Nigeria is working towards self-sufficiency in rice production


Friday, December 18, 2015 09:15 AM / FBNQuest Research 

Rice is a staple food in Nigeria and is consumed by individuals across all income levels. The steady rise in demand is due to increasing population growth in addition to its ease of preparation and storage.

The country remains the second largest importer of rice globally. The total demand for milled rice in Nigeria is estimated at 5.3 million metric tons (mmt) annually, with 3.3mmt produced locally resulting in a shortage of 2.0mmt.

Industry sources estimate annual average spending on rice importation at US$2bn.  To ease pressure on the fx reserves (and create employment), the FGN needs to employ effective import substitution strategies to boost domestic production.

Currently, Nigeria has no fewer than 24 integrated rice mills across the country capable of bolstering the production process. Approximately 8mmt paddy rice was harvested last year.

In 2012 the Indonesian industry put its milling yield (from paddy) at 62.7%. The rate would appear substantially lower in Nigeria.

Recently, an Indian company has announced plans to invest US$100m towards the cultivation of 7,500 hectares of rice farms and the construction of two rice mills in Niger State over the next three years.

The CBN's latest annual Statistical Bulletin reveals that in 2014 crop production accounted for 88% of agricultural GDP. Drilling down through this data, we see that cassava, yam and maize accounted for 36%, 28% and 9% of crop production respectively while rice’s share was just 3.5%.

Olam Nigeria, which features consistently as one of Nigeria’s top non-oil exporters by value, engages actively in rice production in Nasarawa State. It has an annual production capacity of 62,000 tonnes. Olam’s activities repeated many times over would have a dramatic balance-of-payments (BoP) impact.

In November the CBN launched an anchor borrowers’ programme for rice and wheat farmers across fourteen states. Under this programme, N40bn from the N220bn Micro, Small and Medium Enterprise Development Fund will be disbursed to farmers at single digit interest rates annually. This initiative aims to boost output by raising the capacity utilisation of integrated mills.

With the current macro challenges, there is an urgent need to address the domestic production constraints across the agric value chain as a whole. Audu Ogbeh, the new agriculture and rural development minister, is pushing for import substitution in rice. The policy is replicated across the ministries.

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