Why price of local rice is still high – DG RIPAN, Ekwelem
Mr Andy Ekwelem is the Director-General, Rice Processors Association of Nigeria (RIPAN). In this interview he spoke on factors responsible for the high cost of local rice in Nigeria. Foreign rice seems to be gaining more entrance into our market, what are the implications of this on our local drive? It is indeed very […]
Mr Andy Ekwelem
Mr Andy Ekwelem is the Director-General, Rice Processors Association of Nigeria (RIPAN). In this interview he spoke on factors responsible for the high cost of local rice in Nigeria.
Foreign rice seems to be gaining more entrance into our market, what are the implications of this on our local drive?
It is indeed very distressing, to say the least. The truth is, if the current situation is not immediately arrested, the tremendous progress made so far in the rice sub-sector would be washed away very swiftly. And most unfortunately, if that happens, millions of jobs would be lost, huge investments would collapse, bank loans and other financial obligations may not be met, and there would be serious investor apathy because potential investors would find it difficult to trust the country’s business environment.
As you well know, the present administration has made so much investments in the rice industry. Over the past five years, the administration of President Buhari has thrown almost everything it can to encourage primary production and rice processing, all in a bid to conserve foreign exchange, strengthen our food security, provide jobs for Nigerians and grow our economy generally.
The Central Bank of Nigeria (CBN), on its own, has designed, and is implementing veritable development programme/schemes, such as the Anchor Borrowers Programme(ABP) for farmers, the Paddy Aggregation Scheme (PAS) for processors and even the Commercial Agricultural Credit Scheme (CACs) that avail agro-investors funds at a single digit.
Look around and you will see the positive result and impact. A lot of people are encouraged by the forceful thrust of government in this area. People are investing in large-scale farming, rice processing, paddy aggregation and agro-input dealership. Jobs are being created, private sector participation is active and new entrepreneurs are emerging in the sector.
We should not joke with it. For me, it will be foolhardy of us to fold our hands and watch economic saboteurs ruin our collective resolve to ensure that Nigeria migrates from a food importing country to a food producing nation.
But some Nigerians think that with the much talk and efforts on our local rice production drive, the price of processed commodity should have come down more than this, what do you think is the reason?
As a matter of fact, our progress in the rice value is something to applaud. But we must acknowledge that we are new entrants in the area of rice agriculture. We cannot, in just six years, begin to think that we can compete with countries like Thailand, India and the likes.
Thailand has over 50 years experience in rice agriculture, likewise India and Vietnam. These countries have, overtime, managed to overcome teething obstacles that normally impede high yields. But here, we still grapple with critical infrastructural problems; epileptic power supply/high tariff per kw; poor access road; poor agro inputs, especially certified seed; poor extension services, coupled with the fact that our commercial banks are not keen to fund/lend to agriculture.
All of these factors contribute majorly to the reason Nigerian processed rice is a little bit costlier that the smuggled rice from these other countries. Also, remember that this rice comes into Nigeria unofficially. With the circumvention of duties/tariffs, naturally, the price at which it lands at the market will be lower.
The good news though is that once again, the CBN is coming to the rescue. I am aware that the CBN is launching a massive primary production programme in the coming season.
There is this allegation that some of the millers were mopping up paddy, just to create artificial scarcity, with the aim of jerking up the price of locally processed rice; how would you react to this?
This is a very preposterous accusation; possibly from detractors who may be in connivance with the smugglers. It is unfortunate how people who are not players in the rice value chain throw words carelessly. Without a shred of doubt, Nigerian rice processors are one of the most patriotic people in the country today. These are people who invested in a sector that was relatively unknown, people who built factories that provided jobs for millions of Nigerians. The processors are not like the briefcase merchants who encourage smuggling because the money is easy.
By the way, it may interest you to know that rice paddy is the only raw material needed in processing and milling. Rice paddy is to the mills what water is to the fish. Without paddy, the mill is useless. Also, for your information, an average integrated rice mill has a staff strength of about 200 people. Every month, the mill has the obligation to pay the salaries of these employees. Every month, some mill will have to service bank debts/loans and make other sundry expenses. So, tell me what will be the rationale or justification to hoard paddy. And for how long will the processor hoard the paddy.
That said, this issue of paddy hoarding is a matter of serious concern to us the processors. This is because, as we speak, it persists. The truth is that we are the ones that drew the attention of the authorities to the ugly trend. At a time, from October 2020, prices of paddy jumped from N157/Kg to about N250/kg. Then, beyond the escalated price, the commodity was very scarce. The mills became starved of their only raw material. Seeing how bad things were going, we (the processors) called ourselves to a meeting to appraise the situation and sought a solution. We set up a small committee to investigate the situation and report back to the association. What the committee found out was alarming. Paddy became scarce because people had begun to procure and hoard the commodity, waiting for the price to shoot up before they would bring them out for sale.
Of course you know that during the COVID-19 lockdown, the food industry, especially rice and other commodities appeared to boom. Now, most of those whose businesses were affected by the COVID-19 lockdown looked towards paddy procurement and storage as a way of survival. All manner of people became paddy speculators and traders, causing a total distortion of the market.
Now, don’t get me wrong; I understand that these people have the legitimate right to aggregate paddy and sell as a means of livelihood, but the snag is that instead of buying from the farmers and releasing them to the millers, who are the end users, they warehouse them, just to cause artificial scarcity to earn higher prices afterwards.
Knowing that the cost of finished rice is dependent on the cost of paddy, we immediately called the attention of the CBN to the ugly trend. We even escalated the matter up to the chief of staff to Mr President.
When the ugly trend refused to abate, we wrote to the Economic and Financial Crimes Commission (EFCC) and the Department of State Services (DSS), informing them of the situation and calling on them to join us to tackle the problem.
On our part as an association, we agreed to stop buying paddy, just to see if these hoarders would be discouraged. But no; the situation persists. As I speak to you now, the price of paddy hovers around N180/ N185 per kg. If not for the CBN that is currently releasing paddy to processors at N160/kg from their reserve, I wonder what would have happened. So, the insinuation that processors are hoarding paddy to cause scarcity is very ridiculous.
How best do you think the Federal Government should handle the issue of smuggling?
We have said it over and over. As a country, we have to take a hard stand against our neighbours who allow parboiled rice into their country for onward transfer to the Nigerian market. The time has come for the Federal Government to say that enough is enough. We cannot continue to play the big brother when our food security progarmme is being sabotaged by the same neighbours.
Also, it is high time the Federal Government criminalised and began to penalise sales of foreign rice in Nigeria. For instance, the know that rice is number one crop in the import prohibition list of the CBN. Going forward, the Customs Service, in collaboration with other security agents, the RIPAN and the Presidential Committee on Trade Malpractices, should commence raids on the market to fish out those traders/agents of the smugglers. Any foreign product found in any shop/market in Nigeria today should be seen as a smuggled product and the shop owner arrested and charged as a criminal.
We must not lie to ourselves. The activities of these smugglers and their agents amount to economic sabotage, so they should be arrested and punished accordingly. We need these drastic actions if we really want to curb the menace.