Nigerian demand for rice imports drives focus on domestic underproduction

The UN Food and Agriculture Organisation (FAO) reports that Nigeria is Africa’s leading rice consumer and one of its largest rice producers. It describes rice as an “essential” cash crop for Nigeria, with small-scale farmers accounting for 80% of production but just 20% of consumption. Shifting consumption trends have seen domestic rice demand rise in recent years, with Bloomberg reporting that domestic demand rose by 4% to hit 6.7m tonnes during the 2017/18 season ending in May. Nigeria was the world’s third-largest rice importer as of June 2018, with the US Department of Agriculture reporting that the country imported 2.6m tonnes during the 2017/18 season.

One Step Forward

Curbing rice imports has become an increasingly important policy objective for the federal government in recent years. In June 2015 the Central Bank of Nigeria (CBN) announced it would restrict access to foreign exchange for 41 imported products, among them rice. The measure was intended to halt rice imports and protect domestic farmers and millers, with industry stakeholders frequently citing cheap imports as one of the primary impediments to meeting rice self-sufficiency targets.

On the surface, the measures appeared to have been successful. In November 2017, for example, the Federal Ministry of Agriculture and Rural Development announced that monthly rice imports had fallen from a high of 644,131 tonnes in September 2015 to just 20,000 tonnes in September 2017, a decline of 95%. According to the ministry, 12.2m Nigerians were engaged in rice farming as of November 2017, with processing activities undertaken at 1421 rice mills across the country, and more planned for states including Anambra, Ebonyi, Nasarawa, Jigawa and Kebbi. The administration of President Muhammadu Buhari has overseen nearly $1bn of rice farming and milling investment since coming to power in 2015. Rice production will also be boosted by the planned $1bn investment in rice processing at the Badeggi staple crop processing zone in Niger State, which was announced in November 2017.

Two Steps Back

However, many stakeholders report that the current measures will do little to curb illegal trading and smuggling, with the porous borders continuing to pose a problem. “The government has put high tariffs on the importation of rice without securing the borders. Togo, Cameroon and Benin are meant to have rice imports down to zero, but because of the ECOWAS trade agreement, they’re moving these products freely. Competing with smuggled rice is a huge issue for farmers,” Rotimi Williams, CEO of Keresuk Farms, told OBG. Insecurity and falling production will also impact government plans for rice self-sufficiency. The US Department of Agriculture forecasts the volume of rice imports to rise by 12%, from 2.6m tonnes in 2017/18 to reach 2.9m tonnes in the 2018/19 season, as higher costs, insecurity and declining output cause demand to spike. At the same time, Mohammed Sahabi, chairman of a rice farmers’ association in Kebbi state, projected a significant drop in rice production during the 2018/19 season, reporting that the amount of land allocated to rice in the Kebbi area had fallen by 50% from the 200,000 ha under plantation in the 2017/18 season. Other major producing states, including Kogi and Ebonyi, have been impacted by clashes between nomadic herdsmen and rice farmers.

Cracking Down

The government is moving to address these challenges, however, and in the 2018 budget speech, delivered in November 2017, President Buhari announced that illegal food importation would be considered a threat to national security. The president has called for the reactivation of the Badagry Agreement with Benin, signed in 2003, which obliges Beninese customs to ensure compliance with any export bans in force in Nigeria. This should help to reduce imports and promote rice self-sufficiency, although domestic security concerns will certainly remain an important consideration moving forward.