CTA
Small fontsize
Medium fontsize
Big fontsize
English |
Switch to English
Français
Switch to French
Filter by Agriculture topics
Commodities
Regions
Publication Type
Filter by date

Nigeria further extends levy concessions to support rice sector backward linkages

23 August 2014

According to press reports, on 26 May 2014 the Nigerian government extended its preferential import tariff policy for operators investing in new rice milling capacity and developing backward linkages “to bridge the gap between supply and demand”. Since 1 January 2013 the government has lowered the levy on imports of husked brown and semi-milled or wholly milled rice for “investors with rice milling capacity and [a] verifiable backward integration programme” from 100% to 20%, with a 10% duty being levied. In contrast, those trading without such milling capacity and integration programmes are charged a levy of 60%, in addition to the 10% duty. Imports under the concessional rates are to be “limited to the national supply gap”, as determined by a specially constituted committee. The new import levy arrangement will be in place for 4 years.

A special dispensation on demurrage charges (the penalty charged for exceeding normal unloading times) was also announced for cargos of rice awaiting clearance under the new arrangement.

Apart from trade measures, the Nigerian government has extended support to rice sector development under its Growth Enhancement Support scheme. Registered rice farmers receive fertiliser and seeds, while major corporate investments in rice production by Olam and the Dangote Group (30,000 ha each) are also taking place. Rice value chain leader Dr Olumuyiwa Osiname, interviewed by the News Agency of Nigeria, commented that since 2011 the number of functioning rice mills has increased from 3 to 18 and the number of rice seed companies operating has increased from 3 to 25.

However, rice farmers’ representatives continue to complain about low levels of service delivery, from farm implements and functioning irrigation equipment to improved seeds and loan financing. In addition, commercial disputes have emerged between some rice sector companies and the government.

If the rice sector policy objective of self-sufficiency by 2015 is to be attained, rice sector stakeholders maintain that there needs to be consistency in the government rice sector policy as well as further tariff reductions for investors with backward linkage programmes. This is seen as essential given the level of smuggling taking place from neighbouring countries, such as Cameroon and Benin, where no import levies are imposed on rice. Press reports suggest that up to 3 million tonnes of rice are smuggled into Nigeria every year.

From May 2013 to May 2014 world market rice prices fell by 28.2% – one of the largest price declines reported over the period. In June press reports indicated that sales from Thai rice stocks accumulated since October 2011 were re-establishing Thailand as the world’s leading rice exporter. Thailand is expected to export 9 million tonnes of rice in 2014, potentially exerting a downward pressure on rice prices (although the recent coup d’état in Thailand unsettled the markets). By June 2014 heavy sales of Thai rice to Nigeria, Cameroon, Côte d’Ivoire and Togo were being reported, with Thai rice exports to Africa increasing by 80% in the first quarter of 2014 to some 1.2 million tonnes. 

Editorial comment

The Nigerian government has been reviewing its rice sector tariff and levy policy to foster the development of backward linkages. This more nuanced approach, alongside government support measures, would appear to be having a positive effect on rice production. However, press reports suggest that serious implementation challenges remain, including the need to contain smuggling. 

The Comptroller General of Customs in Nigeria has “identified the low tariff on rice in neighbouring countries as one of the major factors contributing to smuggling of rice into the country” (see Agritrade article ‘ Benin profits from Nigeria’s agricultural trade policy’, 2 June 2014). This suggests that without the narrowing of the discrepancy in the tariffs and levies applied by Nigeria and its immediate neighbours, rice smuggling is likely to remain a problem. Movements in the global rice price over the past year could serve to exacerbate the problem of smuggling, as could the current rice stock disposal programmes of the Thai government.

It should be recalled that, as part of the mini-deal reached at the WTO ministerial meeting in Bali, an agreement was reached on public stockholdings for food security purposes. This allowed developing countries to increase purchases of food security crops without breaching WTO commitments on levels of agricultural support. An important part of this agreement was a commitment from developing countries to “ensure that stocks procured under such programmes do not distort trade or adversely affect the food security of other Members” (see Agritrade article ‘ ACP aspirations and expectations and the outcome of the Ninth WTO Bali M...’, 11 December 2013).

Current patterns of Thai rice exports from public stocks to West Africa could come to constitute an important test case of this commitment.

Comment

Terms and conditions