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

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

4. 3 Background (cont’d) Trade liberalization in the Nigerian rice sector Per capita consumption is 23kg/annum

5. 4 Background (cont’d) Rice is the fastest growing commodity in Nigeria’s food basket. 0% 20% 40% 60% 80% 100% 1961196519691973197719811985198919931997 Sorghum Millet Maize Rice (Milled Equivalent) Yams Cassava Trade liberalization in the Nigerian rice sector

6. 5 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

7. 6 Background (cont’d) 0 0.5 1 1.5 2 2.5 3 19611963196519671969197119731975197719791981198319851987198919911993199519971999 Source: PCU (tons)/ha Yield is low: 1.7 tons/ha Trade liberalization in the Nigerian rice sector

8. 7 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 Trade liberalization in the Nigerian rice sector

9. 8 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 Trade liberalization in the Nigerian rice sector

10. 9 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. Trade liberalization in the Nigerian rice sector

11. 10 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 Trade liberalization in the Nigerian rice sector

12. 11 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 Trade liberalization in the Nigerian rice sector

13. 12 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. Trade liberalization in the Nigerian rice sector

14. 13 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) Trade liberalization in the Nigerian rice sector

15. 14 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 Trade liberalization in the Nigerian rice sector

16. 15 Project objectives 1.Develop in-country methodologies 2.Characterize the Nigerian rice sector (production, processing, marketing, consumption and policy) 3.Conduct integrated assessments of trade liberalisation for the rice sector 4.Develop policy packages 5.Provide financial implications of policy package 6.Identify and propose agencies and institutions to carry out the implementation. 7.Develop capacity for analysing and implementing environment-friendly policies and programmes Trade liberalization in the Nigerian rice sector

17. 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. Trade liberalization in the Nigerian rice sector

18. 17 Development of In-country Methodology 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 Trade liberalization in the Nigerian rice sector

19. 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) Trade liberalization in the Nigerian rice sector

20. 19 Integrated Assessment of Impacts of Trade Liberalization and WTO AoA 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 Trade liberalization in the Nigerian rice sector

21. 20 Analytical tools selected are: Gross Margin Analysis (profitability) Summary Statistics (frequencies, means, standard deviations, etc) Policy regime analysis Regression Analysis Trade liberalization in the Nigerian rice sector

22. 21 Environmental Impacts Trade liberalization in the Nigerian rice sector Rice Life Cycle StagesInputsEnvironmental Effects 1. Establishment of Rice Farm - Land preparation 2. Maintenance of mature rice farm - Weed, pest and disease control Slashing, bush burning Use of agrochemicals Deforestation, biodegradable waste Damage to biodiversity, human health, etc.

23. 22 Environmental Impacts (contd) Trade liberalization in the Nigerian rice sector Rice Life Cycle Stages InputsEnvironmental Effects 3. Harvesting 4. Threshing Manual Grit and paddy straw create waste management problem Grit, paddy husks create waste management problem. Rice husk particles may cause eyesight and breathing problems

24. 23 Environmental Impacts (contd) Trade liberalization in the Nigerian rice sector Rice Life Cycle Stages InputsEnvironmental Effects 5. Processing - Parboiling - Milling - Disposal of rice husk/dust Soaking paddy in water and heated Hand pounding and/or automated milling system Burning Smoke, soot, air pollution and greenhouse gases Health problems

25. 24 Environmental Impacts (contd) Trade liberalization in the Nigerian rice sector Rice Life Cycle Stages InputsEnvironmental Effects 6. Distribution and marketing 7. Consumption TransportationSoil compaction, air pollution from vehicular exhaust fumes Beriberi

26. 25 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 Trade liberalization in the Nigerian rice sector

27. 26 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 Trade liberalization in the Nigerian rice sector

28. 27 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 Trade liberalization in the Nigerian rice sector

29. 28 Social and Economic Impacts (Contd) Negative Impact Imports dampens local production Huge import expenditure Health problems Gender disparity Trade liberalization in the Nigerian rice sector

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

31. 30 Combined Environmental, Economic and Social Costs Combined Environmental, Economic and Social Costs Yet to be conducted satisfactorily Trade liberalization in the Nigerian rice sector

32. 31 Emerging policy issues o The need for distributional equity in the benefits of trade liberalization in the rice sector o The need to explore alternative uses for rice rather than human consumption Development of Policy Package Development of Policy Package Trade liberalization in the Nigerian rice sector

33. 32 The need to address the structural and technological deficiencies in rice production systems The need to combat diseases asociated with rice production Development of Policy Package Development of Policy Package Trade liberalization in the Nigerian rice sector

34. 33 Need to promote rice production as a strategy for poverty alleviation Further articulation and implementation challenges will be examined Development of Policy Package Development of Policy Package Trade liberalization in the Nigerian rice sector

35. 34 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 Trade liberalization in the Nigerian rice sector

36. 35 Project Experience: Main Conclusions and Steps Forward 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 Trade liberalization in the Nigerian rice sector