UNEP Country Project on Trade Liberalisation in the Agriculture Sector and the Environment

1. UNEP Country Project on Trade Liberalisation in the Agriculture Sector and the Environment The rice sector in Nigeria 19 February 2003 Geneva Project Leader: Tunji Akande Professor, Nigerian Institute of Social and Economic Research (NISER), Ibadan, Nigeria 1

2. Trade liberalization in the Nigerian rice sector Background Nigeria is Sub-Saharan Africa’s largest consumer, producer and importer of rice. Thanks to the population of about 130 million people.

3. Trade liberalization in the Nigerian rice sector Background (cont’d) Per capita consumption is 23kg/annum

4. Trade liberalization in the Nigerian rice sector Background (cont’d) Rice is the fastest growing commodity in Nigeria’s food basket. 100% Sorghum 80% Millet 60% Maize Rice (Milled Equivalent) 40% Yams 20% Cassava 0% 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997

5. Trade liberalization in the Nigerian rice sector • Area under rice is 1.6 million ha and increases at • 7.9% per annum • Paddy rice output in 2000 is about 2.9 million • tons

6. Trade liberalization in the Nigerian rice sector Background (cont’d) Yield is low: 1.7 tons/ha 3 2.5 2 (tons)/ha 1.5 1 0.5 0 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 Source: PCU

7. Trade liberalization in the Nigerian rice sector Rice imports averaged about 300,000 in 1995 but now about 1 million metric tons since 2000 Expenditure on rice imports is US$600 million in 2001

8. Trade liberalization in the Nigerian rice sector Background(Cont’d) The importance of rice in the Nigerian economy may be summarised as follows: • A major food commodity with increasing demand (self-sufficiency and food security are social goals) • An import-substitution crop capable of eliminating imports if domestic production expands

9. Trade liberalization in the Nigerian rice sector Background (Cont’d) • Employment for farmers, young school leavers, processors, millers, transporters and other handlers. • A raw material for agro-allied firms; industrial demand shortages stand at about 500,000 metric tons. • Nigeria has a huge potential for export to the West and Central African sub regions.

10. Trade liberalization in the Nigerian rice sector Project Approach and Process • The national institution hosting the study is the Nigerian Institute of Social and Economic Research (NISER) • NISER is Nigeria’s foremost policy research institute • Founded in 1950 • Involved in social and economic research in the following areas: • Agriculture and Rural Development • Technology Development • Economic Development • Human Resources Development

11. Trade liberalization in the Nigerian rice sector Project Approach and Process (Cont’d) • Physical Development • Social Development • Political Development • Macroeconomic and Strategic Modelling • Rural Policy analysis and Management • Transport Policy Analysis • Indigenous Knowledge System

12. Trade liberalization in the Nigerian rice sector Project Approach and Process (Cont’d) • Each is a department or unit and has full complement of required disciplines. The knowledge base available at NISER permits interdisciplinary research activities. NISER is headed by a Director-General.

13. Trade liberalization in the Nigerian rice sector Project Team • Tunji Akande – Professor/Agricultural Economist, Agriculture and Rural Development Policy Analysis – Project Leader • Femi Olokesusi – Professor, Environment and Natural Resource Management • Ms Bola Akanji – Snr. Research Fellow, Agricultural Economist, Rural Sociology, Gender Analysis • Godwin Akpokodje – Research Fellow, Economist, Quantitative Analysis and Modelling • Jire Adeoye – Reader, Soil Scientist, (University of Ibadan/IITA)

14. Trade liberalization in the Nigerian rice sector Stakeholders’ Approach Project Steering Committee Members: NISER (Chair of the committee) West African Rice Development Association (WARDA) University of Agriculture, Abeokuta Premier Seeds, Zaria Federal Ministry of Environment Federal Ministry of Agriculture and Rural Development Federal Ministry of Commerce Central Bank of Nigeria National Planning Commission National Cereal Research Institute Institute of Agricultural Research and Training Rice Producers Association of Nigeria Rice Millers Association of Nigeria

15. Trade liberalization in the Nigerian rice sector Project objectives • Develop in-country methodologies • Characterize the Nigerian rice sector (production, processing, marketing, consumption and policy) • Conduct integrated assessments of trade liberalisation for the rice sector • Develop policy packages • Provide financial implications of policy package • Identify and propose agencies and institutions to carry out the implementation. • Develop capacity for analysing and implementing environment-friendly policies and programmes

16. Trade liberalization in the Nigerian rice sector Development of In-country Methodology • Methodology developed is both participatory and inclusive, as all stakeholders made an input. This is to ensure that the findings and recommendations emanating from the project have wide acceptance and implementation in policy cycles. • Interactions with stakeholders are in the form of meetings, consultations and workshops.

