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Government Policies and Competitiveness of Nigerian Rice Economy

This paper examines the government policies and competitiveness of the Nigerian rice economy. It discusses the strengths, weaknesses, constraints, opportunities, and threats in the rice industry and provides recommendations for improvement.

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Government Policies and Competitiveness of Nigerian Rice Economy

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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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