Project – The Economic Implications of Food Loss Along Urban Food Distribution Chains: A Study of Mile 12 International Market, Lagos.

CHAPTER ONE

INTRODUCTION

TITLE: THE ECONOMIC IMPLICATIONS OF FOOD LOSS ALONG URBAN FOOD DISTRIBUTION CHAINS: A STUDY OF MILE 12 INTERNATIONAL MARKET, LAGOS

1.1 Background to the Study

Food is one of the most essential commodities required for human survival, economic development and social stability. The production and distribution of food involve several interconnected activities, including harvesting, aggregation, transportation, storage, wholesale trading and retailing. These activities form the food distribution chain through which agricultural produce moves from farms and rural production centres to urban markets and final consumers. However, food does not always reach consumers in the quantity and quality in which it leaves the point of production. Some quantities are damaged, contaminated, deteriorated or rendered unsuitable for sale during transportation, storage and handling. This situation is generally described as food loss, particularly when it occurs before food reaches the retail or consumption stage. The Food and Agriculture Organization (FAO, 2019) explains that food loss and waste represent reductions in the quantity or quality of food along the supply chain, with food loss occurring from post-harvest activities up to, but not including, the retail stage. Food loss is therefore not merely an agricultural or environmental concern; it is also an economic problem because resources invested in producing, processing, transporting and marketing food are partly wasted when the products deteriorate before reaching their intended market.

The economic implications of food loss are particularly significant in developing countries where agricultural distribution systems frequently operate under infrastructural, technological and financial constraints. In many developing economies, the movement of perishable food commodities from rural production areas to urban consumption centres involves long distances, multiple intermediaries, inadequate storage facilities and inefficient transportation arrangements. Fruits, vegetables, tomatoes, pepper and other fresh agricultural products are especially vulnerable because they have limited shelf lives and can deteriorate rapidly when exposed to excessive heat, poor ventilation, physical pressure and inappropriate handling. The FAO (2019) identifies inadequate storage, poor infrastructure, inefficient trade logistics, unsuitable packaging and handling difficulties as important factors contributing to food losses along supply chains. These problems create economic consequences for farmers, transporters, wholesalers and retailers because the cost of acquiring and distributing food remains even when part of the produce becomes unsaleable. Consequently, food loss can reduce the volume of food available for sale, increase operating costs, weaken the profitability of businesses and contribute to inefficiencies in the wider food economy.

In Nigeria, food loss remains an important challenge affecting agricultural productivity, food distribution and the income of people involved in food marketing. Although the country produces different categories of agricultural commodities, the benefits of production can be reduced when substantial quantities deteriorate during post-harvest handling and distribution. The problem is particularly important for perishable commodities that require appropriate packaging, careful loading, timely transportation and suitable storage conditions. Usman, Garsama, Mazza, Sati and Jahun (2025), in their review of food loss and waste in Nigeria, identify inadequate processing and storage facilities, poor post-harvest management and other weaknesses in food handling as important contributors to food losses. They also report that fruits and vegetables experience considerable losses within the Nigerian food system. These losses have economic consequences because traders may be unable to recover the money invested in purchasing produce, paying transportation charges, employing labour and meeting market-related expenses. Where food losses occur repeatedly, traders may increase selling prices to recover part of their financial losses, reduce the quantity of goods purchased or experience declining working capital. Food loss therefore affects not only the physical availability of food but also the financial stability of businesses operating within Nigeria’s food distribution system.

The economic effects of food loss can be examined through several dimensions, including direct financial losses, reduced business profitability, increased operating costs and the transfer of additional costs to consumers. Direct financial loss occurs when traders purchase food commodities at a particular price but are unable to sell the entire quantity because some products have deteriorated or become damaged. Reduced profitability occurs when the revenue generated from sales becomes insufficient to cover the cost of purchasing, transporting, storing and handling the commodities. Increased operating costs may also arise when traders spend additional money on sorting, repackaging, cleaning, disposing of spoiled produce or transporting replacement goods. These costs can be particularly difficult for small-scale traders who operate with limited capital and depend on daily sales to sustain their businesses. Aghadi, Balana and Ogunniyi (2020), in their study of tomato traders in Lagos, found that the adoption of reusable plastic containers significantly improved traders’ net profits. Their findings demonstrate that the nature of post-harvest handling and packaging can influence the financial performance of traders, while also showing that reducing physical damage to produce can improve the economic outcomes of food distribution activities.

