Nigeria is on the brink of witnessing a staggering surge in the cost of rice imports for the 2023/24 marketing year, potentially surpassing the cumulative N1.08 trillion spent over eight years under the Anchor Borrowers (ABP) scheme. The ABP initiative has been a critical source of funds and inputs aimed at bolstering local production.
According to the 2023 grain report on Nigeria from the United States Department of Agriculture (USDA), the country is projected to import 2.3 million metric tons (MMT) of parboiled rice in 2024, marking a substantial 10 percent increase from the 2.1 million tons projected for the current year.
International Grain Council data reveals that a metric ton of parboiled rice currently sells for $568. Consequently, if this projection holds true, Nigeria could find itself expending a staggering $1.31 billion on rice imports in 2024 (calculated as 2.3MMT multiplied by $568 per ton).
Given an exchange rate of N900/$, this expenditure translates to a whopping N1.2 trillion ($1.31 billion), surpassing the total funding allocated to ABP by N100 billion. The USDA report highlights factors such as insecurity in farming areas, elevated input prices, and inadequate mechanization as contributors favoring rice imports over stimulating local production.
The report points out, “In addition, increasing demand for foreign rice coupled with high production costs has made local rice uncompetitive, especially in terms of quality.”
A significant development in October saw the Central Bank of Nigeria (CBN) lifting the ban on 43 items, including rice, from access to foreign exchange (FX) after an eight-year prohibition. Analysts speculate that this move may further escalate rice imports in 2024 due to Nigerians’ strong preference for local parboiled rice and concerns regarding the quality of local varieties.
Despite improvements in productivity per cultivated land unit and the expansion of mills over the last four years, the perpetual poor quality of most local rice varieties continues to drive consumers toward imported options from Thailand, Vietnam, and India.
The USDA report indicates that Nigerian rice millers, both integrated and small-scale, are reducing production due to high operating costs, primarily attributed to soaring diesel and paddy costs. Additional challenges include a weakening Naira and the growing menace of smuggling foreign brands through land borders, making domestic production less profitable.
While local rice is comparatively cheaper than imported varieties, the report notes that the price difference is not significant enough to offset the disparities in quality. Furthermore, the USDA forecasts a decline in Nigeria’s rice production to 8.1MMT in 2024 from 8.5MMT in 2023, citing higher fertilizer prices, reduced access to conflict-prone farmlands, and an increase in unrecorded rice imports of cheaper paddy as contributing factors.
