How import exemptions are debilitating local rice mills. Rice producers have expressed apprehensions regarding the federal government’s import duty exemption on rice, maize, and sorghum, asserting that it is detrimental to their enterprises.
This is concurrent with the Nigeria Customs Service (NCS) indicating that the exemption has led to a decrease in food prices.
Last year, the government sanctioned a 150-day exemption for the importation of rice, maize, sorghum, and other food items to alleviate the escalating food crisis.
The directive, which was set to commence from July 15 to December 31, 2024, aimed to exempt import duties on crucial food items such as maize, rice, wheat, and cowpeas.
Producers report significant challenges in competing with imported products in the open market due to various production factors.
Data from the NCS, which imposed the exemptions on imports of staple foods like sorghum, rice, and maize, highlights the extent of the waiver.
The NCS’s Comptroller-General, Bashir Adewale Adeniyi, stated two weeks ago, “The Q1 2025 waivers on maize (N45. 3 billion FOB value), rice (N751. 6 million), and sorghum (N2. 3 billion) have also aided in lowering prices by 12-18% this year.
“Simultaneously, the broader exemptions from 2024 on rice (N45. 9 billion FOB) and wheat (N2. 8 billion) are now manifesting their complete impact after taking time to permeate the supply chain.
“The NCS’s duty exemptions on food imports have played a role in the recent reductions in food prices, with effects observed both immediately and progressively. ”
In an interview with Daily Trust, the General Manager of Labana Rice Mill in Kebbi State, Malam Alhassan Yusuf, noted that the current administration believed “the sole approach to reduce food prices is to permit importation.
“They did not implement this directly; they issued licenses to two rice mills, Imota Rice Mills in Lagos and BUA Rice Mill in Kano, to import brown rice from India and process it.
“There is an oversupply of rice in India that has led to prolonged storage. The imported rice may be expired, while many others could be chemically preserved to maintain their form and nutrients. This is the rice now being brought into the country at a lower price. It is disheartening to the rice value chain, affecting farmers, workers, millers, truck owners, and drivers impacted by the influx of rice of questionable quality,” he stated.
Another local producer in the Goru area of the state, Abubakar Idris, mentioned he was compelled to shut down his rice mills as he could not continue to operate under the current circumstances.
“There was a decline in rice prices, and we cannot compete with the foreign rice that is now prevalent everywhere. We attempted to sustain our business, but we had to close when it became evident that we could no longer operate under the existing conditions. ”
“It was a regrettable choice as we had to terminate our employees and close the factory. We hope that the federal government revisits the situation to explore potential solutions to the current predicament.
“They should endeavor to build upon former President Muhammadu Buhari’s initiatives aimed at promoting the growth of local industries. That was a favorable period for us, and they can still take measures to ensure the survival and prosperity of local rice mills,” he stated.
Additionally, Alhaji Abubakar Bawa, a rice miller from the Kamba region of Kebbi, informed our correspondent that his rice mill had ceased operations.
“We cannot simply persevere against the prevailing challenges in the industry. I incurred losses; we attempted to continue operations, yet we were overwhelmed by the daily obstacles.
“The Buhari administration was a beneficial time for us and others involved in the rice supply chain. However, the current governmental stance and the influx of foreign rice are detrimental to the rice industry. We seek government intervention as numerous rice mills have been closed, and more will likely close due to the difficulties we are currently experiencing,” he remarked.
A trader in Kano, Abdullahi Usman, indicated that while the rice millers have valid grounds for complaint, they also share responsibility for their plight.
“The reality is that during the Buhari administration, the federal government favored the rice millers. They received loans, grants, and various waivers.
“The goal was for them to reciprocate by reducing the price of rice, but they declined. They continue to secure exorbitant profits at the expense of the impoverished. Individuals found it difficult to afford rice, a basic food item.
“As a result, the federal government wisely provided waivers to importers to lower rice prices,” he explained.
Daily Trust attempted, without success, to elicit a response from the Federal Ministry of Agriculture.
The Director of Information at the ministry, Dr. Joel Oruche, neither answered calls nor responded to a text message sent by one of our correspondents.
In Kano State, our correspondent reports that rice production and processing is currently stalled.