Urban food distribution chains are particularly important because cities depend on continuous supplies of agricultural products from different production locations. Urban markets serve as major points where food commodities are received, sorted, stored, exchanged and redistributed to retailers, restaurants, institutions and household consumers. The efficiency of these markets therefore has implications for food availability, market prices, employment and commercial activities. However, the concentration of large quantities of perishable food in urban markets can create additional challenges when storage space, handling facilities, transportation systems and market infrastructure are inadequate. Plaisier, Sibomana, Van der Waal, Clercx, Van Wagenberg and Dijkxhoorn (2019), in their study of tomato value chains in Nigeria, examined the movement of tomatoes from production areas to urban markets, including Mile 12 Market in Lagos. Their study identified the importance of involving farmers, transporters, traders and retailers in identifying the causes of post-harvest losses and developing practical interventions. The research also demonstrated that the use of improved packaging, such as plastic crates instead of traditional raffia baskets, could support efforts to reduce losses. This evidence establishes that food loss within urban distribution chains is influenced by the interaction of several actors and activities rather than by the actions of a single group.

Mile 12 International Market, located in the Kosofe area of Lagos State, is an important urban food distribution centre where agricultural commodities are brought together from different parts of Nigeria for wholesale and retail transactions. The market plays a significant role in supplying fresh food products to traders, retailers, restaurants and consumers across Lagos and neighbouring areas. Its position within the urban food distribution system makes it a relevant location for examining the economic implications of food loss. Food commodities entering the market may experience deterioration during long-distance transportation, unloading, sorting, temporary storage, display and subsequent distribution to other locations. Tomatoes, pepper, vegetables, fruits and other perishable commodities are particularly exposed to damage when packaging materials are unsuitable, vehicles are overcrowded, storage facilities are inadequate or products remain unsold for extended periods. Benson, Ambee, Osegbo and Okonkwo (2019), in their study of reusable plastic crates for handling fresh fruits and vegetables in Lagos State, reported that the use of reusable plastic crates at Mile 12 was associated with substantially lower tomato losses than the use of raffia woven baskets in the observations presented by the study. This illustrates the relationship between handling practices and the economic value retained by food traders. It also indicates that the market provides a practical setting for investigating how distribution-related losses affect traders’ revenue, costs and profitability.

The economic implications of food loss at Mile 12 Market extend beyond the value of commodities that become spoiled or damaged. When traders lose part of their purchased goods, they may still have to meet transportation expenses, market levies, loading and offloading charges, storage costs, labour payments and other business obligations. These expenses are often incurred before the final quantity of saleable produce is known. Consequently, food loss can reduce the actual profit obtained from each consignment and weaken the ability of traders to maintain or expand their businesses. Aghadi et al. (2020) provide relevant Nigerian evidence by showing that the use of reusable plastic containers can improve the net profits of tomato traders in Lagos. Similarly, Plaisier et al. (2019) demonstrate that interventions aimed at reducing losses in Nigerian tomato value chains require attention to the specific circumstances of farmers, transporters and market traders. These findings suggest that reducing food loss is not only about preserving food but also about protecting business income, improving the efficiency of distribution and ensuring that investments in agricultural commodities generate better financial returns.

Despite the importance of food distribution markets to urban food supply, there is a need for more focused examination of the economic consequences of food loss at specific market locations. General discussions of food loss often emphasise food security, agricultural productivity and environmental sustainability without sufficiently examining how losses translate into financial costs for individual traders and other participants in the distribution chain. In particular, it is important to understand the types and sources of food loss experienced by traders at Mile 12, the extent to which such losses affect their business revenue and profitability, and the additional costs associated with preventing, managing or disposing of deteriorated commodities. Yakeen and Oguntimehin (2024), in their evaluation of fruit supply chains in selected Lagos food markets, identified poor logistics management, inadequate storage systems and insufficient storage facilities as major challenges affecting fruit distribution. Their work reinforces the importance of examining distribution problems within the context of Lagos markets. Therefore, this study focuses on the economic implications of food loss along urban food distribution chains, using Mile 12 International Market as a case study. It seeks to provide an understanding of how food loss affects financial returns, operating expenses, business profitability and the economic activities of market participants.

1.2 Statement of the Problem

Food loss along urban food distribution chains constitutes a serious economic challenge because it reduces the quantity and quality of agricultural commodities available for sale after considerable financial resources have already been committed to their production, purchase and movement. In Nigeria, food commodities are transported from rural production centres to urban markets through distribution systems that may involve long-distance journeys, multiple intermediaries, inadequate storage facilities and unsuitable handling practices. These conditions expose perishable products to physical damage, deterioration and spoilage before they reach consumers. Although food loss is commonly discussed in relation to food security and agricultural productivity, its direct financial implications for traders and other distribution-chain participants require greater attention. The FAO (2019) emphasises that reducing food loss can improve economic efficiency and lower production costs, while Usman et al. (2025) identify inadequate processing and storage facilities as important contributors to food loss in Nigeria. The persistence of these challenges raises concerns about the amount of money lost by traders, the additional costs incurred in managing deteriorated produce and the extent to which food loss weakens the performance of urban food distribution businesses.

