Government Policies and Competitiveness of Nigerian Rice Economy by

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Government Policies and Competitiveness of
Nigerian Rice Economyby

• Biyi Daramola
• Dept of Agric Econs Ext
• Federal University of Technology
• Akure, NIGERIA

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Introduction

• Nigeria is one of the largest importer of rice in
  the world
• It has become a staple food item in Nigeria
• Importation mainly from Asia, esp. Thailand,
  India
• The volume and value of import is rising
• Local rice is depressed by imports
• Tariff has inc consumer price but not encouraged
  rapid domestic production.

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Policy Environment

• Presidential initiative on rice
• 110 duty on importation
• R-boxes are being distributed to farmers
• 50 duty rebate on brown rice
• Donor-supported initiatives e g NSPFS, Rice
  Alliance, RUSEP, SG 2000, etc
• Encouragement of large-scale millers

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Map of Nigeria Showing Rice Areas
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Sources of Domestic Rice Supply
Rainfed Upland Rice
25
Rainfed Lowland Systems
9
50
Mangrove Swamps
Irrigated Systems
16
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Rice Value Chain
Traditional Rice channel
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Estimated cost in /Mt of De-husked Parboiled
Nigerian Rice Compared with the Imported
Product,
534/Mt 120 tariff
234/Mt no tariff
1.9 Mt
2.4 Mt
1.5 Mt
1.9 Mt
2.9 Mt
2.3 Mt
2.6 Mt
2.3 Mt
1.5 Mt
4.5 Mt
6.3 Mt
2.9 Mt
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Strengths

• Rice can be grown in all parts of Nigeria
• Irrigation facilities already in existence in
  many states of the federation
• Existing high demand for rice as staple food
• Profitable business in spite of importation and
  smuggling
• Upland NERICA and other improved varieties
  available (with some effort)

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Weaknesses

• Poor infrastructure and weak institutions to
  support farming
• Hostile macroeconomic investment climate (ie
  interest rate, duties, etc)
• Dearth of production inputs (esp fertilizer)
• Low productivity from low technology base
• Absence of favorable credit terms

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Constraints

• High-yielding varieties not being cultivated and
  under sole-cropping system
• Poor husbandry practices
• Inappropriate milling and processing technology
  leading to poor product quality (burnt rice,
  cooking odor, stones)
• Dearth of knowledge about profitability and
  competitiveness of local rice
• Inconsistent government policies (i.e tariffs)

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Opportunities

• Heavy population that has adopted as rice as
  staple food
• Cultivation possible and popular in every part of
  country
• High consumer price of rice is an incentive
• Favorable government disposition and policies
• Improved inputs increasingly available

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Opportunities Contd

• Domestic demand gt demand supply gap and demand
  growing _at_ 10 p.a
• Tastes better and more nutritious (vitamins)
• Processing and packaging services currently being
  offered
• Production cost can be internationally competitive

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Threats

• Regional disparity in tariffs - Smuggling, cross
  border trade, etc
• Poor infrastructure e g roads, electricity,
  irrigation (water), machinery.
• Weak institutions e g seed service, research
  institutes, standards and measures, micro-credit,
  extension, etc
• Poor processing technology giving rise low
  quality milled rice

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Threats Contd

• Low efficiency productivity (0.9 1.3 ton/ha)
• High transport costs
• High interest rates on production loans
• High labor content and costs
• Absence of appropriate parboiling technology and
  high energy cost
• Menace of birds
• Generally high production cost

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Prospects

• Privatization of extension through BDS embedded
  ext services chemical firms
• Rice Alliance model to be fine-tuned
• Encouragement of FDI in processing e g OLAM
  VEETEE.
• Presidential Initiative on rice
• Policy of outright ban from 2006 and the 50 duty
  on brown rice
• Development of lowland NERICA seeds

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Conclusion

• Fine-tuning of import substitution strategy for
  the rice sub-sector
• Empirical and evidence-based rice policy through
  rigorous simulation analysis
• Well-coordinated national rice agenda for
  cultivation and consumption of local rice
• Institutional reforms
• Repair of infrastructure

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