Rotimi Fashola is a senior partner of OIT Fash Consult that has worked on the entire rice value chain in Nigeria and across Africa. In this interview, he tells JOSEPHINE OKOJIE, that Nigeria’s rice sufficiency will depend on mechanisation and proper water management.
The Buhari’s administration has focused on increasing rice production through its Anchor Borrowers Scheme (ABS). What is your assessment of the scheme?
Without being specific to any state, the Anchor Borrowers Scheme has been quite a laudable initiative. Before the scheme we were getting to a stage where imported rice was taking over local production because farmers were not motivated to produce. In 2012 and 2013 spilling over to 2015, rice imported into the country was sold for as low as N6000 per bag which was a dis-service to rice farmers. At that period it cost N8000 to produce a bag of rice in the country, making it less competitive compared to imported varieties. The ABS made it mandatory for farmers to be re-energised to producing rice as well as for processors to invest more in mills.
Under the scheme, farmers were given loans in form of inputs and guaranteed off-takers. But the challenge we have now is that the prices of paddy has gone so high that millers are having serious problems. A bag of paddy now cost an average of N12,000 if you include logistics and milling expenses a bag of rice finally come out at an average of N20,000 to N21,000 and smuggled rice still comes in for as low as 14,000 to 16,000, bringing us back to where we started from. We need to be able to manage the price of paddy so that integrated rice millers can buy at a cost that is both productive and competitive.
There are reports that Nigeria has increased its local rice production. How true is this and if yes where is the multiplier effects?
Yes we have increased our local production but not as much as it is being reported in the media. Before now our paddy production was five million metric tons which gave three million metric tons of milled rice. Now I think we are producing between six and seven million metric tons of paddy. Currently, on the average Nigeria is hitting about 52 percent recovery production of paddy. We have opened up unused flood plains to dry season cultivation of rice in Kebbi especially, in Niger, Jigawa and Taraba marginally, and we have consistently maintained the areas for wet season crop.
Between 2010 and 2013 wet season rice farming was reducing because farmers were moving to farming sugar cane since it was more productive than rice. Many of those farmers are now returning to farming rice today because it is attractive. Interestingly, Nigeria is also increasing productivity per unity area and our yields per hectare have moved from 2.5 to 3.5. A lot of agro companies are also increasing their production and investment across the rice value chain.
All the progress made is not yet significant because we have not attained the number of required bag of fertiliser use. The effect is not seen because our population is also increasing very fast and per capita consumption of rice is increasing. Few years ago, it used to be 30 kg person. In Lagos now it is 40 kg person and the Northern regions that use to have an average 20 kg per person is now 30 kg per person. Until there is aggressive increase in production we would not see the effect yet. We have to start talking about 12 million tons per year in paddy production before we can start meeting the needs of Nigerians.
This will require us to do a lot more in terms of increasing productivity per unit area and increasing our land areas. We must consistently have a yield average of five tons, it means we must use more fertilisers than we are using now, it means we must increase our tractorisation, it means we must increase our water management system and introduce more irrigation. Hoes and cutlass farming cannot get us there and this is why the margin increase is not sufficient to make that direct impact that can be bring down the price and attain sufficiency.
Total milling capacity of integrated milling rice is still less than one million metric tons. Most of the rice milled in Nigeria is done by the cottage mills. More than 2.5 million is done by cottage mills which are inconsistent in terms of variety, stones and it is not colour sorted. This rice does not come to Lagos but goes to the suburbs. For major cities like Lagos and Abuja to appreciate local processing, integrated millers must increase their capacity and warehousing. And this is why the government is bringing in more integrated mills. The capacity of integrated mills must be increased to at least 3million metric tons so that city dwellers can start to have a feel of good local rice to eat.
How can local rice varieties compete favourably with other imported varieties especially in pricing?
Our local rice is not competitive because of the cost of paddy. Cost of paddy alone constitutes 70 percent of the total rice processing. If the cost of paddy can drop as a result of abundant supply or government putting a price ceiling for paddy to ensure that there is parity in which that the cost of paddy drops not to disenfranchised farmers but to a price that would be benefitted to both farmers and processors.
We cannot compete with India and Thailand. In Thailand and India rice is heavily subsidised. There is a bank for rice in Thailand that gives loan to farmers without collateral. All farmers need to get loan from the bank is proof that they have planted rice which would be verified and estimated and would be given loan at a single digit. How can a Nigerian farmer who gets a loan at 23 percent interest rate compete? These are policy issues that need to be fixed so that both producers and processors can have loans at single digit, enabling them to compete favourably with imported varieties. Also, the Nigerian Customs still need to do their job effectively to stop smuggling.
We cannot bring down production costs if we are not using tractors. The total tractors in Nigeria that are functional are not up to 5000. The agriculture ministry told us that the country has 30,000 tractors both functioning and not. To produce a hectare of rice costs between N220, 000 and N190, 000 and this depends on the state. With lower production cost per hectare and constant yield per hectare, farmers will reduce their price of paddy. We need policy consistency to fix it because we cannot do it over night.
You initiated the Imota rice integrated mill at Imota, why was it positioned at Ikorodu and not Itoga in Badagry where the rice farmers are located?
I am glad you mentioned Imota. Before 2007 Lagos state did not have any rice project and I was called upon to make an assessment of the agricultural system in the state. While visiting the length and breadth of the agricultural areas of the state, I noticed conspicuously that there was lot of Ugu farms in Ikorodu and cassava farms scattered all over. The total hectare of rice production in the state then was less than 10 hectares and the state alone was consuming more than half a million metric tons of imported rice with a population of 16 million people. So I recommended for a rice project in the state because the state cannot be eating so much rice without a rice project.
The project involved three phases which the state implemented. The first phase is to have cottage mills which will have youths attached to it, that were trained in medium scale rice production and offada rice. The production from the youths was milled in the cottage mills. The youths were put into clusters and most of them became entrepreneurs. They were growing rice, processing it and selling.
The second phase was for us to establish a medium size integrated mills in which we would partner with the rice communities of the north and bring paddy from the north to the south to process. The purpose was to improve the quality of rice given to civil servants of the state, to infiltrate the market and allow private sectors to key into the initiative and start doing it. To achieve this, we established Imota rice mill. Lagos state government was distributing almost 20,000 metric tons every year, four seasons of the year. Imota was to stop that or reduce it drastically. The third phase of it was to acquire land in Ogun state and start farming rice. We acquired 500 hectares in Ogun state. The vision was to hand it over to private sector.
What is the problem with Nigeria’s rice industry; is it milling or production?
Milling is very important and so also production. India has over 2000 integrated mills while Thailand has over a thousand mills. I am not talking of small scale cottage mills. As at the last count in Nigeria we do not have up to 20 cottage mills. Government needs to invest in both because they have to come together and complement each other with right pricing.