Rice policy criticism: Are stakeholders treading the right path?

Few weeks after the Federal Government introduced its new rice policy of backward integration, some stakeholders in the sector have come out with information allegedly aimed at possibly reversing the initiative that seeks to make Nigeria self-sufficient in rice production within, possibly, two years. OSA VICTOR OBAYAGBONA examines the stakeholders’ criticism and the implication on rice production.

Recently in Abuja, the Nigerian Federal Capital, Tunji Owoeye, president, Nigerian Rice Investors Group and managing director of Elephant Group, led the association’s members to addressed the press and evaluate the Federal Government new backward integration initiative on rice production.

At the meeting, Owoeye revealed that some stakeholders in the sector were against the initiative, saying that the views being brought forward by these stakeholders were false and unfair to government officials who had worked hard to midwife the policy.

According to Owoeye, “most Nigerians are unaware that time was when we depended entirely on imported rice. Government examined past efforts to restore self-sufficiency in rice production that failed before coming out with the new revolutionary policy.

“The critical thing is protecting local investors to the point they can reasonably stand on their feet. The government developed the new rice policy based on what is produced presently against the shortfalls, which were factored to further encourage local investors against those whose core interest is importing and selling locally without the mind of contributing to the national dream of self-sufficiency.”

Although the critics claim to be genuinely concerned about the initiative derailing, over one defect or another of the implementation instrument, the truth is that they are driven by insatiable greed and total disregard for constituted authorities, he said.

The rice policy, unarguably, is the initiative of government and not at the order of stakeholders. The Federal Government decided to use fiscal policy to help businesses already engaged in and others interested in growing, milling and packaging rice locally to end the perennial importation of the product. Government set the parameters – the best possible completion time frame, the incentives and who best could be brought in with the assurance that they would perform.

The Federal Ministry of Agriculture and Rural Development, as the project coordinator, invited stakeholders principally to share with them the dream and seriousness government attached to the policy, but not to determine the basics such as the volume of rice that would enjoy import waivers and quota allocation qualifications, according to Owoeye.

These critics argue that the indiscriminate granting of waivers in the guise of backward integration may promote smuggling and therefore make the policy counterproductive.

However, the quota allocations based on the supply gap of import grade rice of 1.5 million metric tons, Owoeye said, were made to both existing rice millers and new investors in equity.

“Existing millers and others with expressed interests submitted Domestic Rice Production Plan (DRPP), and based on the submissions, a total of 1.3 million metric tons of rice import quotas was issued to 25 qualifying millers at the preferential levy of 20 percent and duty of 10 per cent. The remainder 0.2 million metric tons of rice imports will be at the higher levy of 60 per cent and duty of 10 percent,” Owoeye said.

Stakeholders did not know why government asked rice investors to give their DRPP, he said. Thereafter, a committee went round to verify the claims in terms of farm holdings, and so on, and did not inform the stakeholders that they were coming to investigate. In some cases, the committee got to the sites and called the concerned party that the inspectors were at their premises.

“We believe the market is big enough for all genuine investors in the rice market so that there is no point dissipating energy on frivolities and wild allegations,” Owoeye said, but added that he wondered why anyone could sincerely allege that some quota beneficiaries were “already trading it to interested buyers at between 60 percent to 80 percent levy, having got the same at 20 percent levy.”

The allegation implies that the 60 percent levy is lower than what is charged as penalty for otherwise, why would anyone pay above that to buy from those who got the waiver, the Group asked.

“Rice smuggling into Nigeria is not contentious because it is common knowledge, but to allude any complexity of the policy is subversive and clear indication that some interests are trying to persecute others and would stop at nothing to achieve the unholy objective,’’ he said.

Furthermore, the outcry over giving businesses that expressed interests in investing in rice production waivers as those who have made substantial investments are not well founded, he said.

“Considered on the surface, the government could be faulted but on close review, it is certain government wants to recruit and expand the investors’ base and was not whimsical.

