Prices of rice, other foodstuffs on the rise •As stakeholders lament FG policies


rice3Growing fears of insecurity have been mounting over the past few months in the country, fuelled by lack of stable power supply and rising food prices.

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Prices of essential commodities and food products have skyrocketed, making them unaffordable to the common man, following seemingly impractical policies of the FG in these segments.

Prices of rice, for instance, have hit historic highs of N12,500 per bag, triggering a panic among the people across the country. Persistent increase in prices of other staple products such as fish, bread, meat, cereals, chicken, yam, onions, beans, vegetable oil, tomatoes, groundnut oil and others have aggravated the continued woes of the common man.

Shortage of products and ever-increasing prices have created unsettling sentiments across communities, dampening the country’s efforts to end poverty. There are estimates that more than 65 per cent of the Nigerian population are food insecure.

In September, the Food and Agricultural Organisation of the United Nations (FAO) warned that Sahel states in Northern Nigeria were faced with severe food insecurity. The release mentioned: “Poor families have used up their food stocks and are facing high food prices awaiting the next harvest.”

Alarmingly, it points out that over 1.4 million children in the region are at risk of severe malnutrition in 2013.

In certain products regrettably, the country’s ambitious Agricultural Transformation Agenda (ATA) seems to have been hijacked by unscrupulous operators across the country’s borders.

In the case of rice, since the implementation of high tariffs for rice importation, legal imports into the country have come to a standstill, creating a massive demand from staple consumers. In the absence of local paddy production to meet this demand, smugglers have been having a free ride, pumping rice into the country through the borders. The neighbouring countries including Cameroon, Ivory Coast and Benin have zero or negligible duties, thereby acting as conduits for the illegal trade of rice into Nigeria. It is reported that more than 2.5 million tonnes of rice was imported into these countries since Nigeria’s implementation of the new tariffs at 110 per cent.

Most of this volume found its way into Nigeria through the porous borders. For instance, Benin imported in excess of 1.7 million tonnes of rice, for a population of just 10 million people, several times more than their average consumption, clearly indicating conduit operations.

As a result, the Federal Government and terminal operators are losing billions of naira in unpaid customs duty and levies, as well as handling charges. The Deputy Comptroller General of Customs (DCG) in charge of Enforcement, Saka Yinusa, recently said the importation should be through approved seaports to ensure adequate payment of import duties, levies and other charges. He disclosed that Nigeria lost an estimated N1 billion on contraband rice daily, which translates to N356 billion yearly. The smugglers also often engage the Customs officers on gun duels, resulting in loss of officers on government duty.

The farmers have their own set of problems and have not been able to adequately respond in meeting the demand caused by the abrupt stoppage of imports of finished rice. A recent report suggests that the rampant smuggling further compounded the woes of local rice millers operating in a high cost environment – devoid of infrastructure such as potable water, power and good road networks – with sparse funding.

The nation is also reeling from the severe impact caused by the Boko Haram activities. It has been reported that in Borno, Muhammed Namadi, the Borno State Farmers Association chairman said “hundreds of farmers have been killed or forced to abandon rice and other crops ready for harvesting or just planted.” He spoke in Maiduguri, the Borno State capital and a former insurgent stronghold. Without immediate relief, farmers in Borno, who already live with abject poverty, insecurity and isolation, could also face widespread hunger.

“We have suffered a great deal as farmers in the last three years,” Namadi said, asking the state to provide farmers with money and equipment. “Many young and old farmers have been forced to leave their farms.”

Nearly 20,000 farmers have been driven from their land by both the insurgency and the military crackdown since Nigerian President Goodluck Jonathan in May declared a state of emergency in Borno and two other northeastern states, according to the Borno state agriculture commission. Entire villages have been cut off from their farmlands by military roadblocks and insurgents increasingly operate in the countryside.

In June, the Chad Basin Development Authority reported that 10,000 hectares (24,700 acres) of rice paddies had been abandoned at the peak of harvesting season.

Large-scale investments made into the farming and milling industries by private businesses are also in jeopardy, following Customs’ inability to protect the industry from the vagaries of smugglers.  Small farmers consume most of the paddy produced in the nation on a sustenance basis.

Several rice mills in the country have been fully or partially shut down due to lack of paddy supply, leading to unemployment and mounting losses for the entrepreneurs. These include Olam Nigeria, Ebony Agro Industries Limited, Ashi, Mewa, and Umza rice processing mills, and Popular Foods.

The new agricultural policy that was aimed at protecting the local rice industry interests seems now to be helping smugglers make a fortune. The millers face unfair competition from smugglers, making their large investments unviable and effectively stalling any new expansion plans in the country.

To elaborate, the cost of Indian origin parboiled rice is around US$ 430 per MT and Thailand rice is around US$ 550 per MT. Comparatively, rice paddy in Kano is at a high US$ 480 per MT, while in other places like Ibonyi, its at a prohibitive US$ 540 per MT.  The price to a consumer in Lagos therefore of local finished rice is around N 16,000 per 50kg, whereas the imported rice was being sold at an affordable N 8,000 per Kg, until the tariffs were increased significantly.

Further in a recent media report, The Managing Director, Attajiri Rice Mill Sokoto, Alhaji Nura Attajiri, said “Most of the people that collect agricultural loans from government for paddy rice production are not genuine farmers. I strongly believe that it will take some time for Nigerian farmers to meet local demand and this can be achieved only if government is determined to put in mechanism to ensure that only genuine farmers are empowered.”

Pertinently, the President, Rice Distributors Association of Nigeria (RIDAN), Esther Olufunmilayo urged government to review the impact of its present policy on the economy, arguing that tariff hike imposition without tangible transformation of the local rice value chain defeats government’s rice self-sufficiency goal.

The reality is that the increase in import tariffs for rice has not made any significant impact on paddy production. The rice millers are going out of business, the consumers are suffering from lack of affordable supply, and the FG is losing out heavily on revenues whilst the smugglers thrive prosperously.

The FG needs to act expeditiously to enhance availability of essential food products through legal channels at affordable prices.

Babatunde Akinsola
Babatunde Akinsola
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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