Investing in rice production and rice processing
In Nigeria today, some states produce paddy rice in abundance. Some of these states are Enugu, Anambra, Abia, Kebbi, Imo, Kwara, Edo, Ogun, Ondo, Cross River State, and Sokoto, to mention but few. Therefore with serious efforts not only by the government but private companies and individuals, the self-sufficiency policy is achievable.
Rice is consumed in great quantities every day. So, the demand is very high. Of the total projected population figure of 200million, over 70% feed on rice. Because of the high demand, most of what is consumed is imported. This situation should not be allowed to continue forever. These importers must channel their huge resources to establish modern milling plants in Nigeria instead of helping the growth of some foreign countries.
From publications made by the Bureau of Statistics and the Federal Ministry of Finance, the importation figures of rice amounted to about N1tr (One trillion Naira) at the end of 2012. This figure increased to over N2tr (two trillion naira in 2016) and about three N3tr (three trillion naira in 2018. The figure has always been on the increase. Rice takes about 60% of the total import figures.
After the government decided to close the land borders it became clear that large quantities of foreign rice come into the country through the neighbouring ports. It became clear that there was a huge importation of rice through illegal means.
As a result, it became imperative that Nigerians can actually produce enough rice to sustain itself. Nigerians had survived and are gradually adapted to eating of local rice. Famers were happier, local processors of rice came back to life and they all make more money with less competition with imported products. However, the prices of rice, the staple food in the country rose on top of the roof.
A common man can no longer afford the commodity, both locally produced and imported. Currently, a bag of imported rice is as high as between N28, 000 and N30, 000 for a bag of 50kg; while the locally made rice is between N18, 000 and N20, 000. Government must, therefore, sustain the tempo of not allowing massive importation of rice into the country, but have a relaxed but well-controlled system of importation. It is not advisable to impose a total ban on importation of rice without first assessing and establishing exactly what the country can afford to produce; ensure that the country can produce at least 70% of what is needed in this country. There must be a full record of what the country can produce internally with a projection of what farmers can produce at full capacity.
Generally, encouraging local production or adding value to agricultural produce and processing is one of the good things that can happen to this country because the policy will generate more employment opportunities and put more food on the tables.
The Federal Government has also concluded arrangements to roll out a new policy to make loans available at single digit interest rate to farmers with effect from this year.
Corporate organisations such as Coscharis Group have gone into production, processing, and bagging of rice. More individuals are being encouraged to invest in this sector.
Here is how you can venture into the rice processing and packaging business.
Investors can go into rice farming and rice processing or rice milling plant. Rice milling projects will best be sited in these areas where rice is grown in order to reduce the cost of transportation of the paddy. To set up this project, a minimum space of a plot of land is required to dry paddy rice after harvesting.
The components of machines required to set up this project are cleaning facilities, Dehuller, Boiling tank, Polisher, Bagger and other miscellaneous equipment such as wheel barrows, weighing scales.
These machines can be fabricated locally. They can also be imported from Europe and some known Asian companies. Prospective investors would be given details on these machines.
Also, project vehicles and generating sets are essential for the smooth running of this project.
Rice milling could be done on the cottage, small, medium and large-scale, depending on availability of capital and the raw materials – paddy rice. Output could be from 2MT to 150MT per day. Generally, one metric tonne of paddy rice yields about 60kg-70kg of milled rice, depending on milling efficiency, company management practice and the variety of paddy.
In the process of milling well-parboiled rice free of sand, stones, unpleasant odour, with fewer breakages, whole rice, broken rice, and bran are obtained. Whole rice is packed and sold for human consumption. Broken rice is further milled into ‘’Tuwo Shinkafa’’ (a flour meal) while bran is very important input for manufacturing dietary products like rice bran bread, which has been acclaimed for reduction of blood cholesterol, rice bran oil and livestock feeds.
From rice, you can also obtain puffed rice, rice cakes, rice pudding etc.
The husks are used for the production of potassium Hydroxide solution or as fuel for milling plants. It can be seen that virtually all parts of paddy rice are useful.
The likely cost of the total project will not actually be stated safely unless one knows the scope (whether cottage, small, medium or large scale) proposed investor would like to embark upon. However, the cost ranges from N550, 000 – N10.2million from cottage level to N57million for medium size plant and over N500million for large scale. Basic factors to consider in determining the initial cost include the capacity to produce, the source(s) of the machinery, whether to construct or rent, the location, etc.
Therefore to embark on this project, one needs a business plan (feasibility studies), with detailed costing for all the aspects of inputs, before arriving at a likely total estimate.
In conclusion, rice milling; an agro-based business is very profitable (45-55% return on investment) and sustainable. It has a low capital requirement and the technical know-how is not complicated. The machinery and equipment can be sourced locally. The project has a short pay–back period.
It is highly recommended for serious and aggressive promoters, local and state governments and private investors particularly those that are thinking good for this country.
• Uba writes from Global Trust Ventures Limited, Lagos E-mail; email@example.com; 08034494437
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