Aliko Dangote Investing in Local Production of Rice as an International Exporter

The Chairman of Dangote Group, Aliko Dangote is investing in local rice production in an effort to enhance the domestic production of rice that will make Nigeria as international exporter of rice.

Years ago, Nigeria was among the top rice producers until an aversion for home-grown rice sets in. This has turned Nigeria to the second largest importer of rice in the world, buying at least five million metric tons per year from exporting countries like China and Thailand. Yet Nigeria’s fertile land and rich agro-climatic conditions could easily produce rice to feed the entire country and generate surplus for the region

Rice remains an integral part of the average Nigerian’s diet. As such, there is no surprise that the country import is heavy on this food crop. The FGN’s estimates show demand at 6.3 million metric tons per year (mmt/y) while domestic supply is estimated at 2.3 mmt.

According to the FGN’s Agriculture Promotion Policy, rice import still exceed $1 billion per annum. It was gathered that the CBN’s policy, which focused on limiting the importation of 41 items (rice inclusive) led to a 300,000 metric ton decline in rice import in first quarter, 2016.

The inclusion of rice on the list of 41 items excluded from accessing foreign exchange (FOREX) from the official window as well as the general issues with sourcing of FOREX has led to a drop in rice supply to the domestic market and a spike in prices.

Considering that the FGN’s set minimum wage currently stands at N18,000 per month, a bag of rice currently priced at between N18,000 to N19,000 per bag is almost not affordable to the average household.

Despite the ban on rice imports through land borders, there has been increased smuggling. The Nigeria Customs Service has recorded a pick-up in seizures since January 2016.

The Federal Ministry of Agriculture and Rural Development (FMARD) has expressed its commitment to improving rice productivity. Local rice production has been projected to hit 2.7 mmt in 2017.

On the public- private partnership sphere, Dangote inaugurated its 8,000-hectare rice out-growers’ scheme in Hadejia, Jigawa state early this year, when he distributed rice seedlings to farmers. The scheme is said to help reduce the level of Nigeria’s imports and potentially provide direct and indirect jobs to about 10, 000 Nigerians.

Dangote Industries Limited (DIL) also recently signed a Memorandum of Understanding (MoU) with the ministry of Agriculture and Rural Development (FMARD) to invest $1 billion on establishment of fully integrated rice production and processing operations across Nigeria.

Farmlands in Edo, Jigawa, Kebbi, Kwara, and Niger states totalling 150,000 hectares have been penciled down for the commercial production of rice paddy.

Rice is one of the viable investments in agriculture, as a high yield crop, the return on investment for rice farming is high and it takes just four months to plant and harvest rice.

Starting with 20,000 hectares of rice cultivation under scheme known as outgrowers, to be expanded to cover 800, 000 hectares over the next three years, the president of Dangote Group, Alhaji Aliko Dangote said time is now to turn to agriculture to save the nation’s economy.

The business mogul commenced the scheme with the distribution of treated rice seedling for planting to some 5,000 farmers expected to participate in the scheme.

He explained, “We are committed to the development of outgrower scheme by providing local, value added products and services that meet the basic needs of the populace. To this end, the Dangote Rice Farm, will run an initial pilot in Hago-Fadama, Kafin Hausa and Auyo areas which would see Dangote Rice developing small hold farmers by providing quality inputs, certified seeds, fertilizers, agro-chemicals and petrol improved agricultural practices and technology to increase yield and produce quality rice paddy which would also be bought back from them by Dangote Rice Limited. The Outgrower programme in Jigawa state is expected to create more than 10,000 direct and indirect jobs to the host communities.”

Aside the outgrowers aspect of the investment, he explained, Dangote Rice is planning to plant approximately 150,000ha of long grain white rice and produce near one million tons of high quality par boiled white rice for sale into the Nigerian market.

“Our internal policy within Dangote Rice is to procure 30 per cent of our rice production from local farmers who will be developed into outgrower groups. These outgrowers will be simultaneously developed alongside our commercial farming operations.” he said.

The business mogul justified his investment in rice cultivation pointing out that the situation the country has found itself needs a reversal, saying “Nigeria spends nearly $1.8 billion per annum importing approximately 3.2 million MT of rice to feed its population. These are dollars that could be used on more impactful social development interventions if they were not needed for food imports.”

During the rice seedling distribution by the company, the minister of state for Agriculture, Senator Heneiken Lokpobiri lauded the initiative of Dangote, saying intervention in the government efforts at providing food security for the citizenry, creating jobs and reducing dependency on food importation are being boosted.

While expressing the government readiness to provide all the needed support to make the Dangote Rice Outgrowers Scheme a success, the minister said the government is putting in place a strategy that will make farmers have greater access to farm implements to help them produce with ease.

Also, the special adviser to Dangote on Rice and Coordinator of the Outgrowers Scheme, Mr. Lulu Carlos explained that 6.1 mmt of rice is consumed annually but not more than 2.6 million metric tons are produced locally leaving the rest to importation.

Lulu said, “We are happy to start today the partnership with the first Outgrowers bloc of 200 hectares, shared among eight communities.”

He pointed out that the same project was applied by Brazil, which transformed the country from a net importer of rice in the year 2000 to a net exporter in the year of 2009, saying “This was achieved through a big outgrower scheme in the rice region, which, today involves thousands of independent farmers responsible for 80 per cent of the 12 million tons locally produced rice and a small number of large commercial farms supplying the remaining 20 per cent.”

Jigawa State governor, Alhaji Badaru Muhammed Abubakar thanked the Dangote Rice Limited for choosing Jigawa as the pilot state for the project.

He pledged the readiness of his administration to provide all necessary support to the project.

With the federal government rice production scheme, stakeholders have expressed hope that the scheme will stop the massive importation of rice in Nigeria, in the next three years.

Apart from large entities like Dangote, there has been increased participation by small holder rice farmers. However, access to credit still remains a challenge.

There are other areas within the rice value chain which are largely untapped, they include processing, storage, packaging and distribution. Insufficient supply chain integration was highlighted as a core issue within the rice segment by the federal government.

While the supply deficit is huge, closing the gap could be accelerated through increased private sector participation. However the onus is on the government to create an enabling environment. Excluding the job creation potential, this would also ease pressure on the country’s import bill.


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