At Mile 12 International Market, the movement and exchange of large quantities of agricultural commodities create economic opportunities for farmers, transporters, wholesalers, retailers and other market participants. However, the perishable nature of several commodities traded in the market makes them vulnerable to losses during transportation, unloading, sorting, storage and retail distribution. Where produce becomes damaged or deteriorates, traders may be forced to sell it below its expected market value, dispose of it completely or incur additional expenses to sort and separate affected commodities. Such experiences can reduce sales revenue, diminish profit margins and affect the amount of working capital available for subsequent purchases. Evidence from Lagos tomato traders by Aghadi et al. (2020) indicates that post-harvest losses have measurable implications for traders’ net profitability and that improved handling technology can increase financial returns. Similarly, Benson et al. (2019) reported differences in tomato losses associated with packaging methods at Mile 12. Nevertheless, the specific economic burden of food loss across different categories of food traders and distribution activities at the market requires further investigation.

Another problem is that food loss may generate additional costs that are not always immediately recognised when traders calculate their business expenses. Apart from the value of spoiled or damaged commodities, traders may incur costs relating to transportation, loading and offloading, temporary storage, labour, repackaging, sorting and waste disposal. When these costs are combined with the reduced revenue arising from unsold or deteriorated produce, the actual financial consequences may be greater than the visible value of the food discarded. Such circumstances can create difficulties for small-scale traders who have limited access to capital and may be unable to absorb repeated losses without affecting their business operations. Yakeen and Oguntimehin (2024) identified poor logistics management and inadequate storage facilities as major challenges in selected Lagos fruit markets, while Plaisier et al. (2019) demonstrated that losses within Nigerian tomato value chains are connected to the conditions and practices of several actors. These findings suggest that the economic problem cannot be understood only by counting spoiled commodities; it also requires an examination of the additional distribution costs and the effect of these costs on traders’ net earnings and business sustainability.

Although previous studies have examined post-harvest losses, packaging methods and the profitability of agricultural traders in Nigeria, there remains a need for a focused assessment of the broader economic implications of food loss along the urban distribution chain at Mile 12 International Market. Existing evidence on tomato packaging and fruit supply-chain challenges provides useful insights, but it does not by itself establish the extent to which different forms of food loss affect traders’ revenue, operating costs and profitability across the market’s distribution activities. Without adequate understanding of these economic effects, interventions may focus mainly on reducing physical spoilage without sufficiently addressing the financial pressures experienced by traders. The central problem, therefore, is the insufficiently established relationship between food loss and the economic performance of participants in the Mile 12 urban food distribution chain. This study seeks to address this problem by examining the major causes of food loss, its effects on traders’ revenue and profitability, the additional costs associated with food loss, and the measures that can reduce its economic consequences at Mile 12 International Market.

1.3 Objectives of the Study

The main objective of this study is to examine the economic implications of food loss along urban food distribution chains, using Mile 12 International Market, Lagos, as a case study.

The specific objectives are to:

1. Identify the major causes and forms of food loss along the urban food distribution chain at Mile 12 International Market.

2. Examine the effects of food loss on the revenue and profitability of food traders at Mile 12 International Market.

3. Assess the additional operating costs incurred by traders as a result of food loss at Mile 12 International Market.

4. Examine the measures adopted by food traders to reduce food loss and improve their economic performance at Mile 12 International Market.

1.4 Research Questions

The following research questions will guide the study:

1. What are the major causes and forms of food loss along the urban food distribution chain at Mile 12 International Market?

2. What are the effects of food loss on the revenue and profitability of food traders at Mile 12 International Market?

3. What additional operating costs are incurred by traders as a result of food loss at Mile 12 International Market?

4. What measures are adopted by food traders to reduce food loss and improve their economic performance at Mile 12 International Market?

1.5 Research Hypothesis

The following null hypothesis will be tested in the study:

H₀: Food loss has no significant effect on the economic performance of food traders at Mile 12 International Market, Lagos.

1.6 Significance of the Study

The findings of this study are expected to be useful to food traders, market associations, transporters, government agencies, agricultural stakeholders, consumers and researchers. The study will provide information on the economic consequences of food loss and the importance of improving food handling and distribution practices within urban markets.

Food Traders: The study will help food traders understand how food loss affects their revenue, operating expenses and profitability. It will also draw attention to practical measures such as improved packaging, careful handling, proper sorting, timely sales and appropriate storage. The findings may encourage traders to adopt better business practices that minimise avoidable losses and protect their working capital.

Market Associations and Management: The findings will provide market associations and management with information about the challenges affecting food distribution and trading activities. This may assist them in identifying areas where improved storage facilities, sanitation arrangements, organised loading and offloading systems and trader education are necessary. The study may also encourage market stakeholders to develop collective strategies for reducing food deterioration and unnecessary financial losses.

