Nigeria’s revised rice sector policy, which offers lower tariffs on imports of rice to companies investing in domestic rice production and processing, is currently being implemented (see Agritrade article ‘ Nigeria further extends levy concessions to support rice sector backward...’, 24 August 2014).

In July 2014, this led to further announcements of investment by both local and international commodity companies in rice production. Dangote Industries announced an expansion of its rice sector investments from US$300 million to US$1 billion, covering 150 ha spread across five states. Dangote Industries envisages expanding rice production in association with smallholder growers, who will provide production inputs from the company and have a ready market for the growers’ production.

Similarly, at the opening of the integrated rice milling facility’s 6,000 ha greenfield project in Nasarawa state, Olam’s managing director for Africa and the Middle East announced a scaling up of rice sector investments to a total of 10,000 ha. Some 3,000 ha of land is already under irrigated and mechanised rice production, reportedly producing 36,000 tonnes, with a further 3,000 ha to be developed in 2015.

According to Olam, “together the farm and the mill are expected to boost smallholder rice production in the region through a ‘nucleus and outgrower farming model’”, under which Olam provides “training, pre-finance, agri-inputs and marketing linkages” designed to improve the rice yields of smallholder farmers, while providing a ready market at “a fair market price”.

While 3,000 farmer are currently involved, the aim is to involve some 16,000 farmers by 2018 and ultimately 20,000, when smallholder farmers will be expected to provide between 30 and 40% of the rice mill’s needs.

According to Olam representatives, the scheme “demonstrates how large-scale commercial farms could work hand in hand with smallholder farmers to achieve the government’s agricultural transformation agenda.” The scheme is held as evidence of the validity of the Nigerian government approach to treating “agriculture as a business, while enabling the private sector to drive growth of the sector”. It is also seen as evidence of the impact of the policy of providing incentives to firms that contribute to the attainment of government sector policy objectives.

According to President Jonathan, “the private sector is responding strongly to our rice policy, as the number of rice mills has grown from just one three years ago to 18 today.” It is maintained that “these mills are producing high quality local rice that meets international standards and competes well with imported rice.”

However, according to FAO, in 2014 “Nigeria is forecast to harvest 4.6 million tonnes (2.8 million tonnes, milled basis), 2 percent less than the 2013 high, largely on expectations of a less favourable climate”.

Nigeria’s rice production and imports (tonnes milled basis)

Source: USDA: ERS, ‘Rice outlook’, 14 August 2014, Tables 9 and 11, http://www.ers.usda.gov/media/1547831/rcs-14h.pdf

In terms of the Nigerian government trade policy, local rice sector players maintain that the continued import tariff differential on rice between Nigeria and the neighbouring countries of Benin and Cameroon will continue to encourage smuggling and undermine efforts to develop backward linkages in the rice sector.