Border closure

By AYOOLA OLAOLUWA

The about N4 trillion invested in the entire rice value chain production across the country is under threat as the prices of rice continued to tumble since the reopening of borders, Business Hallmark findings can reveal.
It would be recalled that the Central Bank of Nigeria (CBN), largely on the prompting of the current administration, had instituted a special intervention fund for rice farmers and millers in the country under the Anchor Borrowers Programme (ABP) to stimulate economic growth.
Available data indicates that while the CBN had disbursed about N400billion till date, rice millers under the aegis of Rice Processors Association of Nigeria (RPAN) have invested about N3.4 trillion, with farmers, supported by their respective state governments, making up the balance of N200billion.
However, the massive investments, it was gathered, have failed to achieve remarkable impact. To worsen the already precarious situation, the continued fall in the prices of rice, both local and imported, may lead to the collapse of the local rice production industry.
A week-long survey of prices of rice by BH in selected commodities markets in Lagos, namely Agege, Daleko, Ile-Epo and Ogba between January 27 and February 2, indicate a significant reduction in the prices of foreign-made rice. The development, checks revealed, has forced sellers of locally-made rice to drastically reduce their prices.
For instance, a 50kg bag of Caprice, Royal Stallion, Tomato and Caprice, all foreign rice, now sell for N23,500, N24,000, N24,000 and N24,500, respectively. Just two months ago, prices of the foreign brands range between N27,000 and N32,000, depending on the market.
Likewise, prices of locally produced rice have recorded significant drop. A 50kg bag of Mama’s Pride by Olam Nigeria, sells for an average of N22,700, as against N29,000 it sold in November 2020. While a 10kg size of Mama Gold rice sells for an average of N4,200.
Prices of other locally produced rice on average are: Mama’s Choice N22,500, Big Bull N23,700, Royal Naija N18,200, Labana N21,500 and Three Brothers N22, 400. Meanwhile, in November 2020, our correspondent bought the same 50kg bag of Mama’s Choice for N29,500.
Some rice traders, who spoke to our correspondent on the crash in the prices of rice, attributed it to the recent #EndSARS protests and the reopening of land borders across the country by the Federal Government.
A trader at the Agege Market, Alhaja Islat Bajela, said that since the nation’s land borders were reopened in December 2020, imported rice has continued to flood the market, forcing a massive crash in the prices of the commodity.
“Before now, we were selling a bag of imported rice from between N29,000 and N35,000 depending on the brand and quality, while locally rice was sold for between N27,000 and N31,000. That was the period when a Derica measure of foreign rice was sold for between N450/N550 and local rice N300 and N400.
“But immediately the #EndSARS protest began, we noticed a downward trend in the prices of foreign rice. At a point during the protest, a 50kg bag was sold for as low as N16,000”, Alhaja Bajela disclosed.
BH reliably gathered that at the peak of the EndSARS protest, security operatives manning the nation’s numerous borders, comprising men of the Nigerian Customs Service (NCS), the Police, Department of State Security (DSS) and the Nigerian Army (NA), all fled their posts at the borders after facing consistent attacks from protesters, leading to the borders to be largely unmanned.
Smugglers soon after capitalised on this, importing millions of tons of duty free rice and other banned products into the country. The development led to the first fall in the prices of food items, particularly rice in the market, with a bag selling for as low as N16,000.
However, after the EndSARS protest, security personnel, though on a smaller scale, returned to the borders. This, according to a source in the Customs Service, resulted in the reduction of smuggled goods been brought into the country.
Prices of rice soon went back to between N26,000 and N29,000. But with the reopening of borders, prices of foreign rice have now crashed below the N25,000 mark. Unable to cope with the stiff competition and rising stocks, local rice producers were forced to bring down the price of their products.
Despite the drastic reduction, findings suggest that they are fighting a lost battle. Owing to the low quality of most locally produced rice, Nigerians now prefer the more polished and relatively cheaper foreign brands.
In order to be competitive, local producers are daily crashing the price of their products, thereby recording huge losses in the process. Checks by our corresponding revealed that some brands of local rice now sell for as low as N17,000.
The Director-General of Rice Processors Association of Nigeria (RPAN), Andy Ekwelem, warned that if the trend continues, many farmers and millers would soon be out of job. He said that apart from job losses, the hundreds of billions of naira already invested in the sector could be lost.
The RPAN boss argued that unless the federal government tackles the rising importation of foreign rice into the country, the little gains recorded in local rice value chain initiative could be lost.
While attributing the gains made in the subsector in the last few years to the support and interventions of the CBN, the RPAN DG noted that apart from the over N3.4 trillion already invested in the entire rice value chain production across the country, the rice value chain sub sector had engaged about 13 million Nigerians on direct employment.
“We have said it many times on the need for government to criminalise sales of foreign rice in the markets and supermarkets. Rice is number one on the list of prohibited products in which CBN places forex restriction on.
“It is assumed that any rice you see in this country now, in the markets, shops and even in your homes that is not Nigerian made rice, it is smuggled into the country. The country is losing revenue because these smugglers are not paying the right duties to bring the rice into the country and this ugly development is killing our economy.
“We want a law that will empower law enforcement agencies to go to markets and shops to arrest anyone found with foreign rice because their action amounts to economic sabotage. When that is done, people will be discouraged from buying from these people that smuggled rice into the country. We need to take drastic measures against smugglers as well as those selling the products.
“Smuggling is taking a toll on rice value chain. The economy is in danger. If not well tackled, there will be job loss, criminality will increase and the entire value chain will collapse,” Ekwelem stated.
Meanwhile, findings revealed that it is not only the rice scheme of the CBN’s ABP that is threatened. For instance, maize farmers who participated in the ABP credit facilities for the first time in 2019, have not been able to repay the N5.4billion facility granted to them by the CBN owing to the effects of Covid19 pandemic.
According to the President of Maize Association of Nigeria (MAAN), Dr. Bello Abubakar-Annur, about N5.4 billion was advanced to the farmers under MAAN but no repayment had been concluded since the Covid19 disruption around March 2020.
He lamented that Covid19 dealt a devastating blow to farmers’ productivity during planting seasons, off-taking logistics and repayment plans.
Financial experts who spoke to BH warned that the inability to recoup the loans could spell doom for further deepening of sustainable agricultural financing and food security objectives as envisaged by the ABP’s formulators.