“President Goodluck Jonathan approved the backward integration policy on rice in May and the implementation is starting just this December 2014. I can say authoritatively that government did not only ask interested parties to submit their DRPP but demanded also their production plans, including establishing staple crop processing zones (SCPZs) that are intended to encourage the clustering of food processing industries in proximity to raw materials and end markets,” he said.

Currently, 16 major investors have farms and or established milling plants with cumulative capacity of about 1 million metric tons by 2016, while the rice policy estimates additional 2.7 million metric tons produced locally by 2016. It was obvious to the government that more reliable investors must be recruited with secure commitments to attain set targets

“To ensure government is not giving cheap money to opportunistic businesses, the waiver requires that 30 percent of the quota fee be paid into a participating bank. In the event the beneficiary fails to meet the terms, the ministry of agriculture will call on the bond fee, which means that government would take it over and use it to develop and advance the policy to the logical conclusion.

“What government has been doing in the last two to three years is to get across the value chain to get an investment plan in the rice industry, and inspections were concluded based on the claims. Government has given six months to those who expressed interests to start tangible and serious work. The process is tamper proof and measurable. It is the first time government is doing something right in the rice sector,” the Group noted.

Imploring persons who feel displeased not to derail the policy with internal squabbles, the Group gave assurance that all issues will be addressed since the policy was in the early stage.

“To a large extent, government gave allocations to encourage big investors who are putting down substantial amounts of money. There is nowhere on earth that major investors are not wooed and that is what the government has done, but I can tell anyone who cares to listen that government also took adequate precautions in case of anyone defaulting,” Owoeye said

He therefore told the stakeholders to worry over the 1.2 million metric tons lost between the government’s estimated 1.5 million metric tons imports and what can safely be assumed allotted the illegally operators.

The investors who feel bitter that others who have not much on ground received high allocations know for sure that the in-coming players plan to exceed the current investors, Owoeye said.

“They need not hide their fear of being overtaken by the new-comers but should join hands with other stakeholders to ensure rice smugglers are put out of business because until illegal traders are caught and caged, honest investors are in danger.

“The reason is simple and applies to all industries: until Nigerian growers and millers reach maturity and efficiency levels, the international traditional growers still hold the ace and can sink us unless we are fairly protected,” he said.

Nigeria’s 170 million people constitute the largest market in Africa, and in the consumer and commodity markets, the stakes are high. To dominate the largest market South of the Equator is serious and sometimes brutal business, he said.

Government wants the Nigerian rice industry to explode similar to what happened in the telephone industry in recent years, he said, noting that the potential has been there for decades but the reality has just dawned on the government.

“Anyone capable of investing huge has immense business opportunity and government is saying everyone is welcome on board. Investors who have made some input should not cry blue murder when there is none. The Nigerian rice market (local productions) can accommodate all serious investors and that is enough guarantees,” according to the Group.

Michael Aondoakaa, former minister of justice and attorney general of the federation, and secretary, Rice Processors Association of Nigeria (RIPAN), emphasised that prior to the emergence of President Goodluck Jonathan’s administration, nobody had ever wondered who got what quota.

“The truth is that many have had witnessed the old system where some highly connected people influenced the rice quota allocation. This administration made sure it went to rice farmers with visible investments,” said Aondoakaa.

The rice policy of the present administration is visible for all to see, Owoeye said, adding: “if you travel through Zamfara, Niger, Benue, Sokoto, and many other states in the country, you will see vast plantations of rice in the last two year.

‘’We have also seen some of our members who were traders make huge investments in local rice production. We have seen increase in employment and value creation in the rice sector.’’

The Federal Government has provided rice investors with improved seedling and that is the reason rice production is getting better. On his part, Abubakar Mohammed, president, Rice Millers, Importers and Distributors’ Association of Nigeria, said five years ago, there was only one processing mill in Nigeria but the number grew to 24 by 2014, just as he stated that before President Goodluck Jonathan’s administration, rice paddy produced from Nigeria was one of the worst in the world. But this had changed, according to him.

“We process 800,000 tons of paddy rice annually, and the government is putting measures in place to produce additional 360,000 tons. All these happened with the help of President Goodluck Jonathan and the minister of agriculture and rural development, Akinwunmi Adesina,” he said.