Rice farmers blame govt waivers, others for mills shutdowns, warn of long term danger

Given multi-billion-dollar investments in rice mills meant  to bolster local processing and production, many mills are  shutting down, while others are barely going by and producing below capacity, as a result of debilitating conditions and factors that negate their survival.

Nigeria is noted as Africa’s  major  rice producer and one of the world’s leading producers, but the reality is that only slightly more than half of the rice consumed in Nigeria is produced locally. This has resulted in  a supply deficit of approximately three million metric tonnes.

The irony is uncanny given that the price of locally produced rice is supposed to be cheaper and more affordable but  the price has increased tremendously, even beyond the reach of average Nigerians, with the majority preferring foreign alternatives, which are not only more affordable, but mostly of better quality, better processed and packaged, although less healthy, according to experts.

As of   May 5, 2025, Nigeria, according to Business Hallmark’s investigations, has 268 rice mills. A large number of these rice mills are  one man business (sole proprietorships) while some are affiliates of much bigger companies.

Kano State has the highest number  with more than 68 integrated and medium-sized rice mills, trailed by Kaduna State with 19 and Ebonyi State with 16, Kebbi has two (Labana and WACOT) large integrated rice mills, among others.

Massive Investment in Danger 

WACOT Rice Mill in Kebbi State is said to have an established capacity of 120,000 metric tonnes believed to be a multimillion-dollar (N10 billion) investment. “It has the capacity to  become the largest in Africa if the investment doubles the capacity to 240,000 metric tonnes,” says Prof. Ropo Atobami, an agricultural economist.

Atobami told Business Hallmark that it’s not easy to build these mills. These are big investments, large  mills in Kano, such as Umza and Challawa,  gulped  billions of naira. At the time of its construction, the privately held, state-of-the-art Gerawa Rice Mills in Kano cost roughly N15 billion.

“In Nasrawa State, Olam Nigeria Ltd invested over $111 million in mechanised rice farming and processing. But some of these facilities are facing the biggest challenges for survival.”

Findings showed that  in Kebbi State, a large number of mills, especially the smaller ones, have been forced to close shop as a result of challenging operational environment and government policies.

Even the  bigger ones, including WACOT, Labana, Lolo, Rayhaan, Sajo and others, are not operating at optimum capacity but  only partially working.

These mills attribute their difficulties to  multiple challenges  posed by the federal government’s policy on rice importation, smuggling operations, high paddy prices, a  decline in the price of milled rice, farmers’ refusal to return to the farms as a result of rising insecurity, and the high expense of running the mills on a daily basis.

The general manager of Labana Rice Mill, one of the largest mills in the country, Alhassan Yusuf, in a recent interview noted that in spite of the daunting challenges, these millers have refused to give up because  of optimism  that the problems would soon fizzle out.

It was learnt that millers had spent  enormously  in the three categories of small, medium and large-scale rice production, with costs running into billions of naira.

It is also observed  that setting up rice mills is no child’s play, as  setting up a medium rice mill of 8 to 12 tonnes per hour and a large-scale rice mill of 16 tonnes – 32 tonnes per hour in Nigeria –straddles  between N7 billion and N20 billion in investment.

Recall that late President Muhammad Buhari wanted to  ensure self-sufficiency in rice by encouraging Nigerians to go to the farm, and at the same time supporting indigenous entrepreneurs to build and uptake all the rice paddy from local farmers.

Policy Reversal 

But findings showed that  the government contributed  largely to the ongoing challenges facing the rice industry  in the country through  its selective policy by giving licences to only two mills, the Imota Rice Mill in Lagos and BUA to import brown rice into the country from India. But it’s believed that   the rice they are bringing had expired long ago in India as a result of rice glut in that country.

Yusuf noted that the government should understand that such a move would badly affect and discourage the efforts of the country’s rice industry.

“The implication of all these is that farmers are now not getting value for what they produced from their farms. Because of this, they are now afraid of going to the farms, thinking of the advantage of spending money on fertiliser, fuel, labour and other things and at the end sell their products cheaply and at a loss? Many of them are now discouraged.

