Insight

How high cost of grains dashes workers’ hope at Christmas as firms foreclose rice gifts

…as 131 trucks of grain rot at Customs yards in Ogun, Lagos

Despite the unveiling of massive pyramids of rice this year, majority of workers will not be going home with any grain of rice as end of the year gift, as some popular companies and banks have ruled out giving the famous gift to thousands of their workforce, friends and customers this Yuletide over high price and other challenges, BAYO AKOMOLAFE reports

Rice is the most popular stable grains in the country and the present administration has been paying much attention to its production since 2016, with sign that the country is gradually becoming self-sufficient in its production. Giving bags of rice as gift to workers and customers during Christmas by corporate organisations such as financial institution, banks and multinational companies have been a long time tradition in Nigeria. Over the years, it is an occasion to show appreciation to loyal customers and employees; but this year, many companies are thinking about alternative gifts for their employees, because of the high and outrageous price of rice.

Issue

Although, the country has been experiencing insurgency and flooding annually, farmers, traders and other stakeholders complain that the magnitude of this year’s flood have eroded the country’s gains in rice production. For instance, thousands of hectares of rice farms in Taraba, Jigawa, Kano, Benue, Niger, Kogi, Kebbi, among other rice producing states up North, were washed away. In the affected states, some of the rice farms were nearing harvest stage when the waters washed them away. Reports from Taraba State revealed that thousands of rice farmers in five local government areas lost their farms to devastating flooding that swept the crop on both sides of River Benue, covering over 250 kilometres from Adamawa to Nasarawa State. It was gathered that the area, which is the hub of rice production, were destroyed by flood. Few days to Christmas, the reverse was the case as scarcity of quality local rice in the market and the price of the existing ones have gone beyond the reach of the common man, as the staple food sold between N38,000 and N47,000, depending on its quality, as the price of 25kilogrammes bag of rice is now the equivalent of the price of a full 50kilogrammes purchased in 2018. Also, it was gathered that the management of some firms have realised that the amount it would spend to purchase a 50-kilogramme bag of the grain at the wholesale price was three times the price of what it was spending in the last six years through their staff cooperative and thrifts societies. For instance, the Lake Rice being jointly produced by Lagos and Kebbi State governments is no longer available in the market. Currently, a worker in one of the manufacturing companies, at Ikeja, Margaret Adeyemi said that her organisation has resolved giving out small electronics appliances to workers and customers instead of rice. Also, a staff in one the banks that does not want his name mentioned explained that virtually all the banks are at crossroads because of the high cost and scarcity of the grain. According the worker, “in our bank, our management is still considering how to bring succour to the workers,” noting that apart from the high price, the banks have been unable to get direct supply from the sellers, while contractors are avoiding extra spending outside their quotation. According to Mrs Esther Ogunleke, a staff of a foam manufacturing company in Ikeja, the staff cooperative was optioning for cartons of noodles for workers. The worker, a member of the cooperative explained that priced of local rice has gone up to between N38,000 and N45,500. She explained that the Mushin, Daleko and Ojuwoye markets in Lagos have low patronage because of the price. Ogunleke explained that some employees have no choice than to accept their fate this year. She blamed the insufficient local rice and flood for the current predicament faced by companies to part with the traditional gift. For instance, Madam Elizabeth Aina, a rice whole seller at Abesan, Lagos, said that it was difficult to bring rice from Idiroko in Ogun State to Lagos because of the stance of Nigeria Customs Service (NCS) officials who will impound the grain. Also, she said that the current exchange rate of naira to the dollar and CFA Franc had almost eroded the profit after bribing police and Customs, saying that one naira was 1.40 CFA. Aina said that there had been slow patronage for the grain because of the high price.

