The price of rice paddy in Nigeria has surged 69 percent in recent weeks owing to the high cost of logistics and farm inputs triggered by the coronavirus COVID-19 outbreak.
The recent sudden and speedy rise in prices is challenging the output of millers currently, as many are unable to get enough rice paddies to feed their mills.
Currently, a metric ton of rice paddy in Kebbi State – Nigeria’s top rice grower – costs N214,500 as against N127,000 sold pre-COVID-19 era, indicating a 69 percentage point surge.
“Millers are not getting enough paddy for their mills because of the recent surge in prices, and this would soon start affecting their output,” Rotimi Williams, founder, Kereksuk Rice Farm, states in response to questions.
“We usually experience a marginal increase in price during the wet season but this year’s increase has been much higher because of the impact of the pandemic and slashes in Asian export,” Williams says.
He says players in the industry are not anticipating any drop in price when farmers commence harvesting for the wet season in the next two months, because of the continuous impact of the COVID-19 pandemic.
Despite farmers increasing productivity per unit area, Nigeria’s rice has remained uncompetitive owing to the high cost of paddy as it constitutes 70 percent of the total rice processing.
Nigeria – Africa’s most populous country – needs 7 million metric tons of milled rice yearly to meet its demand, the Federal Ministry of Agriculture says.
Joseph Ununu, a rice supplier in Ebonyi State, says millers are currently running out of paddies as most warehouses are becoming empty in the state owing to the recent surge in prices.
“A lot of warehouses that were filled during the lockdown are now empty because the owners have sold everything and running out of stock,” Ununu states.
Similarly, the prices of parboiled rice – a key staple in Nigerian diets – have also surged owing to the rise in paddy prices.
BusinessDay surveys some markets in the Lagos metropolis and found out that local brands of parboiled rice dominated the shelves of traders.
In Daleko Market, the biggest rice market in Lagos, a 50kg bag of local parboiled rice was sold for N20,000 three weeks ago, now sells for an average of N24,500, indicating a 25 percent rise in price.
While foreign parboiled rice sells for an average of N28,000 as against N24,000 a few weeks ago.
Since the initial lockdown to contain the virus spread in late March, prices of all farm inputs have also surged by over 20 percent, forcing farmers to reduce their production areas.
This led to a steady acceleration of inflation in Africa’s biggest economy. The country’s inflation rate quickens to a 26-month high at 12.6 percent in June, mainly driven by food inflation sub-index.
“The recent increase in paddy prices across the country is because of the high input cost incurred by farmers,” says Zayyanu-Umar Aliero, chairman, Rice Millers Association, Kebbi State chapter.
“The cost of NPK fertilizer has gone up from N7,500 we were buying to N11,500 now as we speak,” he says.
However, Ade Adefeko, vice president, corporate and government relations, Olam, is optimistic that despite the increase in input cost, the surge in prices of paddy will ease off during the wet season harvest.
At the international market, the price of a metric ton of rice has been declining steadily as top Asian growers of the grain lift restrictions on export after the lockdown.
Data from the International Grain Council show that a metric ton of rice sells for $466 as at the time of writing as against $492 sold late June.
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