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Towards strenghtening Nigeria’s rice value chain 

A typical rice mill

A typical rice mill

The signals from Nigerian farmers, rice processors and some investors in the rice sector are disturbing.

Some lament that large imports of finished packaged rice imported largely by Indian merchants and traders from India and Thailand, have been dumped on the Nigerian rice market. This, they say, has led to a major glut in the local rice market resulting to the collapse of prices.  This means that locally milled rice cannot compete against cheap imports and low quality rice brought in from these countries, with subsidies and export incentives granted by the exporting countries.

Also, Nigerian rice farmers say they are experiencing difficulties selling their paddy.  They speak about how market prices for rice have fallen very low.  They say prices now offered are below their cost of production. There are also fears that local rice millers cannot sell their milled finished rice either because market prices are far lower than local production cost.

There are also cries over local patronage of locally milled rice due to prejudice and preference for imported product.

“Even government agencies buy imported rice for their social and welfare support functions. The glut is serious,” a stakeholder lamented last week.

The hues and cries seem to be unending.

To address the litany of problems in the rice value chain, experts posit that government could support through mechanization, revamp irrigation, develop land for large scale-farming, sponsor research on improved seed varieties and farm inputs, provide incentives such as low cost financing and tariff, and boost power infrastructure.

According to official figures, domestic consumption of rice in Nigeria is estimated at over 6million Metric Tons.
According to the National Cereals Research Institute, “In the 1960s Nigeria was almost 99 percent self-sufficient in the rice consumed by its citizens.”

Nigeria rice production is said to have stagnated in the last 10 years. With a total output of 3m MT in 2013, the country is now ranked 16th in the world in terms of output.

With the huge gap between local production and consumption, Nigeria is rated as the world’s second largest rice importer (around 3.0m MT), spending N1billion a day on rice import and approximately $2.5 billion per year. Indeed, rice is classified among the top four agriculture imports in Nigeria along with wheat, sugar and fish.

Available data shows that Nigeria has the ecology to produce rice to exportable quantity. Nigeria currently produces about 3.2million tons yearly, but can produce 10 million tons per year if government at all levels will make deliberate effort to develop and support rice production.

A rice investment expert, Andy Ekwerem, in an interview with The Guardian,said: “Poor management of import tariff and support, import quota not released on time and ineffectual control and management of imports are some of the issues on the table.

“Current import quotas are not fairly distributed. New investors without actual investments on ground are favoured far more than people who have actual assets and investments on ground. Traders and speculators are favoured against serious local players who are already producing with massive investments already on ground. Government has encouraged speculators instead of farmers and serious rice millers. A major damage and set back to the rice sector is looming.”

On the way forward, he stressed: “The Federal Government through the Federal Ministry of Agriculture, Strategic Grain Reserve must endeavour to find a way to take up all the stock of rice paddy produced by local farmers. Government, through the existing silos and aggregation centres should purchase the paddy available at cost in order to relieve the farmers and save them from the embarrassing cash crisis threatening their survival and sustainability.

“Once this is done, rice farmers can go back to business with minimum loss or damage to their enterprise. The paddy stocks now accumulated and held by government, can be sold eventually to local rice millers within the next 3 to 6 months as the market situation improves. It is most important to protect our farmers. It is estimated that the paddy stocks involved all over the country is in range of two million tons at a cost of N120 Billion.”

For local rice to be competitive, he called for strategies to reduce local production cost through efficiencies in paddy production practises.

“During early years, we must make substantial investments and establish means to protect local farmers, investors, service providers and local rice millers,” he noted.

He called attention to the need for better management of the nation’s import quota system and why import quota should be allocated to only local processors with clear production assets on ground.

He explained: “This way, local prices can be maintained, stable and any profits made by true local investors can be re-invested, thus encouraging rapid growth in the rice sector. Giving import quota to local rice millers and investors is the most viable policy, since it transfers the profits made by ordinary rice traders to those investors, famers and millers that have investments on ground. The profits made will strengthen the investment drive, pay off bankers who have risked their loan assets in support of local production and retain such projects in the country. Also, the prosperity of local investors will create incentives for even greater investments.”

Ekwelem warned of a looming crisis if government doesn’t take the right steps to intervene.
He spoke further: “Local rice millers would offer locally milled rice brands and rice milled from imported brown rice in a way that gives market access to local rice instead of the current practice, where rice traders sell against locally milled rice brands and frustrate market access and market entry through unfair trade practices and other sharp practices which deny market entry to local production. Local rice brands should sell side by side with imported milled rice brands through same channels.”

He called for better management of the quota system to meet the actual national shortfall needed to stabilize the sector.

On his part, former Minister of Commerce and Industry, Engr. Charles Ugwuh wants the federal government to declare a five-year import ban on rice imports, during which it should concentrate efforts to produce enough to meet national needs and displace imports.

During the 5 year period, he wants the Nigerian Customs Service to protect the nation’s rice economy against smuggling.

“All hands should be on deck by the financial sector, local distributive trade, all agencies of government, and all stakeholders to support the national initiative on rice. If we drive this to success, it would encourage even greater success and confidence to tackle other products and programmes that are relevant to prosperity and well-being,” he stressed.

Speaking further, he made a strong case for a viable rewards system to be established to encourage patriotic zeal and drive towards enforcement of compliance by agencies of government, and stressed the enormous benefits to the nation’s economy if rice is grown locally.

“We can grow rice and save over US $2.6 Billion that we currently spend per year on rice imports,” he noted.

Ugwuh, who is the promoter of Ebony Agro and Tara Agro Industries Limited, leading local rice production facilities, was emphatic that Nigeria could be self sufficient in rice production.

His words: “We call for a total ban on rice imports for at least 5 years to enable Nigeria to bed down and produce its own food with the enormous natural resources and endowments we have. The nation can be self-sufficient in rice. We can eliminate food imports and save US$9billion annually on wheat, rice, sugar, and fish. Nigeria cannot afford to waste such a huge amount and export vital jobs overseas, when massive unemployment is such a great challenge threatening our national survival.”

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