Nigeria’s rice farmers and millers who have struggled in the past to sell their products are now smiling to the banks as demand for the crop continues to rise owing to the on-going border closure and Anchor Borrowers Programme.
The border closure and Anchor Borrowers initiative have made farmers and millers ramp up their production to meet the ever-increasing demand for rice- a key staple in the Nigerian diets.
As a result, Nigeria’s rice production has risen to an average of four metric tons per hectare and this made it possible for farmers to meet up with the market rice needs during the 2019 festive season.
“Lots of rice farmers are increasing their production areas because there is a huge market for paddy since the border closure,” said Aminu Goronyo, national president, Rice Farmers Association of Nigeria told BusinessDay.
“This is because millers are patronising rice farmers now and off-taking all that they produce immediately,” Goronyo said.
He stated that before the border closure, farmers had over 20,000 tons of paddy lying fallow because millers were not off-taking from them.
In an attempt to tackle issues of smuggling, the Federal Government had since August 2019 shutdown the Nigerian borders.
The move compelled Nigerians who generally have a high preference for foreign varieties to shift to local brands.
Also, it spurred demand in crop and livestock products across the country and created investment opportunities for potential investors in rice and poultry production value chain, among others.
The United States Department of Agriculture (USDA) put Nigeria’s milled rice 2018/2019 production at 4.78 MMT, up over 2.5 percent from 2017/18 figure of 4.66 MMT.
The Food and Agricultural Organisation (FAO) had in 2017 attributed the continuous growth recorded in the country’s rice production to high local prices and input assistance programmes such as the Anchor Borrowers Program.
However, the 4.7 million MT milled rice in 2018 is still 2.3 million MT below Nigeria’s 7 million MT annual demand as stated by the country’s Agricultural Ministry.
This shows a huge opportunity for investors across the rice value chain.
“We are making so much profit in the sale of rice right now. I am buying paddy and milling it in the north to supply markets in the south,” a trader who is currently taking advantage of the border closure and does not want his name mentioned on print told BusinessDay.
“This is the best time to invest in the rice value chain,” he advised.
BusinessDay’s recent survey at Daleko market – the largest rice market in Lagos metropolitan shows that local brands now dominate traders’ shelves with prices declining when compared to a month ago.
The average price of a 50kg bag of local brands from integrated rice millers such as Mama Pride, Umza Classic, Mama Choice, Lake Rice, Three Brothers, and Al-Hamsad among others now sells for N19,500 as against N24,000 sold a month ago, indicating a 19percent drop in prices.
While a 50kg bag of rice from semi-integrated millers and manual millers sells for between N14,000 and N15,000. These varieties are regarded as lower quality because there are stones mixed with the rice grains.
The country currently has a milling capacity of about 5.1 million metric tons, the Rice Processors Association of Nigeria says.
The milling capacity figure is expected to increase as Dangote Group looks to commence rice production.
Similarly, the Anchor Borrower Programme (ABP) which started since 2016 to provide credits to farmers has impacted rice production tremendously in the country.
The government has since been lauded for the initiative but loan repayment by farmers has remained a constant issue, as farmers see it as their own part of the national cake.
Experts say the country can only sustain the progress made thus far when there is policy consistency and prices of local brands become price competitive as well as improvement in the quality of local rice varieties.
They urged the government to continue with the on-going border closure policy to drive more investments in the country’s agricultural sector.
The experts also called on the government to address lingering structural problems such as insufficient supply chain integration, lack of capacity for farmers and infrastructural deficit which remains a threat to local production.
The Federal Government last year says it will extend the border closure to January 31st, 2020, which is just four days from now.