States expand rice operations as Nigeria pushes to cut N356bn import bill
As Nigeria seeks self-sufficiency in rice production and continuous reduction of N356 billion annual import bill, some states in the country are already keying into this project through direct investments in milling plants and creation of enabling environment for private sector investors.
Lagos and Kebbi states have signed a Joint Venture (JV) agreement for the establishment of a modern and commercially viable rice milling complex, which will have the capacity to process and mill 20 tons of rice per hour.
The finished product would be known as ‘Laskeb Rice,’ just as the plant will be located in Lagos.
An informed source said there were plans to bring in a Chinese firm into the partnership, adding that Lagos and Kebbi may soon extend their collaboration to animal husbandry.
BusinessDay was also told by sources close to the deal that the two states had over the past few months worked closely with Access Bank plc and a Mexican farming conglomerate, San Carlos, a company that has the requisite experience and modern technology for processing and milling of rice in commercial quantity.
Experts say this will save Nigeria as much as $3 billion yearly by way of import substitution and help to boost the diversification of the Nigerian economy, especially now that the Federal Government is working on strategies to develop other sectors, as part of its strategy to curtail the country’s dependence on oil.
A memorandum of understanding (MoU), in relation to the establishment and operations of the rice milling complex, was recently signed between the three principal stakeholders, Lagos State government, Kebbi State government and San Carlos Nigeria Limited.
Access Bank, which has served as the lead financial institution to major projects in the country including the Eko Atlantic City, and the proposed Fourth Mainland Bridge, is the lead banker and adviser and would have responsibility of bringing other credible investors into the project.
Sani Dangote, president, Nigeria Agribusiness Group, and vice president of Dangote Group, recently told BusinessDay that government needed to come in various ways to support Nigeria’s quest for self-sufficiency.
“All government needs to do is to give capacity building to farmers and put them in cooperatives and give them seeds When they do these, production will shoot up in Nigeria and rice would be everywhere. The price of rice will become so attractive that Nigerians will start growing rice in their backyard. India, few decades ago, were importing rice but they banned importation of the commodity and gave incentives to farmers. Today they are exporting rice,” Dangote said.
Apart from Lagos and Kebbi, Cross River, Benue, Kano and Kaduna have also been home to new investments in rice.
Early this year, Thai-African Corporation berthed Calabar, Cross River State, for the development of Rice City in the state.
“The land is quite suitable and is also the best location because it is on the highway and is similar to the one Governor Ben Ayade inspected in Thailand,” said Pantipa Dhanagom, managing director of Thai-African Corporation in January.
Ayamelum, Anambra East and West are home to rice production. Anambra has fertile land for rice production Joseph Agro Limited and Ekcel Farms Limited have set aside a $150m to take over Omor Rice Mill in the state.
Investors such as Dangote Group have spread their nets to Kano and Kaduna states.
Nigeria is among top 12 rice-consuming countries in the world and the highest net importer in Africa and the second largest importer of rice in the world. Domestic demand is between 5 to 6.4 million metric tons annually, while the country has a supply gap of N1.5 million metric tonnes before the exit of the last administration.
Nigeria spends an about N356 billion on importation of rice annually, the bulk of which comes from Thailand. In an effort to boost rice production in the country, the Central Bank of Nigeria launched the anchor borrowers’ scheme for rice farmers late last year.
The central bank reserved N40 billion to provide single-interest loans to rice and wheat farmers as part of a government campaign to boost agriculture and reduce food imports, which weigh heavily on the local currency. However, some farmers say Nigeria is still not doing enough to boost rice production.
“I don’t see how Nigeria can be self-sufficient in rice production when you cannot see the government efforts on the farm,” said Prince Oyefeso, chief executive officer of Oyefeso Farm Enterprise.
“The Federal Government often allocates money for rice farmers but it never gets to the farmers. This in turn affects productivity,” Oyefeso said.
Muhammed Augie, a rice and wheat farmer in Kebbi State, said: “If farmers can access the CBN’s loan for rice farmers and get the right inputs, Nigeria can be self-sufficient in rice production. But if farmers cannot access the loan then we cannot be self-sufficient because farmers need money to farm rice.”