Efforts to foster sustainable rice production gain traction
Nigeria has long relied on imports to help supply its significant rice demand; however, efforts to support small-scale famers through training and improved access to credit are expected to boost domestic production and the overall performance of the agriculture industry.
To help meet national demand of around 5.2m tonnes in 2016, Nigeria imported 2.3m tonnes of rice last year, according to the UN’s Food and Agricultural Organisation (FAO). This heavy reliance on external sources has seen Nigeria – currently the world’s second-largest importer of the grain after China – import around 17m tonnes of rice in the last five years, with the country spending an average of $5m per day on shipments of the grain, Audu Ogbeh, minister of agriculture and rural development, told international media earlier this year.
In order to reduce the country’s trade bill and improve self-sufficiency, the government has been working to roll out new training programmes and cultivation techniques to improve yields, as well as lowering the costs of access to credit and equipment.
Sustaining the nation
The most recent move came in late March, when the FAO started training 300 farmers across Nigeria in paddy production technology and seed production.
The scheme is being conducted under the Partnership for Sustainable Rice Systems Development in Sub-Saharan Africa – an initiative being pursued by both the FAO and the Côte d’Ivoire-based research organisation the Africa Rice Centre.
The states of Ekiti, Edo, Anambra, Abia, Nasarawa and Jigawa have been chosen for the project, with 50 farmers from each region to benefit from demonstration plots that will be established to model best practices in rice farming.
To reduce associated costs in rice farming the World Bank also announced earlier this month that it would be establishing equipment-hire centres for rice and tomato farmers in Plateau State, with farmers only required to pay for 35% of the cost of the hire.
The plan will be part of the bank’s third national FADAMA project, a broader programme aimed at reducing poverty and increasing sustainability among farmers.
The FADAMA programme has already helped rice producers in Plateau State, providing N99m ($321,000) worth of funding to 11 rain-fed rice production clusters.
The World Bank’s International Development Agency also confirmed further support for the sector in March, when it announced it would be extending a $200m loan with a maturity of 25 years to Nigeria. The credit aims to tackle limited access to supply chains among the nation’s farmers, as well as low levels of productivity and technology uptake.
Cheap government loans
Another way the government is trying to reduce its high import bill is through the Anchor Borrower’s Programme (ABP), a scheme created by the Central Bank of Nigeria (CBN) that aims to improve the commercial sustainability of smallholder rice and wheat farmers.
Introduced as a pilot initiative in late 2015, the ABP encourages domestic production by facilitating access to financing and supplies such as tractors and fertilisers, while also improving links between smallholder producers and anchor companies involved in processing.
Under the scheme, farmers with at least 1 ha of land qualify for loans at 9%, well below the benchmark interest rate of 14%. The CBN is funding the programme using N40bn ($130m) allocated from its N220bn ($720m) Micro, Small and Medium Enterprise Development Fund.
The ABP has shown initial signs of success, with total unmilled rice output growing 17.4% between 2014 and 2016 to 7.85m tonnes, according to the National Bureau of Statistics (NBS).
“Government policies are rightfully targeting self-sufficiency; and the recent strong improvements may indicate that, with steadfast efforts, Nigeria would be well on its way to be able to provide for itself,” Mukul Mathur, country head for Olam Nigeria, told OBG.
The price of importation
Substantial demand for locally produced rice already exists and could grow further as imported rice prices have continued to rise at a rapid pace in recent years.
Since the CBN implemented restrictions in 2015 on the amount of foreign capital that can be spent on certain imports, of which rice is one, the price of the grain has more than doubled.
According to the NBS, the average price of 1 kg of high-quality imported rice in March stood at N268.64 ($0.87), representing a month-on-month increase of 1.98% and year-on-year growth of 55%.
Coupled with the managed float of the naira and its related depreciation, this has fed into a broader rise in the food sub-index, which as of March stood at 18.4%, up from 12.7% in March 2016 and 9.4% the year before.