• Sunday, June 23, 2024
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BusinessDay

Rice farmers, millers ramp up production as Nigerians shift to local brands 

Rice

Nigeria’s rice farmers and millers who struggled in the past to sell their products are now smiling to the bank as Nigerians are forced to shift preference to local rice varieties, according to BusinessDay investigation.

The rising demand means the farmers and millers are now having to ramp up production to meet the ever-increasing demand for rice, a key staple in Nigerians’ diet.

The price of rice rose suddenly following the closure of the land borders by the Federal Government but it may have peaked, forced down in the last 10 days by an unusually heavy harvest by rice farmers across the country. It is pushing millers with an estimated capacity of near 5 million tons annually to expand operations.

“A whole lot of rice farmers are increasing their production areas because there is a huge market for paddy since the border closure,” Aminu Goronyo, national president, Rice Farmers Association of Nigeria, told BusinessDay in a telephone response to questions. “This is because millers are patronising rice farmers now and off-taking all that the farmers produce immediately.”

Goronyo said that before the border closure, farmers were holding over 20,000 tons of paddy which lay fallow because millers were not buying from them.

The Federal Government had on August 21 closed the country’s land borders in an attempt to tackle smuggling, especially of rice.

The move created scarcity of the commodity in the markets across the country, forcing prices to skyrocket to as high as average of N24,000 for a 50kg bag of local rice. But the move also compelled Nigerians, who generally have a high preference for foreign varieties, to shift to local brands.

The border closure also brought comfort to local poultry and tomato farmers who struggled for years fighting off smuggled alternatives.

BusinessDay’s survey at Daleko market, the biggest rice market in Lagos, shows that local brands now dominate traders’ shelves with prices declining when compared to a month ago.

A 50kg bag of local brands from integrated rice millers such as Mama Pride, Umza Classic, Mama Choice, Lake Rice, Three Brothers, Al-Hamsad, among others now sells for average of N19,500 as against N24,000 sold a month ago, indicating a 19 percent drop in prices.

Similarly, 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 with stones mixed with the rice grains and were not stocked by traders before now.

“Yes, the prices of rice went up immediately after the border closure. The prices have peaked and are now coming down,” Mohammed Abubakar, chairman of the near 40-member Integrated Rice Processors Association of Nigeria, told BusinessDay.

“We would be able to meet demand and Nigerians have no need to worry about Christmas demand. Our members are already increasing their capacity,” Abubakar said.

He noted that the association currently has 35 members with a milling capacity of about 2.1 million metric tons, while non-members have an estimated milling capacity of about 3 million MT.

Estimates now put Nigeria’s aggregate rice milling capacity at around 5.1 million MT per annum, which is expected to further increase as Dangote Group looks to commence production soon.

The fall in prices is a measure of success of government policies, said a senior government official who applauded the shift to local rice by Nigerians. The government official also acknowledged that the borders cannot remain shut for ever.

The United States Department of Agriculture (USDA) puts Nigeria’s milled rice 2018/2019 production at 4.78 million MT, up over 2.5 percent from 2017/18 figure of 4.66 million MT.

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 inputs assistance programmes such as the Anchor Borrowers Programme.

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 Ministry of Agriculture and Rural Development.

“Since the surge in prices, farmers who have abandoned growing rice have returned and even other farmers are shifting to rice cultivation because the market is there,” Muhammed Augie, chairman, Rice Farmers Association, Kebbi chapter, said.

“A bag of paddy rice now costs N8,500 as against N10,000 sold two weeks ago. This is because we are growing more and the harvesting season just commenced,” Augie said.

But experts say the country can only sustain the progress made thus far when prices of local brands become competitive and lingering structural problems such as insufficient supply chain integration, lack of capacity for farmers and infrastructural deficit which remains a threat to local production are addressed.

“The prices of local varieties have to reduce further. Before the border closure, imported brands were selling for N13,500 even after paying tariffs, bribing the Customs and transportation,” said an expert who spoke on condition of anonymity.

“The government needs to provide key infrastructure to drive down production cost as well as ensure that farmers’ yield per hectare increases,” the person said.

 

JOSEPHINE OKOJIE & BUNMI BAILEY