FG, Olam partner to arrest impending hike in price of rice

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This Day | 5 March 2013

by Crusoe Osagie

The Federal Government and an indigenous rice producer, Olam Agro Technical Processing Company, have announced collaboration towards managing the impact of an imminent rice crisis.

Analysts expect the crisis to result in the rise in price of imported rice beyond the reach of most Nigerians and they have commended Olam for championing local cultivation on a highly mechanised scale.

The Chairman of the federal government inter-ministerial committee on rice price benchmarking, Dhiru Ado-Kurawa, who hailed Olam's effort towards increasing the local rice production capacity in the country, said that 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 the 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 said.

He advised Nigerians to 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. “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.”

He 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 whole 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,” he said.
He pointed out that at the end of the day when the gap between production and processing is closed, rice importation will be a thing of the past in Nigeria.

Expressing satisfaction over Olam's effort, he 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 grown in the world is grown by small-scale farmers who share the same profile as local 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 has been encouraged by favourable government policies as well as a high level of focus on agriculture being part of the transformation agenda.

Original source: This Day
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