Insecurity: Local Rice Price Jumps By 200%

 

According to research by touchaheart Nigeria, rising national insecurity, an import prohibition, and other factors have driven up the cost of one kilogram of local rice by 211.52% over the past seven years.

 

This occurred despite the Central Bank of Nigeria’s support for the country’s rice value chain, which included multibillion-naira finance support and was intended to increase production.

 

The average cost of 1 kg of local rice increased from N172.74 in February 2016 to N520.84 in February 2023, according to data from the National Bureau of Statistics’ Selected Food Prices Watch Report that The PUNCH analyzed.

 

To promote local production, the CBN barred importers of 41 other products, including rice, from using the official window to receive foreign currency in 2015.

 

Additionally, the federal government forbade the import of rice across land boundaries and maintained port-based import duties of 70%.

 

The local rice output appeared to have increased in response to these initiatives.

 

13 massive rice pyramids that the CBN recently unveiled in Abuja are said to hold more than one million bags of rice paddy.

 

The President, Major General Muhammadu Buhari (retd), revealed during the pyramid unveiling that the bags of paddy, once processed and given to markets, would lower the price of rice.

 

I am aware that the paddy bags will be transported directly from here to rice milling facilities throughout Nigeria, where the rice millers would release processed rice to the markets. Our efforts to lower the price of rice in Nigeria will be aided by the measure, Buhari had stated.

 

Although there has reportedly been an increase in output, the price of rice has not decreased, unlike what the president claimed.

 

In response to the rise in domestic production, Andy Ekwelem, Director-General of the Nigerian Rice Processors Association, said that although prior to the ban Nigeria imported roughly 1.24 million tons of rice from Thailand, in 2022 this figure fell to 438MT.

 

The President Muhammadu Buhari administration has provided significant support to the Nigerian rice industry thus far, he stated. Nigeria had formally permitted rice imports before the current administration. At the end of 2014, Nigeria officially imported 1.24 million tons of rice from Thailand; at the end of 2015, this number had decreased to 644,131MT; and by the end of 2016, it had decreased to 58,260MT. Further falling to 23,192MT in 2017, imports fell to an all-time low of 438MT by 2022.

 

In addition, he pointed out that the assistance provided by the Federal Government and the CBN through initiatives like the Anchor Borrowers’ Programme, the Paddy Aggregation Scheme, the Private Sector-Led Accelerated Agriculture Development Scheme, and the Real Sector Support Facility, among others, has resulted in a sharp rise in the number of large-scale integrated rice processing facilities across the nation.

 

According to Ekwelem, Nigeria has more than 100 large-scale integrated rice processing plants dispersed around the nation. From just 13 major integrated mills functioning in the nation between 2010 and 2014, this represents an increase of more than 700%.

 

The RIPAN DG also stated that all of these measures, including the import ban, caused rice output to increase to 8.4 million tons in 2021 from 8.2 million tons in 2020 following the implementation of the border ban policy.

 

The dividend of all these was that the demand for locally grown and processed rice in Nigeria increased quite considerably, leading to an increase in both the production of paddy rice and a rice processing facility, he said. Paddy rice production by Nigerian farmers reached 8.2 million tons in 2020 under the COVID era, and 8.4 million tons in 2021.

 

All of the paddy that was produced at the time was taken by the rice millers and processors, who processed it and gave Nigerians finished rice of high quality. Nigeria didn’t go without food, especially rice, despite the closure of the borders and the ongoing COVID Pandemic.

 

After the borders were reopened in 2022 and smuggling resumed in earnest, a decrease in the amount of paddy off-take by the rice processors/millers resulted in a dip in the number of metric tons of paddy rice produced by Nigerian farmers. In fact, it is documented that once our borders were opened again, Thailand’s official rice import to the Benin Republic increased from a low monthly average of 5,000 MT in 2019 to a monthly average of 26,861 MT in 2022.

 

The price of rice has continued to devastate Nigerians despite these interventions by the Federal Government and the CBN, along with the rise in domestic production.

 

The RIPAN DG cited the country’s rising inflation, which as of March 2023 was 22.04 percent, as the reason for the increase in the price of local rice.

 

We’re all aware that inflation has increased recently, the speaker continued. We are aware of how inflation affects product prices.

 

He asserted, however, that despite rising inflation, rice is the one good whose price has remained stable.

 

Paul Eluhaiwe, the vice chairman of RIPAN, also emphasized that the spike in rice prices was largely due to inflation and unrest.

 

Farmers’ input costs have skyrocketed due to inflation, he remarked. In comparison to current prices, we are aware of the expense of fertilizer.

 

We also face a problem with the number of farmers returning to their fields as a result of the security crisis, in addition to the cost of the inputs that farmers need for their production purposes.

 

These factors collectively have an impact on crop prices. Due to the farmers’ inability to obtain the commodity at a discounted price, this indirectly influences the price of finished goods.

 

Stakeholders in the agriculture industry attributed the rise in rice prices during the review period to a lack of supply at markets in a previous study by touchaheart Nigeria.

 

Kabir Ibrahim, the national president of the All Farmers Association of Nigeria, blamed the weak supply on the unrest in states that produce food, the declining value of the naira, and the ABP’s subpar execution.

 

Ibrahim claimed that the method the CBN used to distribute loans under the scheme may be counterproductive because it significantly enhanced the likelihood of financial mismanagement and abuse.

 

There are various causes for this, he continued, but the main one is a lack of enough supply. Additionally, the naira’s declining purchasing power has a direct impact on the price of practically all the goods and commodities we purchase today.

 

There is both general food inflation and other inflation. The World Bank has stated that Nigeria needs to take significant steps to reduce inflation since it is causing the economy to become unstable.

 

Insecurity, which keeps our farmers from going to their farms, is one factor contributing to the low supply, among others. We also have the CBN’s Anchor’s Borrowers Program. You run the risk of creating some unbalance in the market and the psychology of the populace if you put a lot of money in the hands of people to make goods while also doing due diligence. The truth is that there is a chance of misuse or abuse when there is so much money in circulation.

 

The price of rice, according to economists, has been impacted by rising inflation and unrest.