analysisBy Crusoe Osagie
Crusoe Osagie examines Olam and the Federal Government's attempt to rehabilitate a nation, which appears addicted to rice from outside its shores
The channels through which the Nigerian economy is being drained are not difficult to identify, analysts believe.
To them, the committal of huge amounts of foreign exchange daily for the importation of rice which has become a major staple in the average Nigerian diet clearly leads the pack of wasters.
Data of Waste
The most current figures from the Federal ministry of Agriculture reveal that on the average, Nigeria spends N1billion every 24 hours to purchase rice for her citizens to keep them from hunger. What shameful waste!
Agriculture expert, Dr. Andrew Efisue, a Nerica rice cultivar specialist, said with vast agro-ecological conditions across Nigeria that can actually support major commercial rice cultivation, it is scandalous for Nigeria to still spend about N360 billion annually to import rice in order to keep Nigerians from starvation.
Olam and FG Moves
A Nigerian company, Olam Agro Technical Processing Company, has actually braved the odds facing local rice cultivation, with a view towards showing the example that Nigeria could be weaned off its dependence on imported rice from Thailand, Malaysia and other Asian countries.
The Federal Government recently said it is working with Olam Agro Technical Processing in order to manage the impact of an imminent rice crisis that analysts expect to cause a rise in the price of imported rice beyond the reach of most Nigerians.
According to the government, Olam deserved commendation for championing local cultivation of the essential commodity on a highly mechanised scale, stressing that this was the reason why it had confidence in the local rice producer.
The Chairman of the federal government inter-ministerial committee on rice price bench-marking, Dhiru Ado-Kurawa, who praised Olam's effort towards increasing the local rice production capacity in the country, said following the 100 per cent duty imposed on imported rice in January 2013, an increase in the price of the commodity is expected as soon as marketers exhaust stock for the year 2012.
Ado-Kurawa, who spoke after a tour of Olam's mechanised rice farm in Doma, Nasarawa State, said "I personally feel that the price of rice will go up tremendously and people will complain. Most of the rice being consumed in the country today was brought in last year before the duty went up in January this year, so the prices have not started pushing up."
He advised Nigerians to take heart and weather the storm for a year and create a balance for price and supply because when there is shortage of a commodity the price is bound to go up. Noting however that Olam's supplies would help to ameliorate the problem.
"The message I want to send to Nigerians is, how long can we continue importing food? If we don't have rice and its price goes up let us eat yam, plantain and cassava," he said.
He disclosed that the committee realised that most importers were under-invoicing. "If, for example rice is $700 they quote $200 as their buying price so that their duties will be low. And the government had to set up this committee to find out the international market price of rice and fix the quota for importers."
Boosting Local Production
Ado-Kurawa enumerated some of the incentives by the government to encourage the private sector to invest in local rice production and processing to include the zero per cent duty on machinery for this kind of project; imposition of 100 per cent duty on imported rice and a lot of other incentives for farmers and the agricultural sector across all value chains.
"Government decided to put in place a high duty on imported rice. And it has worked because now it is very clear that the Customs Service is the second largest revenue earner for government after oil, and rice is the highest revenue earner for the Customs Services.
"That high duty is to capture revenue but more importantly to support local production of rice through a barrier process and protection of the investments made by local farmers," the rice expert said.
He pointed out that at the end of the day when the gap between production and processing is closed, rice importation would be a thing of the past in Nigeria.
Expressing satisfaction over Olam's effort, Ado-Kurawa said, "I am very impressed by what I have seen here at Olam's farm especially because Nigeria consumes 5.2mmt of rice yearly and if we are serious and really mean business we can cultivate all the rice we need here in the country and have the surplus to export."
He explained that "almost 90 per cent of rice in the world is grown by small-scale farmers who share the same profile as our own farmers in terms of size of cultivated area and manual labour by family holding", stressing that it is only in America and Japan that one will find mostly mechanised rice farmers.
"And from what we have gathered I can assure Nigerians that by the end of this farming season, we are going to see more rice than we have ever seen in the history of this country because of government's policy to encourage local production," he said.
In his remark, Olam's head of farming, Regi George, said that the farm has 6,000 hectares under cultivation and have been encouraged by favourable government policies as well as a high level of focus on agriculture being part of the transformation agenda.
Olam said its venture into rice farming was to help move Nigeria to the position of a leading rice producing and exporting nation.
TOP TEN GLOBAL RICE PRODUCERS
The top ten rice producing countries account for over half of the world's rice supply. They include (China 182 million tonnes (28.8 per cent of global rice harvest); India 136.5 million tonnes (21.6 per cent); Indonesia 54.4 million tonnes (8.6 per cent); and Bangladesh 43.7 million tonnes (6.9 per cent).
Others include Vietnam 35.8 million tonnes (5.7 per cent); Thailand 29.3 million tonnes (4.6 per cent); Myanmar 25.2 million tonnes (4 per cent); Philippines 15.3 million tonnes (2.4 per cent); Brazil 11.5 million tonnes (1.8 per cent); and number ten is Japan 10.7 million tonnes (1.7 per cent).
According to George, the company started commodity export in Nigeria about 20 years ago and focused mainly on four basic crops then which are cocoa, cashew nuts, cotton and wood and have eventually diversified into some other crops such as rice farming, sesame and ginger production.
"Our vision is to ensure that about 80 to 90 commodities are processed for export to derive the multiplier effect to the economy", he added.
He urged the government to partner with vibrant private companies to boost rice production revive the sector, adding that "some of these private sector firms are reliable and closer to farmers to motivate them."
The company prides itself on also playing leading roles in the cocoa growing belt of South-western part of the country, particularly in Ondo and Osun States.
George said that the company had been complementing the efforts of the States Government in improving the production of the tree crops in these states and also enhancing the quality of agriculture produce.
"We observe that cultivation and commitment on the part of the farmers started declining, resulting in drop in productivity and income for the farmers. The company decided to venture into series of initiatives that can spur more cultivation, increased production.
"In addition to motivating the older farmers to stay in the farm and serve as testimony for the youths to be attracted to the sector, we invested more on the company's Corporate Social Responsibility (CSR), which is to ensure that sustainability is achieved and profitability growth continues as well as managing our business in a way which is supportive to communities, ensure a safe and productive workplace and friendly environment.
"To share their overhead cost, the company decided to distribute 3 million seedlings annually in some cocoa producing states in the south-west for the past five years for new plantations," he said.
"We have expanded the company scope of social responsibility in the past five years to include seedlings and crop protection distribution to farmers. We want to ensure sustainability of Nigeria commodity agriculture through farm best practice, processing, capacity building and market access," he added.
The various initiatives were also put in place because the company does not want to circumvent the domestic use of these crops.
"Moreso, the effort to increase production of the crops will help to diversify the nation's economy from oil and gas revenue base, create employment and more income for the farmers," George explained.
He said the company decided to focus on some major crops such as cashew, cocoa, ginger, sesame, cotton and rice because Nigeria has the opportunity to increase production of these crops and carve a vital niche at the international market.