Impact of Trade on Domestic Rice Production and the challenge of Self-sufficiency in Nigeria

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Impact of Trade on Domestic Rice Production and
the challenge of Self-sufficiency in
Nigeria   Chuma Ezedinma Integrated Cassava
Project
International Institute of Tropical Agriculture
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Introduction

• Nigeria is the largest rice producing country in
  the West African region.
• By 2002, the country accounted for 57 of the
  total rice producing area in West Africa.
• Potential land area for rice production in
  Nigeria is between 4.6 million and 4.9 million
  ha.
• Out of this, only about 35 percent of available
  land area is cropped to rice.
• Rice yields are however low even by West African
  Standards

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The Paradox

• Nigeria is the largest importer of rice in the
  world
• The annual demand for rice in the country is
  estimated at 5 million tons
• Domestic production accounts for 3 million tons
• Imports account for about 2 million tons
• Between 1990 and 2002, Nigeria imported
  5,132,616 tons of rice
• In 2002 alone, the country imported 1.882
  million tons of rice.

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Objectives

• Describe the effect of rice trade (imports) on
  domestic rice production and marketing
• Assess the competitiveness of domestic rice
  relative to imported rice in Nigeria
• Assess the effect of policy inconsistency on rice
  production
• Determine the optimal efficiency of local rice
  mills

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Methodology
Primary sources Field level survey involving
small scale mills, rural and urban markets in
north and south of Nigeria Secondary
sources IITA and other Libraries, internet
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Rice Production Systems

• In Nigeria, cultivable land to rice is spread
  over five ecologies, namely
• rain fed upland
• rain fed lowland or shallow swamp
• irrigated rice
• deepwater or floating rice and
• tidal mangrove swamp

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In geopolitical terms rice is produced mainly in
the central region of Nigeria

• Major Rice producing States
• Kaduna - 22 ,
• Niger - 16
• Benue - 10
• Taraba - 7

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Effect of rice trade (imports) on domestic rice
production and marketing


The proportion of local rice available in
Nigerian markets is far less than that of
imported rice
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Effect of rice trade (imports) on domestic rice
production and marketing
Three types of rice processing mills Traditional/
hand Small rice mills Large rice mills

• The small rice processing mills are the most
  dominant in Nigeria
• Low effective capacity utilisation in small rice
  mills

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Effect of rice trade (imports) on domestic rice
production and marketing
Loss of rural farm labour to urban migration Rise
in intra regional trade
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Effect of rice imports on domestic production

• The growth in domestic rice output declined with
  growth being negative in 1995
• The growth rate in domestic rice production is
  still negative to date

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How competitive is local rice ?
On the average an extra cost of 25 percent is
needed to process domestic rice to the quality
and standards of imported rice Improving the
standards of local rice is feasible and
desirable, but it may not be competitive for
local rice mills Compounded by the issue of
grading and uniform rice varieties from local
farmers
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Table International rice prices relative to
domestic rice prices in Nigeria 1993 to 2001
How competitive is local rice ?
The table compares the domestic prices of paddy
and milled rice in Nigeria with the international
prices of the worst grade rice (white broken
rice, Thai A1 super, f.o.b Bangkok). If we assume
that exchange rates in Nigeria reflect market
forces (which is unlikely especially in 1993),
then Nigerian domestic rice is expensive to
produce (compare paddy prices) and expensive to
process (milled rice) and so cannot compete in
the international market.
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Optimal distribution in domestic rice trade

• Domestic rice markets are shrinking due to rice
  imports
• The closer the demand market to the supply zone,
  the less optimal it becomes with increase in
  transport cost
• The marginal cost of non-optimal supply of rice
  from small processing mills increases with
  increase in transport cost

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Effect of policy Inconsistency on domestic rice
production

• Pre ban period 1960 1976
• Period of crisis (import license, etc) 1976
  1985
• Period of outright ban 1986 1994
• Period of tariff 1995 2005

Domestic self sufficiency in Nigerian rice
production was adversely affected during the
crisis years of 1977 1985 Self sufficiency in
rice production is still a major challenge for
Nigeria to date
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Conclusions

• The demand for local rice in Nigeria is far less
  than the demand for imported rice
• Local rice production costs are high and
  uncompetitive
• Improving the post harvest quality of domestic
  rice is critical but can only be achieved if
  production costs are low
• Local transport costs for rice output are sticky
  downwards at least in nominal terms

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Policy Interventions

• Intensify rice production and increase on-farm
  yield to reduce production costs
• Improve quality and standard of rice and reduce
  post harvest losses
• Facilitate rural enterprises and businesses
  especially in small mills to sustain
  productivity, incomes and employment
• Strengthen human and institutional capacities to
  produce, process and market rice competitively in
  Nigeria

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Thank you