Monday, March 12, 2018 /12:41 PM / PwC
We estimate that increasing the mechanisation rate in Nigeria from 0.3hp/ha to 0.8hp/ha in the next 5 years, can double rice production to 7.2 million tonnes. To achieve this, we estimate that Nigeria will need to at least triple its current stock of machinery over the same period
Rice is one of the most consumed staples in Nigeria, with consumption per capita of 32kg. In the past decade, consumption has increased 4.7%, almost four times the global consumption growth, and reached 6.4 million tonnes in 2017 – accounting for c.20% of Africa's consumption. As at 2011, rice accounted for 10% of household food spending and 6.6% of total household spending. Given the importance of rice as a staple food in Nigeria, boosting its production has been accorded high priority by the government in the past 7 years. Significant progress has been recorded; rice production in Nigeria reached a peak of 3.7 million tonnes in 2017.
Despite this improvement, comparatively, Nigeria's rice statistics suggest there is an enormous potential to raise productivity and increase production. Yields have remained at 2 tonne per hectare, which is about half of the average achieved in Asia. In addition, as population increases, along with rural to urban migration, ensuring food security in key staples becomes critical. However, food security cannot be achieved by a system that depends almost entirely on human muscle power and other manual methods.
Globally, rice production has grown at an annual average of 1.0% over the past decade, reaching 486.7 million tonnes in 2017. Most of this growth has come from Asia, accounting for 89% of global output. China and India are the largest producers, each with a share of 29.6% and 22.6% of global production respectively. In the rest of the world (ex-Asia),rice production has risen steadily over the past decades, accounting for 15% of total production by 2017, a marginal increase from 12% in the last two decades.
Global rice consumption remains strong, driven by both population and economic growth in Asia and Africa. Over the past two decades, rice demand increased at an annual average of 1.2% to reach 481.6 4 million tonnes in 2017.
Nigeria's mechanisation has remained low at 0.3 hp/ha, relative to 2.6hp/ha in India and 8 hp/ha in China. The number of agricultural tractors is estimated around 22,000, relative to 1 million and 2.5 million in China and India respectively. Low income, limited access to affordable financing and the lack of technical skills have limited the adoption of mechanisation across the rice value chain.
We estimate that increasing the mechanisation rate in Nigeria from 0.3hp/ha to 0.8hp/ha in the next 5 years, can double rice production to 7.2 million tonnes. To achieve this, we estimate that Nigeria will need to at least triple its current stock of machinery over the same period. In addition to raising production, adequately increasing mechanisation has the capacity to raise yields, increase labour productivity, reduce post-harvest losses, increase income generated by farmers and deepen import substitution.
Nigeria's mechanisation gap provides numerous opportunities for investment across the agricultural value chain. To attract the required investment, the government needs to create an enabling environment that ensures mechanisation is profitable. In terms of priorities, the government should concentrate on: addressing challenges around land tenure and ownership, providing rural infrastructure and extension services, and ensuring incentives are transparent and accessible to all investors.