Sabotage

Findings revealed that some rice merchants were forced to relocate to Benin Republic where they enjoy low import tariff to ship the grains from Thailand and other major importers of the grains. It was learnt that the Republic of Benin does not consume parboiled rice; 90 per cent of the imports are for Nigerian markets. Large volumes of the imports are shipped from Thailand, Pakistan, India, United States and Vietnam to Benin Republic for transshipment to Nigeria. For instance, parboiled rice from Thailand is sold at $421 (N151,568) per tonne or $21.05 per 50 kilogrammes at a landing price as at November, 2022, as revealed by the Thai Rice Exporters Association (TREA). It was learnt that the Beninioise government had already licensed some Nigerian companies and several other rice merchants who are importing parboiled rice through Cotonou and Bollore port’s terminals. It was also learnt that some Nigerian firms were given a mandate by the Benin authorities to import between 290 and 300,000 tonnes of parboiled and white rice each at 7 per cent tariff per annum. Other small scale traders where licensed to imports 10,000 tonnes each. Meanwhile, rice consumption in the country has climbed to N1.2billion daily, posing a challenge to suppliers despite the Central Bank of Nigeria (CBN) N55billion anchor borrowers to encourage massive production. It would be recalled that the Rice Processors Association of Nigeria (RPAN), had assured that they have the capacity to meet the country’s demand during and after the yuletide. According to the association, their members had been able to boost local production by 1.8million tonnes apart from the millions of metric tonnes produced annually by small scale millers and local millers. Specifically, the Chairman of the association, Alhaji Mohammed Abubakar said in Abuja that there would be no scarcity of rice during the Christmas period, saying that there would be enough supply of rice in the country.

Dilemma

Investigation by the New Telegraph revealed that after the border closure, the country suddenly experience rise in milled rice production from 4.9million tonnes to 6.7million tonnes. Trouble started in August 2019, when the price of the grain rose up suddenly following the closure of the border. In the first three week of the exercise, price of parboil rice went up by 36.4 per cent from N7,000 to N11,000 at the Idiroko, Seme and Jibya borders, following a new method adopted by the Nigeria Customs Service (NCS) to confiscate the illegal imports warehoused in some border communities. Also, the price of the grain went up by 16.8 per cent from N15, 000 to N18,000 in some markets in Lagos.

Smuggling

Besides, the activities of smugglers and Nigeria customs Service (NCS) made the price of the staple food to be bond the rice of common man as price of 50 kilogramme rice goes between N38,000 and N47,000, depending on quality in the local market. At the NCS, the Area Comptroller, Ogun 1 Area Command, idoroko, Bamidele Makinde, said in the first week of December, 2022 that the service seized 44, 933 bags of 50-kilogramme of rice, an equivalent of 73 trailer loads in the first week of December, 2022. Also, in July NCS, Makinde, said that in the first half of the year, 25,906 bags of imported parboiled rice weighing 50 kg a piece, or 43 trailer loads, were confiscated. Also, the Acting Controller of the Federal Operation Unit (FOU), Deputy Comptroller, Hussein Kehinde Ejibunu, said that 8,999 of 50kg bags of foreign parboiled rice (approximately 15 trailer loads) were intercepted in December within the South Western states, while the Coordinator of NCS’ Comptroller General Strike Force Team A, Mohammed Sani Yusuf said that 1,010 50kg bags of foreign parboiled rice were impounded from smugglers between October and December, 2022. It would be recalled that with the border closure since August, 2019, smugglers have been finding it difficult to move large grains out of the two Benin ports. The Customs Comptroller General, Col. Hameed Ali (rtd), said that since the commencement of the border closure, 21,071 bags of 50 kilogrammes of parboiled foreign rice were seized, while 317 suspected smugglers were arrested. Findings by New Telegraph from a global trade portal, Index Mundi revealed that a total of 2.2million tonnes of the grain were expected to be shipped to Nigeria through the neighbouring borders before the end of 2019. It was gathered that this was the major reason government halted the illegal movement of the grain into the country. While Nigerian rice importers pay 110 per cent tariff on $443 Thailand parboiled rice per metric tonne, Cameroon importers pay zero tariff. Also, Benin Republic reduced its rice import duty from 35 per cent to 7 per cent in order to attract Nigerian rice merchants to patronise the Cotonou Port.

Shortfall

Finding revealed that the country needs additional 34.38 per cent or 2.51million tonnes of the grain valued at N37.65billion to meet domestic consumption of 7.30million metric tonnes. It was further revealed that the country depends on 21 large integrated rice mills with a total processing capacity of 1.22 million metric tonnes yearly.

