Insecurity: Local rice price jumps by 200%

Rising insecurity in the country, import ban and others factors have caused the price of one kilogramme of local rice to rise by 201.52 per cent in seven years, according to findings by The PUNCH.

This happened despite a multibillion naira funding support of the Central Bank of Nigeria for the nation’s rice value chain aimed at boosting production.

Data from the Selected Food Prices Watch Report of the National Bureau of Statistics analysed by The PUNCH showed that the average price of 1kg of local rice rose from N172.74 as of February 2016 to N520.84 as of February 2023.

In 2015, the CBN stopped the importers of rice and 41 other items from accessing foreign exchange at the official window in order to encourage local production.
The Federal Government also banned rice imports across land borders and kept 70 per cent tariffs on imports coming through ports.

In line with these interventions, there seemed to have been an increase in the local production of rice.

The CBN recently unveiled 13 mega rice pyramids in Abuja, purportedly containing over one million bags of rice paddy.
While unveiling the pyramids, the President, Major General Muhammadu Buhari (retd), disclosed that the bags of paddy, when processed and supplied to markets, would drive down the price of the rice.

“I am aware that the bags of paddy will be moving straight from here to rice milling plants across Nigeria, which will lead to the release of processed rice to the markets by the rice millers. The measure will aid our efforts at reducing the price of rice in Nigeria,” Buhari had said.

However, contrary to what the president said, there has been no reduction in rice price, except a reported increase in production.

Commenting on the increase in local production, the Director-General of the Rice Processors Association of Nigeria, Andy Ekwelem, noted that before the ban, Nigeria imported about 1.24 million tons of rice from Thailand, but this dropped to 438MT in 2022.

He said, “So far, the Nigerian rice industry has enjoyed considerable support from the administration of President Muhammadu Buhari. Before the current administration, Nigeria officially allowed imported rice into the country. As of the last quarter of 2014, official rice import into Nigeria from Thailand was about 1.24 million tons of rice; by the end of 2015, these imports had dropped to about 644,131MT, and by the end of 2016, it dropped to 58,260MT. In 2017, the imports further dropped to 23,192MT but by 2022, it dropped to an all-time minimum of 438MT.”

He further noted that the support from the Federal Government and the CBN through programmes such as the Anchor Borrowers’ Programme, the Paddy Aggregation Scheme, the Private Sector-Led Accelerated Agriculture Development Scheme, the Real Sector Support Facility, among others, have led to a significant increase in the number of large-scale integrated rice processing facilities in the country.

Ekwelem said, “Nigeria boasts of over 100 large-scale integrated rice processing facilities scattered across the country. This is more than 700 per cent increase from the mere 13 large integrated mills operating in the country between 2010 and 2014.”
The RIPAN DG added that all these interventions, including the import ban, made rice production to hit 8.4 million tons in 2021 from 8.2 million tons in 2020 when the border ban policy was introduced.

He said, “The dividend of all these, was that the demand for Nigerian homegrown and locally processed rice increased quite immensely, causing an increase in both the production of paddy rice as well as a rice processing facility. In 2020, during the COVID era, Nigeria farmers produced as much as 8.2 million tons of paddy rice and another 8.4 million tons in 2021.

“At the time, all the paddy produced was off-taken by the rice processors/millers who processed them and supplied good quality finished rice to Nigerians. Even as the borders were closed and COVID Pandemic raged on, Nigeria didn’t suffer a lack of food, particularly rice.
“The numbers in metric tons of paddy rice produced by Nigerian farmers began to decline after the borders were reopened in 2022 and smuggling commenced again in earnest, causing a drop in the volume of paddy off-take by the rice processors/millers. Indeed, it is on record that upon the reopening of our borders, official rice import to Benin Republic from Thailand rose from meager monthly average of 5,000 MT in 2019 to a monthly average of 26,861MT in 2022.“

Despite these interventions by the Federal Government and the CBN, alongside the increase in local rice production, the price has continued to overwhelm Nigerians.

Justifying the surge in the price of local rice, the RIPAN DG blamed the rising inflation in the country, which is currently at 22.04 per cent as of March 2023 for the price surge.

He said, “All of us are aware that in recent times, there has been a jump in inflation. We know the impact of inflation on the cost of goods.”

He, however, argued that rice is the only product that has maintained stability in price amid the rising inflation.

Also, the Vice Chairman of RIPAN, Paul Eluhaiwe, stressed that inflation and insecurity had contributed significantly to the rise in the price of rice.

He said, “Input prices for farmers have skyrocketed because of inflation… We know the cost of fertilizer when compared to what it is now.

“In addition to the price of inputs which farmers use for their production purpose, we also have a challenge in terms of the number of farmers returning to farms because of the security crisis.

“All these affect the prices of farmers’ outputs. That indirectly affects the cost of finished products because the farmers will not get the product at a reduced rate. ”

In an earlier report by The PUNCH, stakeholders in the agriculture sector linked the surge in the price of rice during the review period to a shortage of supply to markets.

The National President of the All Farmers Association of Nigeria, Kabir Ibrahim, attributed the low supply to insecurity in food-producing states, the dwindling value of the naira, as well as the poor implementation of the ABP.
Ibrahim argued that the approach chosen by the CBN to disburse loans under the programme might be counterproductive as it greatly increased the chances of mismanagement and abuse of funds.

He said, “Well, there are many reasons for this, the principal reason being that there is inadequacy of supply. Also, the purchasing power of the naira has dwindled and this has affected the cost of almost all the products and produces we buy today.

“There is general food inflation as well as other inflation, even the World Bank has said that Nigeria has to do a lot to curb the inflation, because it is destabilising the economy.

“And the low supply is also dependent on many things such as insecurity which is preventing our farmers from going to their farms. We also have the Anchor’s Borrowers Programme of the CBN. If you are putting a lot of money in the hands of people to produce items and you are doing it using due diligence, you are likely to cause some imbalance in the market and the psyche of the people. The reality is when there is so much money in circulation, abuse is possible or mismanagement.”

Economists also said rising inflation and insecurity have affected the price of rice.



Vanguard