Small-scale rice mills packing up over high paddy, power cost

Many small and medium-sized rice mills have been forced to close due to the high cost of paddy needed to sustain the business. The obstacles confronting rice millers in the country are not only related to the cost of paddy, but also to high energy and other logistics expenses. Many of the millers have had […]

Many small and medium-sized rice mills have been forced to close due to the high cost of paddy needed to sustain the business.

The obstacles confronting rice millers in the country are not only related to the cost of paddy, but also to high energy and other logistics expenses.

Many of the millers have had to halt production as, they said, they’ve been operating their mills at a loss due to escalating expenditures and other related expenses.

In Nasarawa State, one metric ton of paddy rose from N500,000 in January to about N920,000 in the last week of June and is currently sold at about N850,000 per ton.

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Depending on distance, the cost of transporting the paddy to the mills ranges from N1,500 to N3,000 per 100kg bag.

 In terms of energy, due to the erratic and unreliable power supply, a large number of the millers now rely on diesel to power their generating sets. And as diesel is sold at over N1,000 per litre, this raises the cost of production and makes it difficult for the millers to break even.

Grain prices have also been rising at an unprecedented rate since the commencement of this year’s processes, placing many small and medium-sized processors in a difficult situation.

One of the millers who pleaded anonymity, along the Keffi–Abuja expressway, said he had to stop processing at his 20-ton-per-day mill because buying paddy at current prices is unprofitable.

 Although, Nigeria is considered to be the top producer of rice in West Africa, indications suggest that the commodity is increasingly becoming too expensive for a large number of households in the country.

According to a Kano-based smallholder rice miller, Malam Bashir Mohammed, rice milling is becoming a no-go area for many people in his category. He explained that many of his business colleagues have shut down operations because they cannot continue to operate in the hash business atmosphere.

 “Many of my colleagues have not been operating because the business atmosphere has been very expensive. A ton of rice paddy is now sold at N720,000; coupled with the high cost of both electricity and diesel; rice milling has become almost impossible for most of us in the sector.

“I have a chain of customers, that is why I didn’t quit the business, but I have shut down the operation. I ventured into paddy sourcing and milling in another facility, that way, I am able to cut down the cost of production,” Bashir said.   

Another miller, Shehu Mustapha Bako, said the high cost of paddy and competition between the mega mills and the smallholder mills are responsible for the closure of many smallholder rice milling ventures, adding that the sector is suffering.

He lamented that operators of the smallholder mills are finding it very difficult to operate despite playing a very significant role in rice production stability in the nation.

“Most of us have closed down our production sites and those of us that are still in the system are only operating skeletal services because the already identified issues related to paddy scarcity wouldn’t allow us to operate fully.

“A lot of persons in this line of business cannot continue with their present standard; sooner or later, they will no doubt join us by closing down. It is a worrisome issue that needs to be seriously looked into. We in the sector have done what we can, but we do not have any form of backward integration system and as such, we cannot do much,” he lamented.

A rice merchant in one of the rice paddy markets in Kano, Alhaji Isah Bello, attributed the scarcity and high cost of the paddy to the decrease in rice production last year and previous years due to insecurity as well as the high demand of the commodity by both mega and smallholder rice mills in the country, among other issues.

He advised that the government and other stakeholders in the country should invest in rice production, especially during this wet season, to promptly address the problem, adding that rice farmers should be assisted and encouraged to grow more.

He maintained that the governments of rice-producing states should also be involved in the processes to stabilise costs.