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Stakeholders call for intensified consultations on Nigerian rice sector trade

17 February 2014

In December 2013, in an interview with Nigeria’s Vanguard newspaper, the National Chair of the Rice Millers, Importers and Distributors Association of Nigeria (RIMIDAN) proposed a “phased import substitution” policy as a “lasting solution to the challenges facing the rice industry” in Nigeria. While supportive of government aspirations to develop national rice production, Mr Tunji Owoeye highlighted the current impact of rice smuggling on the sector, reporting that official importers, farmers and processors are all now unable to compete on price with the smuggled product. In particular, he highlighted the “damaging effect of duty differences between Nigeria and neighbouring West African countries”. He noted that Nigeria's duty is 110%, while those of Benin and Cameroon are 30%.

The RIMIDAN Chair pointed out that “smuggled polished rice at N6,000 [€27] is cheaper than N6,500 [paddy rice] [€29.25] that the farmers sell to millers.” He maintained that “processors are no longer buying paddy from the farmers because the price is not attractive for business” – this situation was encouraging imports through Cameroon and Benin, where some half a million tonnes of rice were reported to be waiting to be unloaded in the port of Cotonou. Mr Owoeye maintained that about 1.5 million tonnes had already been “discharged in Benin all heading for the Nigerian market through land routes that are supposed to be banned”.

For this reason, as RIMIDAN Chair, Mr Owoeye was calling for the introduction of a phased import substitution policy, and for the policy to be formulated following a dialogue between all concerned government departments and all stakeholders in the rice value chain (producer organisations, and associations of processors/millers and importers/marketers. RIMIDAN considered that this would enable the government to establish a viable rice sector trade policy that would ensure that Nigeria was “self-sufficient in rice production within a reasonable time limit”. This view was endorsed by Nigeria’s Association of Senior Civil Servants, which called on the government “to raise local production of rice before enforcing the ban on its importation”. A major rice farmer interviewed in January endorsed this view, maintaining that it could take up to 10 years for local production to replace imports, given the mismatch between Nigerian consumer demand and the types of rice produced locally.

Mr Owoeye argued for clear support measures and targets for each group of stakeholders, who would be ultimately responsible for developing integration on the ground. He also called for the establishment of “a monitoring unit to ensure that all parties work towards the planned outcome” of effective import substitution.

Both Mr Owoeye and the farmer interviewed considered that a policy framework which involved all stakeholders would offer the best means of dealing with the problems faced in the rice sector, including smuggling.

Press analysis noted that current domestic rice production was less than one million tonnes, while the market requirement is over 5 million tonnes.

These calls for a more inclusive rice policy formulation process came against the background of an announcement by the Chair of the Presidential Commission on Trade Malpractices that the government intends to “review downwards the 110 per cent import duty and levy on imported rice… to curb smuggling of the commodity and loss of revenue to government”. An editorial in the newspaper Leadership endorsed the call from rice sector stakeholders for a more inclusive and coherent rice sector policy. 

Editorial comment

Recent calls by stakeholders for the creation of a Rice Council that could regulate and draft policies on rice business activities in Nigeria envisage the creation of a joint public–private institutional structure to oversee policy reform in the sector.

To date, Nigeria’s rice sector policies have faced serious implementation challenges in developing production that is competitive with rice imported from Asia (despite the transport costs involved and the import duties levied by West African countries). Current trade policies provide considerable incentives for smuggling across land borders that are very difficult to police.

Smuggling is currently taking place on such a scale as to undermine the operation of internal rice supply chains. The proposed Rice Council would provide a forum for private sector stakeholders to dialogue with the government in efforts at achieve sustainable development of the rice sector within Nigeria. This would be likely to involve a phased implementation of import substitution measures, with the adjustment of tariffs and levies to progressively give local producers, processors and traders a greater competitive advantage over those only importing the commodity.

The proposed Rice Council could serve as a forum for dialogue on rice sector research aimed at improving both yields and the quality of rice production, as well as investments required to efficiently market expanded national rice production.

The government is also likely to be encouraged to explore public–private partnerships for the rehabilitation and upgrading of irrigation infrastructure and to explore the provision of low-cost loans for the establishment of integrated rice milling operations.

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