Arm Strength Industrial Co.Nigeria is caught between its desire to be self- sufficient in rice and rising incidents of illegal trade with its bordering countries on account of vast rice tariff differential. The debate in Nigeria is an intense and fierce one by different players who don’t understand the dynamics and only tend to put out emotional and fact less arguments to score political points. They try to play to the fact that self-sufficiency is a walk in the park and merely requires sloganeering and mantra speak devoid of any pragmatic approach. The rice tariff differential between Nigeria and its neighbors like Benin Republic and Togo is very vast and as a result gives rise to massive levels of illegal cross border trade flows (smuggling).

As per the industry sources, smuggling of rice from Benin, Niger and Cameroon have easily been between 1,000,000 Metric Tonnes (MT) to 2,000,000 MT per annum over the past 6-7 years. The markets in northern Nigeria like Kano are completely swamped with smuggled rice which enters the country through land borders with Niger Republic and Katsina & other North-western states. Legitimate importers of rice in Nigeria have thus effectively been shut out of Kano and other northern markets for several years. Another dynamic in play is that rice consumption in the country is almost entirely parboiled rice. In West Africa only Nigeria consumes parboiled rice. Other West African countries including all the neighboring countries like Niger, Benin, Cameroon and Chad are not consumers of parboiled rice. In Africa, South Africa is probably the only other major country that consumes parboiled rice. There is very little of locally produced or milled rice in the market whether it is in big markets like Lagos, Abuja or the smaller markets like Makurdi, Ilorin and Kaduna.

Anchor Borrowers Scheme run by the current government and particularly the Central Bank of Nigeria, seeks to encourage local production by granting single digit loans to out growers is yielding results, even if slowly, but it is a good start and must be lauded. The higher paddy prices in Nigeria that are hovering around naira 160,000 per metric tonnes currently are significantly higher than the prices in India and Thailand, making it challenging for rice millers in Nigeria to be competitive. Although the federal ministry of agriculture claims that there are about 21 rice mills in the country but the fact is that there are not more than 9-10 mills that are active and in regular production. The low average yield in Nigeria for paddy of around 1.8-2.25mt per hectare also leads to high production cost for the farmer and also, high paddy prices for the rice miller. But the initiatives by the Federal Government like infusing new investments and improvement in paddy production techniques can create lots of new jobs in the rural areas and coupled with the encouragement to rice milling and distribution sector can improve the entire value chain of Nigeria.

 

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