Government and Policymakers: The study will be useful to government agencies responsible for agriculture, commerce, transportation and food security. It will provide information that may support policies aimed at improving urban food distribution infrastructure, promoting affordable preservation technologies and strengthening post-harvest management. The findings may also help policymakers understand that food loss is not only a food security issue but also a problem affecting the financial performance of businesses.

Transporters and Logistics Operators: The research will highlight the relationship between transportation arrangements and food deterioration. It may encourage transporters and logistics operators to improve vehicle arrangements, loading methods, packaging practices and delivery schedules to minimise physical damage to perishable commodities.

Consumers: Consumers may benefit indirectly from reduced food losses because improvements in distribution efficiency can help preserve the quantity and quality of food reaching urban markets. Reducing avoidable losses may also reduce some of the financial pressures that traders transfer to consumers through higher selling prices.

Researchers and Students: The study will serve as a reference material for students and researchers interested in agricultural economics, supply-chain management, food distribution, post-harvest management and urban market studies. It will also provide a basis for further research into the financial consequences of food loss in other Nigerian markets and distribution systems.

1.7 Scope of the Study

The study focuses on the economic implications of food loss along urban food distribution chains, using Mile 12 International Market in Lagos State as its geographical area of investigation. It examines the causes and forms of food loss during the movement and handling of agricultural commodities, including transportation, loading and offloading, sorting, temporary storage, wholesale trading and retail distribution.

The content scope covers the effects of food loss on traders’ revenue and profitability, additional operating costs arising from damaged or deteriorated produce, and the measures adopted by traders to minimise losses. The study will focus on food traders and other relevant participants in the distribution chain at Mile 12 International Market.

The study does not primarily investigate food waste at the household consumption stage or losses occurring exclusively during agricultural production. Its main concern is the economic consequences of losses occurring during post-harvest movement, handling, storage and market distribution.

1.8 Limitations of the Study

The study may encounter certain limitations during the collection and analysis of data.

Limited Access to Financial Records: Some traders may be unwilling to disclose their sales records, purchase prices, operating expenses and actual financial losses. This may make it difficult to obtain precise monetary estimates of food loss. The researcher will address this challenge by assuring respondents of confidentiality and encouraging them to provide honest estimates.

Recall Difficulties: Some traders may not maintain accurate daily records of damaged or spoiled commodities. Consequently, respondents may rely on memory when estimating the quantity and value of food lost. To reduce this limitation, the researcher will use clear questions and appropriate reference periods when collecting information.

Time and Financial Constraints: The research may be affected by limited time and financial resources, particularly because the market contains different categories of traders and distribution activities. The researcher will therefore organise data collection systematically to ensure that the study remains within the available resources.

Respondents’ Availability: Some traders may be too busy attending to customers and conducting transactions to participate in the research. The researcher will make efforts to administer the research instrument at convenient periods without unnecessarily disrupting their business activities.

Despite these limitations, appropriate research procedures will be adopted to obtain reliable information relevant to the objectives of the study.

1.9 Operational Definition of Terms

Economic Implications: The financial consequences of food loss, including reduced revenue, lower profitability, increased operating expenses and reduced working capital among participants in the food distribution chain.

Food Loss: The reduction in the quantity or quality of food commodities during post-harvest handling, transportation, storage and distribution before they reach consumers. In this study, the term focuses particularly on deterioration, damage and spoilage occurring along the urban food distribution chain.

Urban Food Distribution Chain: The network of activities and participants involved in moving agricultural commodities from production and supply locations to urban markets and consumers. It includes transportation, loading, offloading, storage, wholesale trading and retail distribution.

Mile 12 International Market: A major food trading market located in the Kosofe area of Lagos State, Nigeria, which serves as the geographical focus of this study.

Revenue: The total amount of money generated by traders from selling food commodities within a specified period.

Profitability: The ability of traders to generate financial returns after deducting the costs associated with purchasing, transporting, storing, handling and selling food commodities.

Operating Costs: The expenses incurred by traders in conducting their business activities, including transportation, loading and offloading, labour, storage, market charges, packaging and waste disposal.

Perishable Food Commodities: Agricultural products that deteriorate relatively quickly after harvesting or during distribution, including tomatoes, vegetables, fruits and pepper.

Post-Harvest Handling: The activities undertaken after agricultural produce has been harvested, including sorting, cleaning, packaging, loading, transportation, storage and preparation for sale.

Food Traders: Individuals or business operators involved in purchasing and selling agricultural food commodities at Mile 12 International Market.

Food Distribution Efficiency: The extent to which food commodities are moved from production or supply locations to urban markets and consumers with minimum avoidable losses, unnecessary costs and delays.

Project – The Economic Implications of Food Loss Along Urban Food Distribution Chains: A Study of Mile 12 International Market, Lagos.