• Saturday, May 25, 2024
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BusinessDay

Rice millers roar back to life as cross-border paddy returns

10-year-old stored Thailand rice may find its way to Nigeria, Africa

Rice millers that were forced out of business in Africa’s most populous nation are gradually reopening their factories as it becomes affordable to source critical inputs.

The millers have the lifting of sanctions on the Niger military junta by the Nigerian government to thank for their renewed ability to import paddy- a key input for their operations.

“Some mills that shut down production owing to the scarcity of paddy last year and early this year are now reopening as they can easily source the grain from neighbouring countries owing to the reopening of the Nigeria-Niger border,” said Jonathan Joshua, chairman at African Rice Mill in Nasarawa said.

“We are expecting the prices of paddy to drop further when farmers commence harvesting in two months,” Jonathan, who is also the national president of the Association of Small-Scale Agro Producers in Nigeria said.

Prices of paddy have declined by 32 percent since March 2024 when the country reopened its land border with Niger.

A ton of paddy cost an average of N425,000 in April, down from a high of N625,000 per ton in February, BusinessDay’s market survey shows.

The rice milling industry had been under pressure since October 2023 when Nigeria shut down its border with Niger – a key route for paddy cross-border trade between both countries.

Nigeria needs 11 million metric tons of paddy to meet current domestic consumption but produces about 4.8 million metric tonnes of paddy which gives 2.64 million metric tonnes of rice, according to the Rice Processors Association of Nigeria (RIPAN). That leaves a shortfall of 6.2 million metric tonnes of paddy for the subsector.

The country’s rice milling industry has a processing capacity of 7.5 million metric tonnes, data from RIFAN shows.

The association in a 2023 report says most millers have large unutilized capacity and hence huge overheads per unit of capacity utilised owing to macroeconomic challenges and scarcity of paddy that year.

An industry source who was not authorised to speak on the issues said several millers shut down their operations when they could no longer bring in paddy from Burkina Faso and Niger amid other surging production costs.

“So, with the border reopening and them getting paddies easily and price dropping, it makes sense for them to start reopening,” he noted.

Another industry source said the country had always gotten a chunk of its paddy from its neighbouring countries as insecurity has hampered large-scale production of the commodity.

“Most rice growing areas in the north have been abandoned because of insecurity,” he said. “Our rice production has been declining and with the cancellation of intervention it will drop further,” he noted.

“If you observe the price trend, you will notice that the spike in rice prices started in September and October last year after the border with Niger was closed and governors were doing bulk buying for subsidy palliatives,” he added.

In line with his statement, BusinessDay reported in November 2023, that millers have requested a trade pact with India to import two million metric tons of rice to help stabilise surging prices of the grain locally when President Tinubu visited the country last year.

The millers requested for the trade pact as they scrambled for paddy amid a worsening shortage that was sending prices to record levels.

“We do not have enough paddies for millers in the country despite the success recorded under the Anchor Borrowers scheme,” the industry source noted.