Does agricultural price volatility influenced by oil price affect food security? Evidence from Nigeria

The study examined how agricultural price volatility influenced by oil price affect food security in Nigeria. Quarterly time series data spanning from Q1 2023 to Q4 2024 was employed in the study and were sourced from the National Bureau of Statistics (NBS) and the Food and Agriculture Organization (FAO). The variables used include; crude oil prices, petroleum motor spirit (PMS) prices, and agricultural price volatility, proxied by the domestic food price volatility index, with local rice price as a primary indicator. Descriptive statistics and the Augmented Dickey–Fuller test for unit root were applied. Also, Johansen co-integration test was used to examine the long-run relationships. A Vector Autoregressive (VAR) model was used to analyze short-run dynamics amongst oil prices, agricultural prices, and food security. Where cointegration is detected, a Vector Error Correction Model (VECM) was applied, capturing both short- and long-term relationships. The VECM regression results revealed that agricultural price volatility, driven by oil price fluctuations, impacts food security in Nigeria. The significant ecm implies a long-run equilibrium connection, while short-run adjustments inform the inverse effects of oil price changes through PMS price and agricultural price volatility. The impulse response analysis shows the interrelation between crude oil prices (COP), petroleum motor spirit (PMS), agricultural prices (AGP), and food security (FOS). The results revealed that shocks to crude oil prices significantly influence PMS prices, which in turn affect agricultural prices and ultimately food security. Base on the finding, the study recommends that the Federal Government should implement an integrated policy that would guarantee PMS price relieve specifically for agricultural production regions, ensuring that farmers have access to cost effective fuel for logistics needs, farm irrigation, and tractor operation. This approach would diminish the transmission of PMS price volatility to food production and distribution, thereby stimulating food security.