Rice investors brace for the worst as smugglers prosper again

Smuggling of rice across the Nigerian borders has reached prohibitive levels, with hundreds of trailers plying back and forth from neighbouring countries carrying illegal shipments of the staple food. THISDAY has learnt.

The nation’s supply gap was estimated at around 3 million tonnes by United States Department of Agriculture (USDA) and half that number by the federal government earlier this year.

THISDAY also gathered on Wednesday that legal importers paying full tariff of 70 per cent have not been able to compete with smugglers who enjoy a free ride into the market, aided by negligible tariffs in neighbouring Cameroun and Republic of Benin, taking advantage of porous borders.

Market watchers however added that another pertinent problem hamstringing rice investors is the Central Bank of Nigeria (CBN) ban of foreign exchange for rice imports, among other products, choking the importation supply chain.

Investigations revealed that the resultant shortage in the market is now being exploited by smugglers, who prospered significantly in 2013 when they were able to move in around 2.5 million tonnes through the borders, without paying a single Kobo as import duty.

Earlier in 2013, the federal government increased the importation tariff to 110 per cent as against zero duty regime administered in Benin and Cameroun.

It was reliably gathered that as the Nigeria Customs Service (NCS) struggles to rope in the smugglers, the market is rapidly filling up with cheap quality rice, frustrating efforts of commercial agriculture by key investors in the rice value chain.

Large multinationals including Olam, Stallion Group and Dangote have announced large scale investments in the value chain that are crucial in Nigeria’s quest to meet a growing annual demand of 6.5 million tonnes per annum. Stallion Group is expanding its capacities to produce 1.5 million tonnes in Nigeria, whilst Dangote has announced plans to farm 100,000 hectares for rice production. Effective curbing of rice smuggling is essential to get these projects to fruition and encourage millions of farmers to get back intensively to rice farming.

The National Rice Millers Association of Nigeria (NRMAN), said this week that the Nigerian Customs Service erred in its decision to lift the ban on importation of rice through the land borders. The Chairman of the association, Mohammed Abubakar, said the Customs overreached its statutory mandate as an enforcement agency in taking such a policy decision. Besides, Abubakar said, if the Customs succeeded in its decision, it would destroy Nigeria’s rice value chain attained by the previous administration.

Reports emerged that the huge influx has been noticed in the market from last Saturday, the worst affected being Lagos and the enfire South-west. Rice arrives in big trailers with 1200-1500 numbers of 50kg bags from Cotonou. There is substantial under-declaration and non-payment aspects in these shipments, making it non-viable for legal importers and local producers to compete with these shipments.

The reports noted that several long trailers are noticed during the night time directly plying from Cotonou bearing Benin number plates (RB) into the Daleko and Gcappa markets. Apart from these big trailers, smaller J5 Buses which carry 200 bags each are also used by these unscrupulous smugglers to ship products during the day time, it was gathered.

According to investigations,the affected states are Lagos, Ogun, Osun, Oyo, Kwarra, Ondo and Ekiti. Other States adversely impacted are Sokoto, Katsina, Kaduna, Kano, Abuja, Niger and Plateau – all coming in from Cotonou,  Niger.

Furthermore, rice from Cameroun through Northern Nigeria is flooding Adamawa, Borno, Yobe, Taraba, Benue and Enugu. Affected states from the South-east and South-south are Cross River, Akwa-Ibom, Abia and Enugu.