Rice: Smugglers gain, government’s pain pain

0
221

President Muhammadu Buhari and his Beninois counterpart Patrice Talon met in Japan. The meeting held during the partial closure of Nigeria’s border with the Republic of Benin. Clips of the meeting showed a calm Buhari. But, behind the composure and diplomatic finesse was a president deeply troubled by developments back home, where the gains made by his administration in the rice segment of the agricultural sector are being threatened by the activities of cross-border rice smugglers, particularly from the Benin Republic axis.

The president sure has justifiable reasons to be troubled. The revolution in the rice segment of the sector has been widely acknowledged as one of the visible achievements of his administration.

For instance, in two years, September 2015-September 2017, rice importation from Thailand fell from 644,131 Metric Tons (MT) to 20, 000 MT, representing over 90 per cent drop.

Also, while Nigeria’s current rice consumption is put at between six and seven million MT of milled rice, the country produced 2.5m MT of milled rice in 2015. By 2017, it rose to 4m MT (US Department of Agriculture, World markets and Trade put it at 3.7m MT), leaving a gap of 2m MT.

Also, from only 13 integrated rice mills in the country in 2015, the number rose to 21 by 2017. Similarly, from five million rice farmers in Nigeria in 2015, the number has gone up to 11 million.

Minister of Information and Culture Alhaji Lai Mohammed put the total investment of members of the Rice Millers, Importers and Distributors Association of Nigeria (RIMIDAN) into the economy at over N300 billion, while upcoming investments were expected to reach N250 billion.

The minister announced that the new investments would add 5, 000 jobs and additional 1,775,000 MT of integrated rice milling capacity while saving $300 million foreign exchange from import substitution through local processing. These were the basis on which the administration anchored its hope of closing the nation’s 2m MT of rice gap by 2020 by boosting domestic production.

So, when Buhari rode on the back of the just-concluded Seventh Tokyo International Conference for African Development (TICAD7) in Yokohama, Japan, where he granted audience to Talon, to express serious concern over the smuggling of rice into Nigeria, he wanted to pull the breaks on what he, and perhaps, other concerned stakeholders perceive as deliberate sabotage.

Buhari, who could not stand any attempt to reverse the gains of his achievements in local rice production, pointedly told his Beninois counterpart that the activities of smugglers in that corridor were threatening the attainment of his administration’s rice self-sufficiency.

“Now, our people in the rural areas are going back to their farms, and the country has saved huge sums of money, which would otherwise have been expended on importing rice using our scarce foreign reserves.

“We cannot allow smuggling of the product at such alarming proportions to continue,” Presidential Spokesman Femi Adesina quoted Buhari as saying. This was in response to concerns raised by President Talon on the magnitude of suffering foisted on his people by the border’s closure.

Although Buhari said the partial closure of the western border was to allow Nigeria’s security forces develop a strategy on how to stem the dangerous trend and its wider ramifications, operators and industry stakeholders fear that such strategy, if, and when developed and implemented, might be belated.

Already, the activities of smugglers around that axis, The Nation learnt, may have put Nigeria’s achievement of a total rice import replacement by 2020 in jeopardy. This, according to reliable industry sources, was why Buhari, who could no longer hide his worry, was forced to bare his fangs through the border closure.

Rice Processors Association of Nigeria (RIPAN) Alhaji Mohammed Abubakar Maifata brought this disturbing reality nearer home when he said about half a million metric tonnes of rice have been booked in Thailand for shipment to Nigeria preparatory to the Christmas season.

Maifata, who made this known to reporters in Abuja, last week, after the association’s intensive border and port survey, warned that Nigeria risks losing over $400 million to rice smuggling if the over one million metric tonnes of the commodity is allowed to enter the country from the Benin Republic.

He also said the impending illegal rice importation would, no doubt, have a ripple effect on local rice processors, as their activities would be hampered. Although he said RIPAN supports the border closure, Maifata said it would go a long way in curbing the menace of rice smuggling, while giving local producers a breather.

Why local producers are screaming blue murder?

Indeed, breather came the way of local rice producers since 2015 when the Federal Government banned the importation of rice into the country.

It also went a notch higher, providing N82 billion in funding to farmers of rice, wheat, maize, cotton, cassava, poultry, soybeans and groundnut via the Anchor Borrowers Programme (ABP) of the Central Bank of Nigeria (CBN)

But the succour that came the way of rice farmers on the strength of these strategic interventions appears to have been short-lived, no thanks to the activities of cross-border rice smugglers.

Today, over 70 per cent of rice in Nigerian markets are said to be foreign or imported into the country through any of the numerous porous borders. Foreign brands such as Mama Gold, Royal Stallion, Rice Master, Caprice, Falcon Rice and Basmati are competing for patronage with local rice.

Price difference a disincentive

In the Benin Republic, for instance, the total demand for white rice, which is consumed in that country, against parboiled rice in Nigeria, was 400, 000 MT, as at 2017. Yet, Benin, with a population of about 11 million, imports between one million and 1.2m MT of rice annually.

