• Friday, July 19, 2024
businessday logo


Foreign firms sabotaging Nigeria’s rice policy owe FG N36.5bn


Five foreign-owned rice producing companies in the country have altogether exceeded  import quotas by 70percent of what was allowed by the Federal Government to them at a preferential duty rate, to bridge the domestic rice supply gap.

Akinwunmi Adesina, minister of agriculture and rural development says the companies by their actions, are sabotaging the Federal Government’s rice policy.

Adesina said only 223,902 metric tons was allocated to two of these foreign-owned companies to import rice at the preferential levy of 20percent, instead of the normal 60 percent levy and 10 percent duty.

The remaining three foreign companies did not get allocation for rice import at the preferential duty because they do not have Domestic Rice Production Plans (DRPP).

Based on figures given by the minister, these five companies imported altogether 732,555.55 MT of rice, which is 508,653.55 or 70 percent in excess of the 223,902 MT that the first two were to import at the preferential duty.

Akinwunmi says therefore,  that these five companies are  to pay N36.5 billion as import tariff to the Federal Government treasury, out of which about N31.2 of this amount is tariff owed to the treasury on excess import.

On May 26, last year, a new rice policy was approved by the government to encourage investment in local rice production and milling through the introduction of an import duty differential on rice (brown or polished) imported by rice investors, compared to rice traders.

Investors that have milling capacity with verified Domestic Rice Production Plans (DRPP) enjoy an import duty of 10percent and levy 20percent, while traders will pay an import duty of 10percent and levy 60percent.The new rice policy also stated that importation of brown or polished rice should be limited to the national supply gap for import-grade rice to be determined by an inter-ministerial committee chaired by the Federal Ministry of Agriculture and Rural Development (FMARD), with membership drawn from the Federal Ministry of Finance (FMoF), Federal Ministry of Industry, Trade and Investment (FMITI) and the National Planning Commission (NPC).

Akinwunmi stated that during stakeholders’ meetings and consultations, with members of the Rice Processors Association of Nigeria (RIPAN) and Rice Importers and Distributors Associations of Nigeria (RIMIDAN), a national supply gap of 1.5million MT was determined.

This national supply gap of import grade rice is expected to decline to zero in 2017, when the country is expected to become self-reliant in rice production, when new rice mills being purchased by investors, such as Dangote Group, Honeywell, Wacot and others, would come on board.    

These investors have acquired and are developing over 270,000Ha of rice fields to supply their rice mills with paddy.

Akinwunmi stated that following a transparent exercise, 1.3million MT out of the 1.5million MT of rice import quotas was allocated at the preferential levy to deserving companies. To qualify for a final quota allocation, all qualifying companies had to deposit a Domestic Rice Production Performance Bond (“the Bond”). For each investor, the Bond value will be equivalent to 30percent of the value of the quota received.

This Bond must be secured at a qualifying bank approved by the Federal Ministry of Agriculture and Rural Development. In the event that an investor’s Domestic Rice Production Performance Bond is called, the proceeds will be deposited in the National Domestic Rice Production Fund (NDRP) Fund to support farmers and millers in expanding production and milling operations in the relevant states.

But an industry player, whose company has made huge investment in domestic rice production still says, “Talk is cheap, anyone can present a document to show they intend to start producing rice locally, get the waiver and not invest in local production.

Another rice investor, Abdulghaniyy Alabi-Ojolowo, urged the government to consider granting import waivers only for rice paddy and not finished processed rice to ensure that importers would have no choice but to establish mills and process the paddy to finished rice, thereby employing more hands.”