“These are the areas where millers are incurring losses; hence they are now finding it difficult to cope.”

Commenting on  the losses incurred by millers he noted that “It is difficult to quote figures, but the amount put together is in billions of naira. Imagine all the major rice mills that produce more than 100 trailers at a prevailing cost of rice paddy, which was going for as high as N700/kg being forced to sell at a price that can only be obtained when the paddy is bought at N400.

“So, for every 50kg bag, a rice mill has been losing between N15,000 and N20,000. The worse is the fact that the rice mills are not selling because Nigerians prefer foreign rice, not knowing that most of the smuggled rice is expired but re-bagged for that purpose.”

Government had allowed limited import of rice to cushion the price spiral in 2024, which reached N120,000 per 50kg bag, thus worsening food scarcity and hardship.

Findings also revealed that smuggling  is causing millers huge losses.

“Smuggling is the miller’s major problem, but there is the assurance that the government is doing something about it. The Office of the National Security Adviser (NSA) is doing something to curtail it. We heard that some arrests are being made. We are hopeful that these things would be put to check to safeguard the losses being incurred by the millers,” Yusuf said.

One of the operators of a  small rice mill in Bacita,  Anjorin Oniwala , said that after the withdrawal of fuel subsidy, rice milling operations had no choice but to rely on diesel generators due to unreliable electricity supply. He complained that the rising diesel price, which nearly doubled between 2023 and 2025, increased production cost.

He explained, “Let me tell you at a small-scale milling status, a miller using diesel engines and powered by a generator spends an average of N700,000 per month on energy, which is  unsustainable for a small business operator. The high cost of power drove the price of milled rice to a very high cost level, while many others have no option but to close down their mills. The few that remained in business were operating below capacity due to inconsistent power supply, high cost of power, importation or smuggling; and to some extent, multiple bank loans.”

Teething Issues

Findings show that as of 2023, the country’s local rice production reached approximately 8.9 million metric tonnes of paddy rice, the highest since 2010, which translates to about 5.2 million metric tonnes of milled rice, with domestic consumption estimated at 7.7 million metric tonnes, leaving a considerable supply deficit. An estimated 3.6 million metric tonnes of the commodity were imported to block the deficit gap.

According to a report by the Foreign Agricultural Service (FAS), while Nigeria’s milled rice domestic consumption was put at approximately 7.70 million metric tonnes in 2023, with a projected growth rate of 2.16 per cent for this year, the consumption rate was projected to increase by nine per cent to 8.3 million tons between this year and 2026.

The ugly trend, which has contributed to hunger, occasioned by the general economic situation in the country, was largely blamed on production challenges. The AFEX Commodities Exchange in its 2024 Crop Production Report for rice in Nigeria, for instance, projected a 2.6 per cent decline in production, resulting in a total output of approximately 8.1 million metric tons from the 9.1 million produced in 2023.

The decline, according to the report, was primarily driven by the high cost of fertilisers, leading to reduced yields, prompting many farmers to shift to alternative crops such as sesame and sorghum, which require less fertiliser and are also more cost-effective to cultivate.

Equally, a report by the United States Department of Agriculture (USDA), had earlier forecast a decrease in Nigeria’s rice production owing to higher fertiliser prices, reduced access to farmlands in conflict-prone areas and an increase in unrecorded imports of cheaper paddy, which made local paddy less competitive.

Another factor, according to industry analysts, is the shortage of paddy rice. It was gathered that millers were forced to import raw rice, but the decision of the Indian government in July 2023, which banned export of non-basmati rice to stabilise domestic prices, further worsened the situation. The ban led to the shutdown of many rice mills in Kano due to a lack of paddy.

The Nigerian rice economy was worth an estimated N2.5 trillion in 2018, growing from N1.1 trillion in 2016, according to KPMG market analysis.

Dr. Feyisayo Oke, an agriculturalist, noted that government must first of all tackle insecurity before it can look holistically in the direction of ensuring self sufficiency in rice production.

“Unless government addresses the issue of insecurity, so that farmers especially in the North can return to farm, any policy come up with by government will not work because ultimately it’s the farmers who go to farms that will produce rice. Will bandits allow them? No!”