The mills are located in Kano, Enugu, Ebonyi, Kebbi, Anambra, Edo, Nasarawa, Benue, Kwara, Jigawa, Niger and Kogi states. However, it was gathered that inadequate mills needed to produce the grain has fueled massive smuggling of the grain to the country through the land borders of Seme, Idiroko, Calabar, Jibya and some creeks in Lagos and Calabar. Commenting on the self-sufficiency, the Managing Director of AgroNigeria, Richard Mbaram said that the Federal Government’s determination to end importation of the grain would be a mirage if it fails to address the issues of massive smuggling of the grain into the country.

According to him, achieving self-sufficiency in the next couple of years is merely a pipe dream. Also, Managing Director of Sceptre Consult, Jayeola Ayodele stressed the need by the Federal Government to subsidise the price of the grain and support local farmers so that consumers would not feel the impact of the ban.

He said that insufficiency and the 2022 flood were responsible for the high price of rice in the market, saying that it could have been averted if government had subsidised consumers just like the fuel subsidy. Ayodele said: “The Federal Government should have asked famers to sell the products at N10,000 for 50 kiliogrammes bag and pay the farmers the balance for cost of production. They can still do it if they have the interest of the masses in mind.” He explained that Kebbi, Ebonyi states, multinational companies, who were into rice production and other individuals should be supported in order to lower the price of the grain. Ayodele added that if the price of the grain is crashed by the government, it would be affordable in the market, adding that price of other food items would fall naturally.

Local production

In January, 2015, Nigeria Customs record revealed that some rice valued at N938.2 billion was seized from smugglers despite the grain’s restriction from the borders. For instance, between January and August, 2015, N330.5 billion worth of the grains were intercepted by the service. Also, NCS added that some rice valued at N597.7 billion was impounded from the various land borders in 2016.

New Initiative

Meanwhile, as part of efforts to boost the grain production, the Katsina State government and Saemaul Foundation (SF) from South Korea have partnered to increase rice farming in Nigeria with technology and training being received. It was gathered that having trained the farmers in the Korean style of rice farming, an hectare of land that hitherto produced between one and 1.5 tonnes of rice is yielding six tonnes or 120 bags (50 kilogramme) of rice against previous 20 to 30 bags of the commodity. Following the recorded high rice yield in the two communities, more villages have recently been included in the project. They are Turare, Unguwan Zakara, Marke and Fulani in Dutsinma council, and Sayaya, Keba, and Karachi in Matazu council.

Farmers in these villages have also begun their training in rice farming. The Governor of the state, Aminu Bello Masari at the recent commissioning of the cooperative office and some equipment donated to the farmers by the foundation, said that the country was on a right path to food security and better days for the rice farmers.

The cooperative offices and warehouses were launched when the key officials of the foundation traveled to Katsina from Korea to assess impact of the programme on the farmers. The initiative was set up in 1970 by former President Park Chung-Hee to modernise the rural South Korean economy that was down due to impact of the Korean war. The foundation promotes self-help, diligence and cooperation as core values and necessities to have an improved society.

The success in Korea has been replicated in over 16 nations, including African countries like Rwanda, Senegal, Côte d’Ivoire and very recently in Nigeria. Introduced to Nigeria by the Dangote Industry in 2019, those successes are being replicated in rural communities with the aid of intensive trainings and field practical. Katsina farmers were introduced to the new method of rice farming and imported their first set of Korean agricultural machines into the country, including rice trans-planter, nursery trays, seeding machines, along several other items and organised her first rice planting demonstration with some selected rural farmers. Speaking at the launch, SF President, Mr Lee SeungJong said that the strong bilateral relationship between his country and Nigeria, as well as Nigeria’s desire to emulate the transformation his country witnessed over the years, was what led to the foundation’s operation in the country.

Last line

From interaction among many concerned Nigerians and stakeholders, one tread that runs across is the call on the Federal Government to substitute fuel subsidy for rice subsidy in order to make the grain available and affordable to Nigerians.

 

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