Olam Nigeria Limited is no doubt a trailblazer with many successful records to its credit in Nigeria’s agric and agro-allied sector. Some few years back, Olam Nigeria gained a foothold in the nation’s rice value chain. With the Nigerian government desirous of making the nation a net exporter of rice, BusinessDay Research and Intelligence (BRIU) team comprising TELIAT BIODUN SULE and ADEMOLA ASUNLOYE, in the process of producing Rice Industry Report 2019, sought the views of ADE ADEFEKO, Olam Nigeria’s vice president on the state of rice production in the country and how opportunities in that sector could be optimised. Excerpts:
Kindly give us an overview of the rice value chain in Nigeria.
Rice is grown in almost all the states in Nigeria. The value chain extends from the small holder farmers to the final consumers across the country. The key players in the middle are the paddy rice aggregators, various small to large scale rice millers, rice distributors, wholesalers and retailers (which form the entire trade channel for packed & branded rice). Olam’s operations in the rice industry in Nigeria span the entire value chain starting right from input supplies to small holder out-grower farmers to cultivating paddy rice on its own farmlands and then milling it to distribute the packed & branded rice in all regions of the country.
What is driving producers to cultivate rice and what are the main characteristics of rice producing households (e.g. in terms of their resource base, economic activities and scale)?
The major driving force for the cultivation of rice has been the superlative price realization of the paddy crop harvest. In the last wet season’s harvest, farmers were able to get prices upwards of N110/kg which was a sharp improvement from a price of N 60/kg prevailing only 4 years back. The small holder farmers with the support of an off taker and input finance from NIRSAL/CBN today earn the best returns per hectare of land cultivated. Most farmers have an average cultivation of 1-2 hectares of land which if utilized for 2 seasons in a year ensures subsistence for the family.
What major technological changes have occurred in the nation’s rice farming sub sector? What factors determine producer’s efficiency?
The major change has been in the usage of improved and purer seeds coupled with discriminatory fertilizer applications in various stages of the plant growth. The introduction of L series of seeds (L19 & L34) coupled with Faro 44 & Faro 52 varieties have been effective. However, irrigation facilities have remained limited only to some northern states of the country and are a major area where the government has to invest for the farming community. Agricultural land development has also seen some technological improvements in states like Kebbi, but more use of technology will be required in the future in keeping with global agricultural trends.
What is the current national rice yield per hectare? Which paddy rice specie gives the nation the best yield per hectare and in what rice season?
The current national rice yield is around 2-2.5 Mts per hectare. However, the northern regions of Kebbi and Jigawa states have produced yields far superior to national average. It is a combination of soil & weather conditions, farming practices, seed variety and good harvest & post-harvest practices which significantly influence the yield for a particular season. It has been observed that dry season farming (mainly Faro 44 variety) in irrigated farmlands of Kebbi and Jigawa states have produced the best yield results so far.
When do you think the locally produced rice could compete with imported rice?
Nigerian grown rice is already competing with the imported rice. However, it is not a level playing field with the imported rice (Thai or Indian) virtually all of which are smuggled into the country from the borders with Benin Republic, Niger and Cameroon. There are high level farm and mill subsidies or support programs which are a norm in countries like India, Thailand, Vietnam etc. which make their rice extremely competitive in export markets and generate surplus production for each of the countries in spite of high level of consumption. Hence, when compared to a Thailand or Indian rice, home grown rice in Nigeria is much costlier to produce. To bridge this gap, the price of paddy rice available in Nigeria’s markets needs to drastically reduce which will eventually lead to a lower price of finished rice thus helping compete with the cross border imported rice.
Your organisation relates well with small holder farmers. What are the current crop management practices for rice in the country?
Olam is very closely involved with the small holder rice farmers in the country. We provide inputs (especially certified seeds and appropriate fertilizer) to farmers and give them training on world class farming practices which go a long way in ensuring the best possible yields. Using purer seeds along with discriminatory fertilizer applications in various stages of the plant growth are essential.
What portion of the rice that is produced locally is consumed? What processing and marketing channels are used by players in this sector? What are the marketing problems farmers are actually facing?
The consumption of home-grown Nigerian rice has picked up in the last 3 years. Today, one can observe popular Nigerian rice brands from the North, Central, Eastern and South western parts of the country. The perception and acceptability of Nigerian rice has really grown over the years due to the fast improvements in quality. Nigerian rice is still the best in taste according to most consumers in the country. Olam’s brands of Mama’s Choice and Mama’s Pride have become a favourite choice of consumers from all parts of the country. This is as a result of better understanding of paddy quality by the farming community to supply the rice millers the best quality and thus helping them to produce the best possible quality of branded rice in the country. Millers typically buy their raw paddy from various supplier or agents spread throughout the country and utilize the same to produce branded rice which is sold through wholesalers & distributors into the local retail markets. Today big retailers like Shoprite and Spar also patronize Nigerian rice in a major way.
Rice farming is one of the activities the federal government intends to use to reduce unemployment. How do you think government can achieve this? How can Olam help in this regard?
There are still vast areas of uncultivable agricultural land in Nigeria which the government can use to bring a large portion of the population into farming. Olam’s rice outgrower program for farmers has been in operation for the last 15 years and has now grown in strength to involve 16,723 small holder farmers till date with the potential for further expansion in each consecutive year. The fact that there is exciting returns on cultivating a hectare of paddy should encourage more youths to take up farming as a serious profession. Government support on good road infrastructure, availability of proper irrigation facilities, access to quality and affordable seeds will go a long way in boosting this.
For optimum productivity, which paddy rice species would you recommend to farmers in the different rice belts in Nigeria-North, West, East and South?
Faro 44 has proved to be the most consistent of the varieties for most of Nigeria’s soil and climatic conditions. Hence, for optimum productivity, this type of seed with good fertilizer application can prove to be extremely useful to farmers in different regions of Nigeria.
In spite of the ban, rice smuggling is still a menace to rice producers in the country. How do you think this can be stopped?
The land borders in Nigeria are extremely porous. Thus, foreign rice gets a free flow into the country across our south western, north and south eastern borders. Approximately, two million metric tons of foreign rice are smuggled into the country across various land borders every year. This trade of rice smuggling into Nigeria has seriously evolved over the years especially since the ban on direct rice imports into Nigerian ports. The smugglers have come up with newer and more innovative routes (sometimes even waterways). Smaller vehicles like cars, buses, motor bikes etc are also very popular modes of smuggling rice across the borders apart from the usual big trucks. Though, the Nigerian Customs has been in a long war with the smugglers, their tenacity has been truly tested in the last couple of years. So, apart from the strict border control policies, the solution lies in the economic policy of making Nigerian Paddy and finished rice price cheaper and passing on a strong message of advocating Nigerian rice to all consumers consistently through the mass media. Smuggling probably can’t be completely removed, but it can be drastically reduced if these two pronged strategies are implemented with zeal.
Where do you see the nation’s rice farming in the next five years? What milestones should we watch out for?
The future of the nation’s rice farming does indeed look bright with more participation from small holder farmers, medium sized agri-entrepreneurs and large corporates. However, the menace of smuggling needs to be curbed if investors are to continue patronizing the rice industry. Nigeria definitely has the potential to be self-sufficient in rice production in 5 to 10 years time maximum if farm expansions, yield improvements, a stable market environment and curb on cross border smuggling can be implemented. It is going to be a long and hard journey but one in which Nigeria is fully capable of coming out on top.