17. Trade liberalization in the Nigerian rice sector Development of In-country Methodology • A primary survey was conducted in 3 rice-producing regions, leading to:- • Technical analysis of soil, water and physical environment • Economic, social and environmental impact analysis • Soil analysis indicates the concentration of chemical residues and effects on biodiversity of rice producing areas • Socio-economic analysis focuses on the economics of rice production, processing, trade and consumption; and considers issues of profitability, household food, self-sufficiency, enterprise combination, etc

18. Trade liberalization in the Nigerian rice sector Integrated Assessment of Impacts of Trade Liberalization and WTO AoA • Trade-related policies affecting the rice sector: • Trade policy (tariff, quantitative restrictions, import license, outright bans, establishment/abolition of commodity boards, etc)

19. Trade liberalization in the Nigerian rice sector Integrated Assessment of Impacts of Trade Liberalization and WTO AoA • Exchange rate policy-overvaluation of domestic currency prior to liberalisation measures; • Floating exchange rate since liberalisation • Fiscal policy/government investment-Direct public spending; provision of credit by public agencies; direct credit by Central Bank of Nigeria; and several financial and trade-related assistance

20. Trade liberalization in the Nigerian rice sector Analytical tools selected are: • Gross Margin Analysis (profitability) • Summary Statistics (frequencies, means, standard deviations, etc) • Policy regime analysis • Regression Analysis

21. Trade liberalization in the Nigerian rice sector Environmental Impacts

22. Trade liberalization in the Nigerian rice sector Environmental Impacts (contd)

23. Trade liberalization in the Nigerian rice sector Environmental Impacts (contd)

24. Trade liberalization in the Nigerian rice sector Environmental Impacts (contd)

25. Trade liberalization in the Nigerian rice sector Environmental Impacts Main negative environmental impacts identified • Increased land conversion to rice farms and expansion into marginal lands • Deforestation and land degradation • Loss of bio-diversity • Emission of air pollutants • Salinization and soil nutrient degradation • Contribution to greenhouse gases and climate change • Human health effects

26. Trade liberalization in the Nigerian rice sector Social and Economic Impacts Positive Impact • Generates substantial income to rice farmers • Rice production is highly profitable • Increasing rate of commercialization among smallholder producers • Savings in foreign exchange as local production substitute for imports

27. Trade liberalization in the Nigerian rice sector Social and Economic Impacts (Contd) • Competitive production and efficiency as local rice producers compete with import • Employment opportunities for school leavers • Stem rural-urban migration • Poverty reduction • Improved nutrition

28. Trade liberalization in the Nigerian rice sector Social and Economic Impacts (Contd) Negative Impact • Imports dampens local production • Huge import expenditure • Health problems • Gender disparity

29. Trade liberalization in the Nigerian rice sector Valuation of the effects This is at the conceptual stage

30. Trade liberalization in the Nigerian rice sector Combined Environmental, Economic and Social Costs • Yet to be conducted satisfactorily

31. Emerging policy issues The need for distributional equity in the benefits of trade liberalization in the rice sector The need to explore alternative uses for rice rather than human consumption Trade liberalization in the Nigerian rice sector Development of Policy Package

32. The need to address the structural and technological deficiencies in rice production systems The need to combat diseases asociated with rice production Trade liberalization in the Nigerian rice sector Development of Policy Package

33. Need to promote rice production as a strategy for poverty alleviation Further articulation and implementation challenges will be examined Trade liberalization in the Nigerian rice sector Development of Policy Package

34. Trade liberalization in the Nigerian rice sector Project Experience: Main Conclusions and Steps Forward • …Rice is, perhaps, the commodity driving the Nigerian food economy today • Nigeria plans to double output by 2005! • 100% tariff has raised the price of rice by 60% since December, 2002

35. Trade liberalization in the Nigerian rice sector Project Experience: Main Conclusions and Steps Forward • …Rice production is associated with costs and benefits • Benefits include food supply, income, employment, etc. • Costs are associated with environmental degradation