Most of the imports by Benin are allegedly for Nigerians. As Nigeria’s rice import falls, Benin’s rice import increases. Most of the parboiled rice imported by Benin eventually lands in Nigeria through smuggling.

It is easy to see why this is so. For one, the difference in the price of the local and foreign rice as a result of the influx of smuggled rice has been a major discouraging factor for rice farmers, as people prefer to buy the foreign rice because of the price difference.

For instance, The Nation learnt that at present, smuggled foreign rice costs between N17, 000 and N18, 000 per 50kg bag, while Nigerian processed rice sells for between N14, 500 and N15, 000 per 50kg bag, depending on the brand.

Although the price of foreign rice is slightly higher than local rice, most local producers consider the price margin to little to encourage local production. They blame this on Cameroon and Benin Republics, which lowered tariff payable on rice to 0 and five per cent, respectively, to encourage importation and subsequent smuggling into Nigeria.

As if this is not enough discouragement, Thailand and India where the smuggled rice is sourced also gave a high level of subsidies to rice farmers and rice processors, local rice producers in Nigeria are struggling to compete favourably in terms of pricing with the heavily subsidised imported rice.

A United States Department of Agriculture (USDA) Foreign Agricultural Service and Global Agricultural Information Network (GAIN) report said Nigeria is Africa’s largest producer of rice and among the top 15 producers globally.

The 2019 report, which was accessed by The Nation, however, said the high cost of rough, paddy rice, as well as high operational costs, constrain large-scale/integrated rice mills from producing at more competitive prices.

The report stated that although, Thailand and India rice shipments to Nigeria have dropped off in recent years, there have been large, officially reported increases in rice exports to Nigeria’s neighbours namely, Benin, Cameroun, Niger and Togo, with populations of 11.3 million, 25.6 million, 19.8 million, and 8.1 million, respectively.

“These are countries with lower import tariffs and porous borders, creating conditions favourable for transshipments, the report said, adding that Thai and Indian-origin rice (long-grain varieties) dominate imports into Nigeria, which largely comprise parboiled rice (also known as converted rice and easy cook rice).

A catalogue of missed rice targets

The dynamics of the Nigerian rice market, which is skewed in favour of foreign brands, at the detriment of local producers and investors, is believed to be responsible for Nigeria missing several targets earlier fixed to curb importation of the product and ultimately, achieve rice self-sufficiency.

Recall that before the current administration came on board, the then Federal Government under President Goodluck Jonathan had initiated a new rice policy and set a 2015 target for the realisation of self-sufficiency in rice production.

The policy was part of the administration’s Backward Integration Policy (BIP) and economic diversification agenda, which President Buhari retained and pursued in the hope of encouraging local production of rice and offering investors in the rice sub-sector incentives to invest.

Immediate past Minister of Agriculture and Rural Development Chief Audu Ogbeh assured that Nigeria will be self-sufficient in rice production by the end of 2017.

Although Ogbeh later said rice production had improved tremendously across the country as a result of the CBN’s Anchor Borrowers’ Programme, the government failed to meet the target, due largely to rice smuggling.

The Federal Government again shifted the deadline, with Vice President Prof. Yemi Osinbajo saying that Nigeria will stop rice importation by the end of 2018. But as it turned out, the pronouncement was made without recourse to realities on the ground.

There was no political will on the part of the authorities to halt the booming rice smuggling trade across the borders especially from the Western axis. The result: 2018 had come and gone without meeting the target.

Now, a new date has been set for 2020. Will the authorities do the needful and halt the upswing in smuggling of rice across the borders? What is the level of commitment to addressing the huge infrastructural deficit that has been responsible for pushing up the cost of production for local rice producers and rendering them uncompetitive?

Although the Federal Government put the right foot forward when it partially closed the borders, the question is, is this strategic move enough to halt the illicit rice trade that has been hurting local producers and frustrating government’s efforts to cut the humongous foreign exchange spent on rice importation?

While answers to these remain a matter of conjecture, the preponderance of opinion is that the Federal Government decision to close the borders was a step in the right direction. Operators and other industry stakeholders, however, say that a strong political will is needed to effectively police the borders.

To do this, the Association of Nigerian Licensed Customs Agents (ANLCA) urged the Federal Government to embrace the use of technology such as drones and Close Circuit Television (CCTV) to effectively address the challenges of smuggling and security at the nation’s land borders.

ANLCA Publicity Secretary Joe Sanni said in as much as the security of the nation’s land borders remained important to check smuggling and other security challenges, it was also important to employ smart strategies that would ensure continuity in legal trade without undue hindrances.

Experts also say that government should go beyond border closure and address other issues around price instability, quality and harvesting/processing of rice, as well as the provision of supportive infrastructure to help local producer who has made huge investments in local rice production reduce cost.

Get More out of our stories: Follow us on our Socials

Facebook

Instagram

Linkedin

Twitter