From 2015 to 2020, no fewer than 230 micro, small, medium, and large-scale rice mills were established, and many existing mills in the state have been enhancing their production capacities.
The Chief Operating Officer (COO) of Silvex International, Abubakar Garba Ibrahim, stated that numerous investors had invested significant capital to establish rice mills in Nigeria, and the waiver on rice importation, initially intended for only 150 days, poses a threat to these investments.
The miller noted that the volume of finished rice being imported is adversely affecting the rice mill sector in Nigeria, leading some to shut down due to their inability to compete in the market.
Another small-scale miller, Alhaji Bello Abdu, mentioned that the adverse effects of the waiver have begun to manifest in both large and small-scale rice mills within the state.
Abdu stated that numerous mills had ceased operations as the cost of paddy in the marketplace had decreased by approximately 25 percent.
“Many millers purchased paddy at around N65,000 to N71,000, and now the paddy is priced between N30,000 and N35,000 in the open market. This situation arose because the exemption granted to certain marketers for importing finished rice from India resulted in an oversupply in the market, compelling some millers to exit the business,” he remarked.
Reports indicate that local rice millers are now experiencing delays of two to three days without processing paddy, as the demand for domestically processed rice has declined.
Aliyu Sarkin Noma, the proprietor of Gamzaki Rice Processing Company in Jalingo, commented that local millers are encountering diminished patronage, a circumstance that, according to him, is driving many out of business.
He noted that they previously received orders for locally processed rice from various regions of the country, but currently, they are not receiving any requests due to the influx of foreign rice into the markets.
Dr. Jugulde, owner of Jugulde Rice in Jalingo and operator of a small-scale rice milling facility, mentioned that he used to process between 150 to 200 kg bags of paddy rice daily, but now, individuals are no longer bringing rice for processing.
He predicted that the cultivation of rice and maize will decline this planting season due to the drop in prices for paddy rice and maize.
He pointed out that the costs of agricultural inputs such as fertilizers, chemicals, labor, and tractor rentals have surged threefold, while the prices of paddy rice and locally processed rice have sharply decreased.
In towns such as Wukari, Tella, Donga, Didango, Mutumbiyu, and Karim Lamido, hundreds of small and large rice mills are impacted, as the number of buyers for locally processed rice has significantly diminished.
According to the Rice Farmers Association of Nigeria (RIFAN), many farmers have decided against cultivating rice again because it has become unprofitable.
Alhaji Hussaini Shu’aibu, the treasurer for the association in Kano State, stated that the waiver is driving many farmers to abandon rice farming.
Another rice cultivator, Alhaji Farouk Umar, noted, “I employed over 150 individuals to work on my rice farm during last year’s dry season and we sold the paddy at N71,000 per bag. Upon observing the recent shifts in the agricultural sector due to the federal government waiver, I opted to scale back.
“I only cultivated 10 hectares instead of over 100, employing six workers instead of more than 150. As I speak, I am currently applying for a visa to China, as the dynamics in the farming sector have shifted, and I intend to seek opportunities elsewhere, but certainly not in agriculture,” he expressed.
Miller Alhaji Isah Ibrahim emphasized the necessity for the government to offer a sustainable solution to the challenge of national food security.
He remarked that the exemption is a provisional resolution that would not address any underlying issues but rather generates a significant problem that will impact the nation’s economy, asserting that the exemption is hindering the country’s progress and jeopardizing the agricultural sector.
For Dr. Hamza Bello, a farmer and rice processor based in Jigawa State, the administration should promote the cultivation of a robust and viable backward integration by processors to ensure a sustainable and stable supply of raw materials for the mills.
He also emphasized the significance of encouraging and assisting farmers to enhance their production through zero-interest initiatives.
An agricultural specialist, Dr. Isa Musa, urged the government to explore avenues for acquiring what farmers possess for the strategic reserves at a price that is advantageous to encourage them to resume production.
“A circumstance where the costs of inputs remain excessively high while the prices of the grains decline does not establish equilibrium within the system. It endangers the farmer, leading many to reconsider farming. When a farmer purchases a bag of fertilizer for N60,000 and sells maize for N40,000, it constitutes a severe issue that requires government intervention,” he stated.