Dangote Sugar Refinery logo

DANGSUGAR - Dangote Sugar Refinery News Story

NGN20 0.0  0.0%

Last Trade - 1:18pm

Sector
Size
Market Cap £n/a
Enterprise Value £n/a
Revenue £n/a
Position in Universe th / 0

RPT-Nigeria's rice boom raises output but old problems persist

Fri 10th March, 2017 10:48am
(Repeats Thursday report, adds TV) 
    * Nigeria tries to end rice imports to save dollars 
    * Domestic production rising thanks to incentives 
    * But farmers unable to satisfy demand fully 
    * Growers complain help often not getting to right people 
    * Big investors hope government won't repeat past mistakes 
 
    By Ulf Laessing 
    GADAU, Nigeria, March 9 (Reuters) - Nigerian Abdulhakim 
Mohammed has just graduated in architecture but, like many 
people ranging from unemployed locals to foreign investors and 
Africa's richest man, he has decided the future lies in rice 
farming. 
    The reason is that domestic rice prices have more than 
doubled in the last two years due to an import ban and a dive in 
the Nigerian currency. At the same time, the government is 
subsidising tractors, mills and fertilisers as well as arranging 
cheaper loans to boost production - with considerable success. 
    And yet the drive to cut an annual food import bill of $20 
billion has run into the kind of problems that have long 
bedevilled Nigeria's efforts to build up an economy outside its 
dominant the oil industry. 
    Despite rice growing being a government priority, many 
farmers still work with their bare hands in fields lacking 
irrigation channels. Mills are often ramshackle while poor roads 
 make getting the crop from the main growing areas in northern 
Nigeria to consumers in the south difficult and costly.  
    As a result, the industry has so far failed to fill a supply 
shortfall amounting to about 3 million tonnes of milled rice 
created by the import ban. In the commercial capital of Lagos, 
supermarkets mainly sell rice from India or Thailand. 
    Mohammed took up growing rice three years ago to help fund 
his university studies in the northern state of Bauchi. When he 
finished last year, he opted for a career in the fields around 
the town of Gadau, rather than in architecture. 
    "My advice to the youth is to join rice farming," said 
Mohammed, who is expanding his own area from 1.5 to 2 hectares 
(3.7 to 5 acres) as well as working as a supervisor on a new 
farm that workers are preparing nearby. 
    "One bag of rice sells for 10,000 to 11,000 (naira). Two 
years ago I was selling for 4,500," he told Reuters. 
    That makes a bag worth almost $25 at the exchange rate on 
the black market, where many Nigerians go due to restrictions 
and dollar shortages in the official banking system. In Bauchi 
state, hundreds of farmers are busy expanding, preparing new 
fields and drilling water holes for irrigation. 
    Farms have been opening across much of the country, lifting 
output of unmilled rice to 7.85 million tonnes in 2016 - a 17.4 
percent jump from 2014, the National Bureau of Statistics told 
Reuters. That compares with just 4.54 million in 2010, before 
the campaign began. 
     
    TALKING VS IMPLEMENTING 
    Until 2015, Nigeria imported up to 4 million tonnes of rice 
annually, much of which was smuggled from the western neighbour 
Benin Republic. But this has fallen to about 700,000 tonnes as 
authorities now monitor the border, industry players say. 
    That lifted prices for the staple, along with currency curbs 
imposed to prop up the naira which has been hit by a fall in 
revenues from Nigeria's oil exports. 
    Part of the rise is because farmers are passing on higher 
costs, saying the government subsidies are not enough. Importers 
have to pay a premium of 30 percent over the official rate to 
get dollars on the black market for buying the foreign-made 
machinery and fertilisers that growers need. 
    On top of this, farmers complain that endemic corruption 
means the government help doesn't always reach the right people. 
    "Some people who got fertilisers were not even farmers. They 
sell it then," said Mohammed Tafida, the local head of a rice 
farmers' association, who is also expanding his own fields. 
    "Fertilisers are very expensive," he told Reuters, standing 
by a new paddy field being prepared. "Our production costs are 
very high. You now pay workers 500 to 700 naira a day; before it 
was 200 naira." 
    President Muhammadu Buhari has made fighting graft a 
priority since coming to power two years ago. But he has to work 
with Nigeria's 36 states where officials executing the federal 
programmes often help out supporters or relatives. 
    Farmers and food producers can get subsidised loans well 
below the benchmark interest rate of 14 percent. But one 
processor of garri - another local staple, made from cassava - 
said he had waited six months to get his loan approved as banks 
are new to the farming business. 
    "In Nigeria talking is one thing and implementing plans 
another," said Idris Salihu, another rice farmer in Bauchi. "We 
need more support." 
     
    POT-HOLED ROADS 
    The rice boom has also drawn large scale investment from  
Africa's richest man, Nigerian Aliko Dangote, and foreign firms 
to supply the huge market of 190 million people. 
    Dangote Group said last month it planned to launch a rice 
mill with a farm scheme which will produce 225,000 tonnes of 
parboiled, milled rice by the year-end. 
    Wacot Rice, part of Lagos-based food and farming 
conglomerate TGI, will open a rice mill next month with a 
capacity of 100,000 tonnes annually. It works with rice farmers 
on 15,000 hectares and plans to expand to 165,000 hectares 
within 10 years. 
    Abroad, Singapore-based Olam  OLAM.SI  plans to increase its 
Nigerian rice farming to 6,000 hectares from 4,300 hectares "in 
a couple of years or so", a spokesman said. 
    Nigeria hopes such large-scale investors will improve rice 
yields, measuring output per hectare. These are among the lowest 
in Africa as the market is dominated by relatively inefficient 
farmers running fields of two to five hectares. 
    The lack of good roads also means that rice from the north 
hardly reaches Lagos, Nigeria's biggest city. The government 
plans to increase capital spending by nearly a quarter in 2017 
to fix pot-holed routes and help trade. However, a collapse in 
oil revenues due to low world prices has slowed many projects. 
    Nigerian growers also struggle to meet quality standards set 
by foreign agri-businesses, with consumers complaining about 
having to extract grit from the rice. 
    "I like better the taste of the local rice. The only problem 
is the stones in it," said Samuel Ativ, 38, as he shopped in the 
busy Bauchi market. "If I am in hurry I prefer the foreign rice 
because there are no stones." 
    Nigeria has imported 110 mills which remove grit in the 
process but most farmers still go to villagers to handle their 
rice with home-made machines. 
    Larger investors hope Nigeria will not repeat the mistakes 
of the past by losing interest in domestic food production if 
and when global oil prices pick up again, helping the naira to 
recover and making imports cheaper. 
    "Important is that they started the journey to become food 
self-sufficient," said Rahul Savara, TGI Group Managing 
Director. "They are going on the right track, and the government 
has to continue the same policies it is doing now." 
    ($1 = 304.0000 naira) 
 
 (additional reporting by Chijioke Ohuocha in Lagos; Editing by 
David Stamp) 
 ((Ulf.Laessing@thomsonreuters.com; Reuters Messaging: follow me 
on twitter @ulflaessing)) 
 
Keywords: NIGERIA RICE/
© Stockopedia 2020, Refinitiv, Share Data Services.
This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.