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Government Policies and Competitiveness of Nigerian Rice Economy by

Government Policies and Competitiveness of Nigerian Rice Economy by. Biyi Daramola Dept of Agric Econs & Ext Federal University of Technology Akure, NIGERIA. Introduction. Nigeria is one of the largest importer of rice in the world It has become a staple food item in Nigeria

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Government Policies and Competitiveness of Nigerian Rice Economy by

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  1. Government Policies and Competitiveness of Nigerian Rice Economyby Biyi Daramola Dept of Agric Econs & Ext Federal University of Technology Akure, NIGERIA

  2. Introduction • Nigeria is one of the largest importer of rice in the world • It has become a staple food item in Nigeria • Importation mainly from Asia, esp. Thailand, India • The volume and value of import is rising • Local rice is depressed by imports • Tariff has inc consumer price but not encouraged rapid domestic production.

  3. Policy Environment • Presidential initiative on rice • 110% duty on importation • R-boxes are being distributed to farmers • 50% duty rebate on brown rice • Donor-supported initiatives e g NSPFS, Rice Alliance, RUSEP, SG 2000, etc • Encouragement of large-scale millers

  4. Map of Nigeria Showing Rice Areas

  5. Sources of Domestic Rice Supply Rainfed Upland Rice 25% Rainfed Lowland Systems 9% 50% Mangrove Swamps Irrigated Systems 16%

  6. Farmers Paddy Rice Traders Parboilers Millers Rice Traders Whole/split Grains Paddy Rice De-stoners Bulk Traders/Packagers Wholesalers Retailers Consumers Rice Value Chain Traditional Rice channel

  7. Estimated cost in $/Mt of De-husked & Parboiled Nigerian Rice Compared with the Imported Product, $ 534/Mt +120% tariff $ 234/Mt no tariff 1.9 Mt 2.4 Mt 1.5 Mt 1.9 Mt 2.9 Mt 2.3 Mt 2.6 Mt 2.3 Mt 1.5 Mt 4.5 Mt 6.3 Mt 2.9 Mt

  8. Strengths • Rice can be grown in all parts of Nigeria • Irrigation facilities already in existence in many states of the federation • Existing high demand for rice as staple food • Profitable business in spite of importation and smuggling • Upland NERICA and other improved varieties available (with some effort)

  9. Weaknesses • Poor infrastructure and weak institutions to support farming • Hostile macroeconomic investment climate (ie interest rate, duties, etc) • Dearth of production inputs (esp fertilizer) • Low productivity from low technology base • Absence of favorable credit & terms

  10. Constraints • High-yielding varieties not being cultivated and under sole-cropping system • Poor husbandry practices • Inappropriate milling and processing technology leading to poor product quality (burnt rice, cooking odor, stones) • Dearth of knowledge about profitability and competitiveness of local rice • Inconsistent government policies (i.e tariffs)

  11. Opportunities • Heavy population that has adopted as rice as staple food • Cultivation possible and popular in every part of country • High consumer price of rice is an incentive • Favorable government disposition and policies • Improved inputs increasingly available

  12. Opportunities Contd • Domestic demand > demand supply gap; and demand growing @ 10% p.a • Tastes better and more nutritious (vitamins) • Processing and packaging services currently being offered • Production cost can be internationally competitive

  13. Threats • Regional disparity in tariffs - Smuggling, cross border trade, etc • Poor infrastructure e g roads, electricity, irrigation (water), machinery. • Weak institutions e g seed service, research institutes, standards and measures, micro-credit, extension, etc • Poor processing technology giving rise low quality milled rice

  14. Threats Contd • Low efficiency & productivity (0.9 – 1.3 ton/ha) • High transport costs • High interest rates on production loans • High labor content and costs • Absence of appropriate parboiling technology and high energy cost • Menace of birds • Generally high production cost

  15. Prospects • Privatization of extension through BDS – embedded ext services – chemical firms • Rice Alliance model to be fine-tuned • Encouragement of FDI in processing e g OLAM & VEETEE. • Presidential Initiative on rice • Policy of outright ban from 2006 and the 50% duty on brown rice • Development of lowland NERICA seeds

  16. Conclusion • Fine-tuning of import substitution strategy for the rice sub-sector • Empirical and evidence-based rice policy through rigorous simulation analysis • Well-coordinated national rice agenda for cultivation and consumption of local rice • Institutional reforms • Repair of infrastructure

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