Replicating the cement success in rice production

by Oyinkari Patrick

August 30, 2017 | 3:07 pm
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Nigeria, Africa’s biggest economy is testing new grounds on import substitution for rice production as the country hopes to replicate success recorded with its cement industry.

Nigeria’s economy decelerated to a 25-year low in 2016, after oil revenues collapsed and officials have picked unwavering interest in the agricultural sector as the country attempts revenue diversification and import substitution.

With this, the country hopes to shore up its foreign reserve, boost local production and create employment for its fast rising population.

“Nigeria can replicate what was achieved with cement in rice production. We cannot continue to import everything if we are really serious about growing our economy,” said Sani Dangote, president, Nigeria Agribusiness Group (NABG) and vice president, Dangote Industries in a telephone response to questions.

“We can achieve import substitution with rice in a shorter period of time with effective implementation of government policy. It takes a minimum of three months to grow rice and it requires lesser investments when compared to cement production,” Dangote said.

Nigeria imports almost everything from toothpicks to refined petroleum products despite being Africa’s largest oil producer.

 In order to curtail the country’s heavy import reliance and reduce the deleterious effects of excessive importation, the Buhari led government restricted some 41 items from accessing foreign exchange (FX) since June 2015 to discourage importation.

According to Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI) said in an email response to questions that Nigeria can replicate the success story of its cement industry in rice and tomatoes only when it adopt a different strategy.

“It is much easier to mechanise and automate cement production processes than it is for agro-processing. The value chain in agro-processing is longer and more widespread,” Yusuf added.

 Rice revolution

Nigeria’s rice produce is gaining acceptance at home which is aided by improved production and milling capacity.

 The country’s rice production has risen by four metric tons per hectare owing to the Central Bank’s Anchor Borrowers Scheme in Kebbi, according to a report by the United States Department of Agriculture.

 Rotimi Fashola, a senior partner, OIT Consult Limited said, “we have increased our local rice production. Before our paddy production was five million metric tons but now 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,” he said.

According to the National Bureau of Statistics (NBS) the value of importation has declined by 83 percent within the last three years fromN107.7 billion in 2014 to 17.9 billion in 2016, NBS data state.

Numbers of rice mills both integrated and cottage mills have increased by more than 50 percent in recent months as government and private sector continues to make more investments in processing.

The average crop yield per hectare of the crop has risen from 2.5 metric tonnes per hectare to an average of 4 and 5 metric tonnes of the same acreage, owing to renewed government commitment.

To protect local investments the Federal Government banned the importation of rice through land borders and increase levy of rice importation through the sea ports.

States and local agro firms are already boosting production through direct investments in milling plants.

Lagos and Kebbi states in 2016, signed a Joint Venture (JV) agreement for the establishment of a modern and commercially viable rice milling complex, which will have the capacity to process and mill twenty (20) tons of rice per hour.

Apart from Lagos and Kebbi, Cross River, Benue, Kano and Kaduna have also been home to new investments in rice.

Early 2016, Thai-African Corporation berthed Calabar, Cross River State, for the development of Rice City in the state.

The cement success

Nigeria, one of the top importers of cement has made significant progress with its cement import substitution, as cement companies continue to amass capacity ahead of consumption growth curve.

Through the backward integration policy, the country boosted its local production by more than 80 percent, experts say.

Local consumption has only grown at an average of six percent over the last five with capacity growing at an annual rate of 24 percent over the same period, industry data show.

Data obtained from the Nigerian Bureau of Statistics (NBS) show that the value of cement importation has reduced fromN7.3 billion in 2013 to N5.4 billion in 2016.

This shows a 35.9 percent decline in the value of cement importation over the last four years.

Also, industry estimates revealed that the country currently produces about 40 million metric tonnes per annum  with Dangote having the largest output of 29.3 million MT, Lafarge Nigeria with 8.5 million MT, BUA and Ashaka both with one million MT each, while Northern Cement Company with600,000MT.

 Attaining rice sufficiency

Despite domestic efforts made in boosting rice production perennial problems like insufficient supply chain integration, lack of capacity for farmers and smuggling among others still persists.

 Experts say that if the country can sustain the momentum of investments and address fundamental issues with rice production, the country may be self-sufficient within the next three years.

 The country still has rice production gap of almost four million metric tons in rice owing to illiteracy, lack of technological know-how among rice farmers and high cost of paddy.

 “All the progress made is not yet significant because we have not increased our mechanisation use, water management system and introduce more irrigation farming,” said Fashola who was earlier quoted.

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by Oyinkari Patrick

August 30, 2017 | 3:07 pm
  |     |     |   Start Conversation

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