Smuggled rice floods Nigerian market, as merchants suffer losses

Rice, Nigeria’s staple food and most commonly eaten delicacy in parties, may not be available on the tables of most Nigerian families during the yuletide. This, according to Mrs Esther Olufumilayo, President, Rice Distributors Association of Nigeria, is because importers have stopped bringing rice into the country since the new tariff was introduced in January 2013.


The old tariff of 35 per cent was okay and helped to check the activities of rice smugglers to a reasonable extent, as the duty was almost at par with that of Cotonou port. The government introduced the new tariff regime to encourage local production and help boost investors’ confidence in the rice industry. The policy seems to have backfired and helped to fuel smuggling activities along the Nigeria-Benin border. Although rice import by land is prohibited, almost all the brand varieties in Lagos markets come in through land routes.

Investigation revealed that three months to Christmas, there are no vessels awaiting rice discharge at the ports. This is an unusual situation and may lead to scarcity during the ember months. The resultant effect will be sky-rocketing of prices.

Official rice import has dropped as a result of the new price regime, but the fact on ground according to  investigation is that smuggling of rice into the country has become big business. The local production that it was meant to benefit cannot flourish, as they cannot compete with the prices of smuggled rice from the land borders.

Olufumilayo said for the policy to work, there must be effective policing of Nigerian borders.

A visit to the Seme border showed that smugglers do not only bring in the commodity in bits and pieces, but use the creeks to ferry rice into Lagos. The Federal Government in a move to reduce rice importation into Nigeria jerked up the levy on rice from 20 per cent to 100 per cent while the duty was pegged at 20 per cent.

Investigation showed that a creek linking the Badagry and Igando areas of Lagos has become a hot spot for smugglers as they load their vehicles with several bags of rice and ferry them into Lagos.

Some brands of rice sighted include: Uncle Chef, Master Chef, Parro’t, and Reve Gold. These brands, it was gathered, are made in India.

A trader who refused to give her name at the Iyana Eran area of Lagos said that rice made in India are less expensive than those from Thailand.

She told a source that the latest brand of rice – Chief Chef – goes for N8,000, while the Thai rice goes for between N9,000 and N11,000.

At the Iyana Eran motor park, a major hub for smuggled rice, there is a large warehouse where the commodity is re-bagged and re-packaged into smaller sizes. Reporters sighted at the warehouse in Iyana-Eran motor park, printed bags of different brands on display for smugglers to buy and re-package and re-brand.

It was also gathered that the commodity is also adulterated and packaged in bags of other brands and brought to the market, thereby deceiving the unsuspecting public.

Speaking to newsmen on the ban on rice through the land borders, the National Coordinator of Transborder Traders Association, Alhaji Mikky Okunola, confirmed the imposition of a 100 per cent levy and additional 20 per cent duty in order to discourage rice importation and encourage local production.

Okunola, however, explained that the imposition of the levy and duty alone cannot boost local production of rice. He added that a genuine intervention on the part of government in agriculture will boost local rice production that would feed the nation’s population. Some traders, who also spoke to reporters on the condition of anonymity said that the rice business in the neighboring countries is booming, adding that smugglers are only taking advantage of it to eke out a living.

Nigeria’s Rice Business
It has always been the same story. Government introduces a noble and well intentioned policy, but when it comes to implementation, it is fouled and muddled up in such a manner that a few carpet baggers extend their millionaire and billionaire status, while the majority of citizens are further impoverished. It happened with the fuel subsidy regime; it is now happening in the rice industry.

The government raised duties for rice import from 35 per cent to a range of 110-120 per cent in the month of January 2013 with a view to encouraging local producers for industry growth and desired self-sufficiency for the nation. It was also intended to encourage investors in the rice business. For this to succeed, Nigerian borders must be secured from the activities of smugglers and local production must meet a significant part of the huge rice demand of the populace projected by USDA report to reach 3.1 million tons in 2013.

A few key players in the industry – importers, distributors, retailers, analysts- are worried about government’s unpreparedness to see this policy through. Nine months into the tariff increase, there is palpable fear that many Nigerians may not be able to afford rice during the ember season because from what was discovered on ground; the policy of tariff increase has totally back fired.

While the smugglers and border security personnel are smiling to the bank, major Nigerian key players in the business are gnashing their teeth. Nigerians are asking why well intentioned policies fail? Is it due to sabotage, faulty planning or ineffectiveness on the part of those entrusted with execution?

