Production

Nigeria’s rice production in MY2005/06 is forecast at 2.7 million MT, up from 2.3 MMT in MY2004/05. The projected increase is based on a combination of improved input supply and favorable weather outlook. Area and yield are expected to increase. President Obasanjo has a new special initiative to promote self-sufficiency in rice production. A key element of the initiative is the GON’s subsidy on basic farm inputs, especially improved rice varieties.

The government is promoting the adoption of the new hybrid rice varieties to help boost rice production. These new varieties are high yielding, early maturing, disease resistant, and high in protein content. Despite this initiative, however, Nigeria will continue to depend on imports to satisfy consumer demand.

Consumption

Rice imports account for close to a third of Nigeria’s total rice supplies. Imported parboiled rice is directed at meeting consumer demand in urban areas where incomes are highest. Locally milled rice is of poor quality and is consumed mainly in the rural areas.

Over the past year, the retail price of rice increased by about 30 percent reflecting significantly higher international prices. Accordingly, imports declined from 1.6 million in 2003/04 to 1.3 million MT in 2004/05. Lower-income consumers switched to local staple foods.

However, rice remains a regular item in the diet of most Nigerians, largely because of the convenience and the variety of ways it can be prepared.

Trade

Post forecast Nigeria’s rice imports in MY2005 at 1.5 MMT, up from the revised MY2004 estimate of 1.3 million MT. The projected increase is due to limited supply of locally produced rice and other alternatives such as yams and beans. Although the local press continues to report that the GON will ban rice imports in 2006, Post believes that it is unlikely because of the domestic supply shortfall.

However, local sources indicate that importers will stock rice in anticipation of the ban.
Trade estimates of Nigeria’s imports used in this report include all parboiled rice destined for Niger, Chad and Benin Republics. Nigeria is the only market for parboiled rice in the West African sub-region; neighboring countries are markets for regular milled white rice.

The GON’s prohibitive duty on rice imports is encouraging cross-border smuggling of the product. The import duty on rice is 100 percent. When port charges and other taxes are assessed, the effective duty on rice entering Nigeria through Nigerian ports is 119 percent.

On the other hand, imports to Benin Republic attract only 35 percent duty, representing a $200 per ton price advantage over imports through Nigerian ports. Nigerian importers simply land their imports in Benin and then smuggle them into the country. Some importers ship to Cotonou port (Benin) and declare them as transit goods destined to the land-locked countries of Niger and Chad. Transit goods attract only five percent duty in Benin. The rice is subsequently smuggled into Nigeria.

Marketing

Currently, U.S. milled parboiled rice can only compete for a share of the top niche segment of the Nigerian market. U.S. rice exporters are encouraged to collaborate with leading Nigerian importers to boost sales of their products. Promotional activities should target the growing middle to high-income consumers. These segments of the market are willing and able to pay for premium quality U.S. rice.

Given appropriate marketing support, this market segment can increase commercial import purchases from the U.S. to 100,000 MT annually, up from the current level of less than 5,000 MT within three years. In 2002, a rice trader imported 5,000 MT of premium quality U.S. rice to test market. Encouraged by the result, the company shipped 5,000 MT of U.S. rice in December 2004.

Nigeria's Rice Imports Fall By 40 %

Nigeria's rice imports dropped by 40 percent to 1.2 million tonnes in 2004 from around two million tonnes in 2002, a senior government official said on Thursday. Oil-exporting Nigeria, the world's biggest importer of rice, will ban rice imports with effect from 2006, when it hopes to become self-sufficient and save around $600 million a year on shipments.

"There has been an increase in the local production and milling of rice in the past two years and this has led to a decrease in importation," a spokesman quoted Agriculture Minister Adamu Bello as telling an industry conference in the northern city of Kaduna.

He said Nigeria's major rice importers were acquiring ailing farms and mills across Africa's most populous nation of about 130 million people to raise local production ahead of the ban.

President Olusegun Obasanjo has introduced a series of subsidies in the past three years to encourage farmers to produce more to revive the farming sector, long Nigeria's economic mainstay until vast oil reserves came on stream in the 1970s.