Rice is the second most traded cereal crop in the world second only to corn. At the end of 2016, it was recorded that about 480 million metric tonnes of milled rice was produced globally – the volume is expected to increase by around 1% in 2017 1.
Rice production in Asian countries by far dwarves those coming from any other region. Asia accounts for 90% of the rice produced globally and also consumes 90% of that figure. China and India both dominate the production and consumption markets as they together account for approximately 50% of rice grown and consumed in Asia. The markets for production however are by no means limited to just Asian countries as Brazil, the United States, Egypt, Madagascar, and Nigeria, combined account for around 5% of the rice produced globally. In total however, only about 9% of globally produced rice is grown outside Asia and even a smaller 7% is globally traded. 2
On the aspect of consumption, besides the Asian quota, Africa and the Caribbean are progressivly embracing consuming rice as a staple food. Africa’s rice production is shown to have increased by nearly 6% between 1960 and 2007 – a figure that arguably points towards an increase in population as a primary driver, with around half of the rice produced in the region being consumed locally; again a figure that is shown to be growing 3. In Africa the local demand for rice has been outmatched by the local supply and the gap is primarily filled by imports. The reasons for this range from poor crop quality compared with imported stock to poor irrigation practices and planting low yield crops 4. Other than the fact that since 2008 Africa spends something in the region of $4bn annually on rice imports 5, it casts a shadow of poor confidence when the issue of food security in the region arises.
Rice as a food source is known to be especially more popular around the lower income regions and most of the developing world. Rice consumption ranges from between 110kg per annum in SE Asia to just under 45kg per annum in the United States, with all 28 countries of the EU, importing less than half of Nigeria’s annual import. This is shown even more clearly in the statistics of rice imports globally with China and Nigeria, although regional giants of rice production, coming first and second respectively on the importers’ list while the poorer parts of Asia and South America growing rice with the primary aim of local consumption.67
This brings me to the reason why I thought to write this article; what do we stand to gain or lose from being a net importer of rice? (“Net Importer” here means you import more than you export)
The supply chain that gets rice from the farms where it is grown to the tables of the final consumer is one that is indeed quite encompassing. After the farmers harvest their produce – the rice paddy, the stock is sent to millers who would usually mill for free, especially for small and medium scale farmers, and would settle for taking the rice bran which, as a by product of he milling process, contains a majority of the vitamins, minerals, proteins and fatty acids that come with the harvested rice itself. Rice bran itself has its own distinct value chain and its uses range from additives for bread, to breakfast cereals, bran oil and even brewing beer – but that is entirely another chain.8
A ton of rice bran usually makes up about 10% of the weight of the harvested paddy rice and fetches around $135-150 per tonne on the export market. Overall, the millers usually get a good deal for services rendered for free. At the end of the milling process rice losses a good deal of its nutritional value, it leaves the mills and is transferred to processors who parboil the rice saving future nutritional losses 9. Technological advances have allowed us the ability to reinfuse some nutrients back into the grains of rice with additives thereby nutritionally fortifying it. Also the process increases storage life. In this process alone, we have gone through at least four different job specifications: the farmers, the millers, the food processors (fortification and parboiling) and the petro/agrochemical (fertilisers, pesticides, etc) nexus that eventually brings the food additives to the processing facility and the revenue that is involved with special consideration to the workers in the mentioned facilities who at the lowest levels, could earn anywhere between 30-100,000 monthly; jobs.
The next step is moving the processed rice to storage and packaging facilities – the logistics. A 40ft trailer can carry about 44 tonnes of produce. If we import 3MMT of rice this translates to 68,181.81 trips (multiplied by a minimum of three), how much exactly do we lose or how much does it add to the quota we are already working with in terms of paid jobs transporting these goods from farms to processing facilities and finally to retail outlets/wholesale depots and storing them in warehouses?
Note that we have bot considered local production at all in this aspect. A trucker gets paid anywhere from 20,000 per trip depending on the distance he would have to travel; a figure which, should be factored with the frequency pf travel. Finally how much do we lose from knowing that we do not sustain any economically palpable form of competition between organisations; public and private especially regarding how commercial competition fosters growth within the industry? The jobs and revenue sources that have been mentioned are all sources of taxable income from the point of view of a government so it stands to reason that they are protected, while working towards ensuring that the final consumers get the best possible deals.
Agrochemical companies are those to whom we usually turn when we need things like fertilisers and they are the people who we wouldn’t need and jobs that wouldn’t exist locally when we outsource the nearly the entire supply chain. Although the fertiliser industry in Nigeria “works”, it is however, quite messy and under-performing – ironically through government funded subsidy schemes. Local fertilizer production in Nigeria is largely unable to cater to the needs of local demand and the ensuing gap has to be met by imports. Hopefully, this is one situation that will change in the near future.
Other subsectors that could also support jobs and revenue for stakeholders and investors in the agricultural supply chain could also include the seed providers, research to improve and sustain agricultural productivity and also, the advertising and publicity involved in promoting competition and ensuring that the public enjoys the best quality commodity at the fairest prices and finally, government agencies involved in inspection and regulation.
In Asia, rice sells for between $300-500 per tonne, in Africa it gets to the ports at around $500-700 due to inefficiencies and clearance taxes at the ports. At current exchange rates, an imported bag of rice should sell at around N17,500 the addition of taxes and the logistics cost brings it to around 21-25,000. A local bag could sell for as low as 7,500 if we employ similar techniques as the Asians without even bothering to match the volumes they produce 1011.
Per tonne of produce, an imported bag of rice has between $40-$75 added on it as government taxes and logistic costs. Multiplying this by 3MMT that is imported annually, we could be looking at savings of around $.12-$.225bn annually – at least. Off the top of your head, have you any idea what we could do with $200m sent to the governmrnt as taxes? Or the $1.2bn that could be saved annually? Say a few BETTER health care centres? Better schools? Maybe even a “send a Nigerian man to space by 2030” fund. These are some of the things we stand to lose when you buy an imported bag of rice and even worse; a smuggled one.
Making Nigeria better doesn’t have to be so hard you know.