Findings revealed the following:

Market:
A visit to the following major rice markets – Iddo, Daleko, Ketu, Mile 12, Alaba and Sango Ota, revealed the various brands of rice on display were imported. There was no trace of rice produced in Nigeria.

Implication
The statistics of Nigerian rice production is different from what is on ground. Our local production level is yet to make meaningful impact

Apapa Wharf
Also, a visit to Apapa Wharf revealed that there are no vessels carrying rice awaiting or discharging. It was the same situation at the Tin Can Island Port. If the two major ports are not expecting rice, where will the imported rice come from?

Implication
Importers have stopped bringing rice through the wharfs. On enquiry, it was discovered that rice vessels are being diverted to Cotonou port, including those earlier destined for Lagos ports.

Importers
Genuine rice importers are almost closing shops; they cannot compete with the prices of smuggled rice. The few who tried it at the new rates could not sell their products. Some of them now buy from smugglers to stay afloat. A few of them like GLOBAL and MILAN have left the country.

Implication
Joblessness for many Nigerians working in these companies, including their chain of transporters, distributors and retailers.

Distributors

These are the link between the importers and retailers. They cannot get goods to sell because importers are no more bringing in goods.The local rice producers cannot meet their demand. In fact, the President of Rice Distributors Association of Nigeria, Mrs Olufumilayo, confirmed that the local producers have not even established contact with them.

Government
The tariff that is supposed to be a revenue gain to the government has now become revenue loss. The government may claim credit for low rice importation, but the true situation, as discovered were made, is that most of the rice coming into the country do not have Customs record because they are smuggled. They also are not checked for quality standards by agencies like NAFDAC and SON.

The low import statistics is not a sign of success of the tariff programme, but an increase in smuggling activities. If all the various brands of rice in the market are foreign, genuine importers are not bringing in rice and land importation is banned, where did all the rice in the market come from?

According to PRAN (Patriotic Rice Association of Nigeria), quoted by Thisday Newspapers of May 24, 2013, “Lost revenue from imported rice from Cotonou amounts to N10 billion monthly but the Nigerian Customs Service’s figure is put at N27 billion in four months…” We are talking about the month of May here; both quoted figures will triple in the ember months. Implication

Government is losing revenue unnecessarily.

Local Producers
Local rice is not in the markets because at per unit cost of production, they cannot compete with the smuggled rice.Iinvestigation revealed that landing cost of Benue rice to Lagos is N17,000 and this excludes the cost of fine-tuning in form of separating the stones. Cotonou rice sells for between N9,000 and N10,000, how can the local producers compete? Implication

A policy that is supposed to assist local production is now helping to kill it because of bad implementation.

The Masses

As usual, the masses will bear the brunt. In the ember months, demand for rice will increase as smugglers cannot meet the huge demand. Nigeria rice consumption is estimated in the region of 5.5 million metric tons. Genuine importers have stopped importing; prices are heading for the top. The border security will have to be settled; they are happy, the Cotonou importers are happy.

Conclusion
From Investigations, it is clear that the policy lack proper execution. The Ministry of Agriculture is making efforts to see positive growth in rice production but it had to be done in phases for it to be effective. Government must also factor in key players like the Distributors Association through whom the rice gets to the desired markets.

Findings revealed rice has become a staple food that any adverse effect on the populace will generate sentiments akin to the fuel price increase.

Concerned Nigerians say that it is important for those in authority to introduce an effective monitoring system on local rice production and consumption. As it is now, official statistics on rice importation cannot be relied upon. Nigeria, they say, should not be in a hurry to ban import or increase tariff to prove that we are working; we are only making a few people rich.

Furthermore, they pointed out that security agencies entrusted with the task of securing Nigerian borders have failed. This, in their opinion, is outright sabotage and dereliction of duty. If the borders are not secured, this policy will not work. According to agric experts, it is important for the relevant authorities to institute inquiries and get guilty parties sanctioned where necessary.

They suggested that in the interim, the duties on rice import should be reverted to the old 35 per cent. At this level, activities of smugglers will have minimal effects as the landing cost between Cotonou and Lagos will be almost same.

They believe that it is still early correct these anomalies so that the people can have a peaceful and stress-free yuletide.

(Vanguard)