In this treatise I will be taking a look at yet another of Senator Ben Ayade’s proposed signature project which is the production and processing of Rice in Cross River State as a way of creating jobs for its teeming population and contributing to the development of the economy of the state. I will be looking at the market indices, business risks, competitive advantages and what I consider the best business model to employ for success of the initiative.
Rice consumption in Nigeria has dramatically increased since the 1970s. Rice is a critical component of the Nigerian diet and a major consumer of the country’s foreign exchange. The Nigerian government imposed a ban on rice imports in 1985 with the objective of increasing domestic production in meeting the increasing demand for the product. However in 1995 the import ban was removed as the local supplies, although showing improvement, failed to meet the demand.
Rice is one of the staple foods in the world and enjoys a large and growing market in Nigeria and West Africa. Rice can be prepared in various ways into delicious delicacies such as fried rice, jollof rice, coconut rice and many more exciting cuisines. Rice is grown in many parts of Nigeria and in Cross River State rice is grown in many local government areas from Calabar to Ogoja.
Rice grown in Nigeria is not only tasty but is also not over treated so as to lose nutrients. This makes our local rice best for consumption within and outside Nigeria. In Cross River State, Rice has largely been grown at subsistence levels by individual farmers and cooperatives supported by the federal and state ministries of Agriculture and the Commercial Agriculture Development Project.
In order to increase the potential of rice to contribute to the economic development of the state, there must be effort to scale up production and move from subsistence to commercial and mechanized production. This is where the Cross River State Government comes in. There could never be a better time to do this than now and if you read down you will come to see the reason I say so.
On Wednesday the 24th of June, 2015, the governor of the Central Bank of Nigeria Mr. Godwin Emefiele said importers of rice, cement and other products will no longer access Foreign Exchange from Central Bank of Nigeria, Commercial banks and Bureau De Change for such importation. This may be a prelude to the total ban on the importation of these products of which rice is one.
Prior to the kick off of this administration, I had done an article on why the incoming administration must make Agriculture one of the focus sectors and in particular the production and processing of rice. It was my joy thus to hear Sen. Benedict Ayade’s recent pronouncement that rice production and processing will be one of the signature projects of his administration.
With the planned ban on the importation of rice into Nigeria, the demand for local production is bound to soar. As one of the states with appropriate vegetation and climate for the production of rice in Nigeria, it will be unforgivable if Cross River State does not reposition itself to seize this opportunity and help Nigeria become self sufficient in rice production, create jobs for the youth, save foreign exchange and contribute to economic development of the state and the nation. A look at the market figures will convince you.
The total domestic rice demand is estimated at about 6 million metric tonnes annually. This demand is expected to reach 25 million tons by 2020 due to population growth in the country. Currently, local production stands at about 2.7 million metric tonnes while the balance of about 3.3 million metric tonnes has to be met by import.
The prevailing market price for rice in Nigeria is about N200,000 per ton. With a demand of 6 million metric tons, the annual turnover is in the region of N1.2 trillion. This is a figure that sounds worthwhile and the state must take a share of this market. Why states are waiting for oil revenue to meet their obligations when such opportunities exist beats my imagination. Cross River State must thus act immediately and become a leading state in Nigeria.
What model would be best for the state to achieve the desired results in the promotion of the commercial production of rice? I suggest the state adopt a small holders’ scheme in which farmers will have small companies and partner with the state through the state ministry of Agriculture to promote production of Rice. The citizens must be encouraged to go massively into rice farming in the local government areas with comparative advantage in rice production with the support of the government and the private sector.
The government must partner with the private sector to provide mechanized farming equipment like tractor, rice planters, rice harvesters etc for hire in each of the local government areas including other necessary farm inputs like fertilizer, pesticides and herbicides. The government must also through Public Private Partnership model set up commercial rice mills in each of the senatorial districts of the state.
Rice farmers would then be provided small scale loans from the Bank of Industry and Bank of Agriculture through the Microfinance and Enterprise Development Agency MEDA to farm and the harvested rice will be bought over by the mills, processed and marketed in Nigeria and West Africa under the Cross River State brand name. This model will provide jobs for thousands of citizens and help maximize the potential for rice production in Cross River State.
The rice sector however is not without risk like any other business in the world. But there are mitigations against these risks which are the paths we must take. Some of these risks include market risks and loss due to destruction by pests and weeds. To mitigate market risks, we would use various econometric and statistical tools to monitor the movement of market interests, perform analyses on the current trends and forecast results. To mitigate risk posed by pests and weeds, appropriate pesticides and herbicides can be used.
Beyond risks however, market research shows a consistent growth in the domestic consumption of rice and in the number of restaurants and fast food outlets in Nigeria. The Cross River State government must thus step confidently in this direction guided by some of the steps enumerated above. Some other important considerations I will now go into. These include market strategy, product sales and brand promotion.
The market strategy must focus on key segments of the market and the product sales strategy must be based on a cost effective approach to reach the clearly defined target market. The Cross River Rice brand must be actively promoted through advertising in leading print and electronic media.
The buying pattern for rice in Nigeria is affected by a few attributes which include taste, quality and price. On the part of the consumer, such factors such as gender, age and occupational status are relevant. Consumers usually choose their preferred brand based on recommendation by retailers and their experience with the product. Pricing and quality are thus considered very important in putting a product out in the market.
In concluding, Cross River State is blessed with arable land for rice production, Nigeria has a large market for rice and as the Federal Government is on the verge of a ban on the importation of rice, the time is right to invest in rice production and processing to make Cross River State a leading state in Nigeria.
As Nigeria is making efforts under the government’s policies to increase local production and eliminate need for imports in the medium term, the Cross River State Government must take calculated steps at maximizing the potential of the sector in the state and reaping the benefits there from. These benefits include job creation, food security and economic stability for the state.
Emmanuel Etim is a development consultant based in Nigeria. Emmanuel.email@example.com
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