Emmanuel OchayiRice millers in Nigeria, who were forced out of business due to the scarcity of paddy, are gradually reopening their factories as it becomes affordable to source critical inputs.
The lifting of sanctions on the Niger military junta by the Nigerian government has made it possible for millers to import paddy, a key input for their operations.
According to Jonathan Joshua, chairman at African Rice Mill in Nasarawa and national president of the Association of Small-Scale Agro Producers in Nigeria, “Some mills that shut down production owing to the scarcity of paddy last year and early this year are now reopening as they can easily source the grain from neighbouring countries owing to the reopening of the Nigeria-Niger border.”
The prices of paddy have declined by 32 percent since March 2024, when the country reopened its land border with Niger. A ton of paddy now costs an average of N425,000, down from a high of N625,000 per ton in February.
The rice milling industry had been under pressure since October 2023, when Nigeria shut down its border with Niger, a key route for paddy cross-border trade between both countries. Nigeria needs 11 million metric tons of paddy to meet current domestic consumption, but produces only about 4.8 million metric tonnes of paddy, leaving a shortfall of 6.2 million metric tonnes of paddy for the subsector.
The country’s rice milling industry has a processing capacity of 7.5 million metric tonnes, but most millers have large unutilized capacity and huge overheads per unit of capacity utilized due to macroeconomic challenges and scarcity of paddy.
Industry sources revealed that several millers shut down their operations when they could no longer bring in paddy from Burkina Faso and Niger amid surging production costs. However, with the border reopening and prices dropping, millers are starting to reopen their factories.
The country has always gotten a chunk of its paddy from neighboring countries, as insecurity has hampered large-scale production of the commodity. Rice production in Nigeria has been declining, and the cancellation of intervention programs will further drop production.
In November 2024, millers requested a trade pact with India to import two million metric tons of rice to help stabilize surging prices of the grain locally. The millers scrambled for paddy amid a worsening shortage that was sending prices to record levels.
The reopening of the border and the subsequent drop in paddy prices are expected to stabilize the rice milling industry and reduce the prices of rice in the country. As Jonathan Joshua noted, “We are expecting the prices of paddy to drop further when farmers commence harvesting in two months.”
