Nigeria may see the cost of its rice imports for the 2023/24 marketing year outstrip the cumulative N1.08 trillion spent under the Anchor Borrowers (ABP) – a scheme that provides farmers with critical funds and inputs needed to boost local production in eight years.
The United States Department of Agriculture (USDA), in its 2023 grain report on Nigeria, projected that the country will import 2.3 million metric tons (MMT) of parboiled rice in 2024, a 10 percent increase from the 2.1 projected this year.
Currently, a metric ton of parboiled rice sells for $568 per ton, data from the International Grain Council shows. This means that Nigeria may spend a whopping $1.31billion importing rice in 2024 (2.3MMT multiply by $568 per ton).
Using an exchange rate of N900/$, the country will spend N1.2 trillion ($1.31bn) to import parboiled rice, which exceeds the total funding for ABP by N100 billion.
“Insecurity in farming areas, high input prices, and inadequate mechanisation favours rice imports over the possibility of encouraging more production due to higher prices,” said the report.
“In addition, increasing demand for foreign rice coupled with high production costs has made local rice uncompetitive, especially in terms of quality,” it added.
In October, the Central Bank of Nigeria (CBN) restored the 43 items, including rice, it prohibited from access to foreign exchange (FX), after eight years.
The move analysts say will further increase the importation of rice next year owing to Nigerians high prference for local parboiled rice and quality issues.
Despite the increase in productivity per unit of cultivated land and the expansion of mills in the last four years, the quality of most local varieties has remained perpetually poor, thus fuelling consumers’ preference for foreign varieties.
Read also: Manufacturers’ inventories to decline over high import tariffs
Also, low quality coupled with the high cost of production has made local rice uncompetitive. Imported brands from Thailand, Vietnam and India are the preferred options.
“Nigerian rice millers, both integrated and small scale, are cutting down production due to high operating costs, primarily due to high diesel and paddy costs,” according to the report.
“Mills also face additional constraints including a weakening Naira and increasing smuggling of foreign brands through land borders making domestic production less profitable,” it stated.
The report noted that local rice is cheaper than imported rice, but the price margin is not significant enough to compensate for the difference in quality.
For production, the USDA report forecasts Nigeria’s rice production to decrease to 8.1MMT in 2024 from 8.5MMT in 2023 owing to higher fertilizer prices, reduced access to farmlands in conflict-prone areas, and an increase in unrecorded rice imports of cheaper paddy that is making local paddy less competitive.
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