15 January 2013

Nigeria: Investing in Rice Production and Rice Processing Project


The Minister of Agriculture, Dr. Adewunmi Adesina has re-stated the Federal Government plan to make Nigeria self- sufficient in rice production in the next four years. He pointed out that "Abakiliki rice" is the best rice in the world as the taste and quality is far better than the one from China.

Apart from Abakiliki rice, in Nigeria today, some states produce paddy rice in abundance. Some of these states are Enugu, Anambra, Abia, Imo, Kwara, Edo, Ogun, Ondo, Cross River State and some Nothern States such as Sokoto etc. Therefore with serious efforts by both Government and private companies and individuals, the policy is achievable.

Rice has become a stable food in Nigeria. Every household both rich and poor consumes a great quantity of rice everyday.

Of the total projected population figure of 160million, about 70% feed on rice.

From publications made by the Federal Office of Statistics and Federal Ministry of Finance, of the total foreign debts and importation figures of rice amount to about one (1) Trillion of Naira as the end of 2012. Rice importation has the greatest figure of over 60% of total import figures.

The Federal Government of Nigeria must therefore have to do something about this. It is not advisable to impose a total ban on importation without first assuming that the country can produce at least 70% of what is needed in this country.

It is one of the good things that can happen to this country because the policy will generate more employment opportunities. The federal government within few months ago funded the establishment of about 13Mills with combined capacity of 240,000 across the country. The government is willing and capable to assist prospective investors in the area of production and processing of rice. The Federal Government has also concluded arrangements to roll out a new policy that will ensure that loans are available at single digit interest rate to farmers with effect from this year 2013.

It is based on the above decision, that the Government has entered into agreement with world Bank & ADB to increase the production of Rice in the country. As a result the bodies to commence massive production of rice in the country are working out substantial amount.

Some individuals are to be encouraged by the Government to ensure that private sector participated in the venture.

Rice milling project will best be sited in these areas where rice is grown in order to reduce cost of transportation of the paddy.

To set up this project, a large space is required to dry paddy rice after harvesting.

The components of machines required to set up this project are cleaning facilities, Dehuller, Boiling tank, Polisher, Bagger and other miscellaneous equipments such as wheel barrows, weighing scales.

These machines can be fabricated locally. They can also be imported from Europe and some known Asian companies that specialize in the area. Prospective investors would be given details on these machine produces and specialists.

Also pickup vans and generating sets are essential for smooth running of this project.

Rice milling could be done on cottage, small, medium and large scale bases depending on availability of capital and the raw materials- paddy rice.

Output could be from 2MT to 150MT per day. Generally one metric tonne of paddy rice yields about 60kg- 70kg of milled rice, depending on milling efficiency company management practice and the variety of rice purchased.

In the process of milling well parboiled rice free from sand, stones, unpleasant ordour with less breakages, etc from purchased paddy, whole rice broken rice and bran are obtained. Whole rice are packed and sold for human consumption. Broken rice is further milled into "Tuwo Shinkafa" (a flour meal) while bran is very important input for manufacturing dietary products like rice bran bread which has been acclaimed good for the decrease of blood cholesterol, rice bran oil and livestock feeds. From rice can also be obtained puffed rice, rice cakes, rice pudding etc.

The husks are used for the production of potassium Hydroxide solution or as fuel for milling plants. It can be seen that virtually all parts of paddy rice is useful.

From market analysis, the market for rice is National. With the estimated national population growth rate of 2.9% and population figure estimated at over 130million, Nigeria is a large market and demand is so high and local supply, so low that rice importation into the country is a very big business. Hoarding, rationing and smuggling and sharp black market practices were the profitability associated with the business.

This situation should not be allowed to continue forever.

Those importers must channel their huge returns to establishment of such producing firms in Nigeria instead of fastening the growth of some foreign countries.

The huge demand for rice is further accentuated by increasing and expanding urbanization, endless social parties where rice is the main menu, Nigerians eating habits (preference for foreign rice).

The preference for foreign rice should be stopped.

The likely cost of total project will not actually be stated safely unless one knows the scope (whether cottage, small, medium or large scale) a proposed investor would like to embark upon, the capacity to produce, the source(s) of the machinery, whether to construct his own building or rent one, the location etc. Therefore to embark upon this project, one needs a business plan (feasibility studies), with detailed costing for all the aspects of inputs, and before he can obtain the likely total estimated cost.

To do otherwise is to take a leap in the dark or take our characteristics short cut to distinction that is always ruinous.

In conclusion, rice milling; an agro-based business is profitable (35-45% on sales), and sustainable. It has low capital requirement, technical know how is complicated. The machinery and equipment are 100% locally available. The project has a short pay -back period.

It is highly recommended for serious and aggressive promoters, local and state Governments and private investors particularly those that are thinking good for this country.

For details on comprehensive and bankable feasibility studies, investment Advisory services, funding arrangements, please contact the writer.

Uba is of Global Trust Ventures Limited

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