Why price of local rice is high – Millers

• Say border closure boosts capacity

A few weeks ago, President Muhammadu Buhari, in an unprecedented move, shut down the nation’s borders as efforts by the Nigeria Customs to curtail cross-border smuggling activities, which is badly affecting rice farmers and processors, particularly, appeared fruitless.

The closure led to increased activities in the local rice industry as cost of the foreign variety shot beyond the reach of most average Nigerians who hitherto did not see much good in what is produced locally.

However, some believe the price of the local rice is still high as an effective alternative to the imported variety.

For example, a 50kg bag of Mama Pride rice produced by Olam rice farm in Rukubi, Nasarawa State, at some shopping malls, costs between N19, 500 and N19, 999 while Tomato Rice, which is a Thai imported brand costs between N21,000 and N23,000 – an insignificant difference. This inconsequential difference, some observers said, might not change the attitude of loyal foreign rice consumers.

“Until a 50kg bag of imported rice costs two times the price of local rice and the smuggling routes along the northern fringes are heavily controlled, affordable imported rice will still hit our local markets,” a consumer, Sani Bello, told this reporter in Abuja.

In Doma, Nasarawa State, this reporter witnessed increased activities around rice and farmers appeared to be happy with the business.

But their conversation on the cost of production showed they were concerned over the  rising cost of labour, quality seeds,  and climate related issues, which they said affect yield and turnover.

But for the processors, the heydays are here. Market for their product has broadened as even local small mill operators also record increased demand for rice.

Big players who have invested so much in the production are also very happy, Daily Trust gathered.

Alhaji Abdullahi Idris Zuru, Managing Director, Labana Rice Mills Ltd in Birnin Kebbi, Kebbi State, in a telephone interview with Daily Trust, acknowledged that the closure of the border has improved their sales.

“The truth is it has improved our sales and it has equally increased our production. Before the closure, most of the existing rice mills had milled and stored the commodity in their warehouses because there was no market. Some even suspended production. For those who are strong, they kept on milling and storing despite absence of any good sale,” he said.

Alhaji Idris painted two scenarios which he said hold serious implications in allowing massive foreign rice smuggling. One was that the federal government, through the CBN, gave farmers loans under the Anchor Borrowers’ Programme and the farmers have produced the commodity and they are expected to pay back the loan.

He however noted that where the millers are unable to buy from the farmers, they would not be able to repay the loan.

“Even if we buy, we buy it without much value because we are not selling and at the end of the day, the farmer cannot even get the cost of production not to talk of profit,” he added.

Secondly, Zuru said, investors who heeded government’s call and invested in the agro-allied industry will be in a fix because at the end of the day, they will produce but they cannot sell, adding that there were rice mills that government assisted with loans to buy machinery and which spent more money processing rice that they have not been able to sell.

“These are serious problems. Some rice mills suspended production, some reduced their workforce, some have been operating under capacity but with the border closure, almost all the mills have picked up. The millers are selling, the farmers are selling and if this is sustained, you will see more people going back to the farm to continue rice production and the millers too will increase their capacity,” the Labana Rice MD stated.

Why price of local rice is high

The Managing Director, Labana Rice Mills Ltd, explained why the price of the local rice has gone up.

“To be honest with you, the price has increased to some extent because, with the border closure, millers went out to get paddy from farmers and the farmers, knowing that the borders have been closed, and the millers will come for it, increased the price, and only a few of them have it because some had earlier given up on the business because the price was not encouraging.

“A ton of rice which was sold at N100,000, is about N120,000 to N122, 000 as I speak with you now. If the farmers are encouraged and they return to the farm based on this policy and produce more, basically the price will crash and if the millers process more, the price will drop for the consumers.

“When more mills come on board, the price must drop. The current price is because the policy has just come on board,” Alhaji Idris said.

Mr Ade Adefeko, Vice President, Corporate and Government Relations, who is also in charge of External Communication and Stakeholder Management at Olam Nigeria, a major rice producer with 14,000 hectares of farmland, told Daily Trust  that about two million metric tons of foreign rice were smuggled into the country annually through  various land borders.

He added that the border closure policy was in the right direction as it would protect the investments in the country’s rice industry.

But he expressed worry that the smugglers have developed new and “more innovative routes” over the years to bring rice into the country, adding that “this trade of smuggling rice into Nigeria evolved over time especially since the ban on direct rice imports into Nigerian ports.”

The Olam vice president expressed belief that “apart from the strict border control policies, the solution lay in the economic policy of making Nigerian paddy and finished rice 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 this two-pronged strategy is implemented with zeal.”

Increased milling activities since border closure

Alhaji Mohammed Abubakar Maifata, National Chairman of Rice Processors Association of Nigeria (RIPAN), at a press conference in Abuja, confirmed that mills that were hitherto unable to compete have now resumed production.

RIPAN at the press conference, said without the intervention, Nigeria would have lost about $400 million (about N150 billion) to smuggling.

Similarly, the Secretary General of Rice Millers, Importers and Distributors Association of Nigeria (RIMIDAN), Muhammed Shuaib, stated that millers were increasing their capacity with production and now recording additional one million metric tons.

Reports from Ebonyi State, a major rice hub in the South-east, indicated that there has been increased activity in the rice business.

At the popular Abakaliki rice mill in the state, traders at the market said the closure of the border has tremendously impacted the business of rice.

The traders,  called on the federal government not to reopen the border but to provide loan for rice farmers in the state to expand production.

Mr. Peter Simeon, who has spent over 46 years in the business, made the call while speaking with Daily Trust in Abakaliki.

“Since the closure, traders from Lagos State, Anambra, Aba and Port Harcourt are now buying rice from this mill.

“Yesterday, I sold many bags to traders from Port Harcourt, Aba, Owerri among others.

“So these days, rice farmers smile home with their cash as against what obtained before when milled rice stayed in our hands for weeks before we sold it. Now we don’t have leftover as it used to be.

“That is why we are calling on the federal government to continue with the closure of the border,’’ Mr. Simeon said.