data were used for the study. Data collected were analyzed using descriptive statistical tools such as frequency distribution, percentages, means, etc, charts to show the price trend, and regression analysis. Result of the trend analysis show that price of cereals has been on the increase over the years. The significant factors influencing cereals price were interest rate (P > 0.05), exchange rate (P > 0.01), demand for cereals as raw materials which was proxied by industrial production (P > 0.10) and time trend (P > 0.05). The study equally revealed an inefficient market for cereals. There is therefore, the need to decrease the risk of highly volatile prices through price regulation on commodities and larger cereal stocks should be created to buffer the tight markets of food commodities and the subsequent risks of speculation in markets. This includes reorganizing the food market infrastructure and institutions to regulate food prices and provide food safety nets aimed at alleviating the impacts of rising food prices and food shortage, including both direct and indirect transfers, such as a global fund to support micro-finance to boost small-scale farmer productivity