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Impact of Trade on Domestic Rice Production and the challenge of Self- sufficiency in Nigeria Chuma Ezedinma Integrated Cassava Project International.

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Presentation on theme: "Impact of Trade on Domestic Rice Production and the challenge of Self- sufficiency in Nigeria Chuma Ezedinma Integrated Cassava Project International."— Presentation transcript:

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2 Impact of Trade on Domestic Rice Production and the challenge of Self- sufficiency in Nigeria Chuma Ezedinma Integrated Cassava Project International Institute of Tropical Agriculture

3 Nigeria is the largest rice producing country in the West African region. By 2002, the country accounted for 57 % of the total rice producing area in West Africa. Potential land area for rice production in Nigeria is between 4.6 million and 4.9 million ha. Out of this, only about 35 percent of available land area is cropped to rice. Rice yields are however low even by West African Standards Introduction

4 The Paradox  Nigeria is the largest importer of rice in the world  The annual demand for rice in the country is estimated at 5 million tons  Domestic production accounts for 3 million tons  Imports account for about 2 million tons  Between 1990 and 2002, Nigeria imported 5,132,616 tons of rice  In 2002 alone, the country imported million tons of rice.

5 Objectives  Describe the effect of rice trade (imports) on domestic rice production and marketing  Assess the competitiveness of domestic rice relative to imported rice in Nigeria  Assess the effect of policy inconsistency on rice production  Determine the optimal efficiency of local rice mills

6 Primary sources: Field level survey involving small scale mills, rural and urban markets in north and south of Nigeria Secondary sources: IITA and other Libraries, internet Methodology

7 Rice Production Systems In Nigeria, cultivable land to rice is spread over five ecologies, namely:  rain fed upland  rain fed lowland or shallow swamp  irrigated rice  deepwater or floating rice and  tidal mangrove swamp

8 Major Rice producing States: Kaduna - 22 %, Niger - 16% Benue - 10% Taraba - 7% In geopolitical terms rice is produced mainly in the central region of Nigeria

9 Effect of rice trade (imports) on domestic rice production and marketing The proportion of local rice available in Nigerian markets is far less than that of imported rice

10 Effect of rice trade (imports) on domestic rice production and marketing The small rice processing mills are the most dominant in Nigeria Low effective capacity utilisation in small rice mills Three types of rice processing mills Traditional/hand Small rice mills Large rice mills

11 Effect of rice trade (imports) on domestic rice production and marketing Nassarawa Afikpo Abakaliki Adani Benue Gombe Taraba 20%30% 15% 30% 15% 30% 20% 15% Figure External sources of paddy rice to Abakaliki, Adani and Afikpo rice mills. Loss of rural farm labour to urban migration Rise in intra regional trade

12 Effect of rice imports on domestic production The growth in domestic rice output declined with growth being negative in 1995 The growth rate in domestic rice production is still negative to date

13 How competitive is local rice ? On the average an extra cost of 25 percent is needed to process domestic rice to the quality and standards of imported rice Improving the standards of local rice is feasible and desirable, but it may not be competitive for local rice mills Compounded by the issue of grading and uniform rice varieties from local farmers

14 Table International rice prices relative to domestic rice prices in Nigeria 1993 to 2001 How competitive is local rice ? The table compares the domestic prices of paddy and milled rice in Nigeria with the international prices of the worst grade rice (white broken rice, Thai A1 super, f.o.b Bangkok). If we assume that exchange rates in Nigeria reflect market forces (which is unlikely especially in 1993), then Nigerian domestic rice is expensive to produce (compare paddy prices) and expensive to process (milled rice) and so cannot compete in the international market.

15 Optimal distribution in domestic rice trade  Domestic rice markets are shrinking due to rice imports  The closer the demand market to the supply zone, the less optimal it becomes with increase in transport cost  The marginal cost of non- optimal supply of rice from small processing mills increases with increase in transport cost

16 Effect of policy Inconsistency on domestic rice production Pre ban period: 1960 – 1976 Period of crisis (import license, etc) 1976 – 1985 Period of outright ban 1986 – 1994 Period of tariff 1995 – 2005 Domestic self sufficiency in Nigerian rice production was adversely affected during the crisis years of 1977 – 1985 Self sufficiency in rice production is still a major challenge for Nigeria to date

17 Conclusions  The demand for local rice in Nigeria is far less than the demand for imported rice  Local rice production costs are high and uncompetitive  Improving the post harvest quality of domestic rice is critical but can only be achieved if production costs are low  Local transport costs for rice output are sticky downwards at least in nominal terms

18 Policy Interventions  Intensify rice production and increase on-farm yield to reduce production costs  Improve quality and standard of rice and reduce post harvest losses  Facilitate rural enterprises and businesses especially in small mills to sustain productivity, incomes and employment  Strengthen human and institutional capacities to produce, process and market rice competitively in Nigeria

19 Thank you


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