Are Rice Dealers, Millers Eyeing Bigger Profit Margins as Ramadan Approaches?
When the cost of rice as the preferred staple food item in majority of Nigerian households crashed last month, many people attributed it to the strengthening of the Naira, better conditions of trade at the land borders and a host of other reasons.
However, the relief that households experienced just a few weeks ago as the price of rice especially the short grains crashed to as low as N65,000-N67,000 per 50kg bag has been replaced with despair as the price of the staple food has shot up again.
As it stands now, the price of 50kg imported short grain Indian rice which dropped from N90,000 in December 2024 to N65,000-N67,000, by January 2025, has gone up to N75,000, with traders believing it will still go up.
While the imported long grain 50kg bag Thai rice which was sold for as high as N100,000 during the Yuletide but came down to N88,000-N89,000 three weeks ago is currently selling for as high as N92,000-N105,000 depending on the popularity of the brand.
The locally grown rice is not immune to the steady increase in price as the price of 50kg Bull rice sells for between N84,000-N90,000 while the popular Abakaliki rice sells for N84,000 per 50kg in Ebonyi/Enugu states and sells for over N90,000 in major cities outside the Eastern part of Nigeria due to cost of transportation.
Research revealed that the short respite experienced by Nigerians was an annual trend. Prices of rice often crash at the beginning of every year and steadily climbs up from the middle of February every year as the Ramadan season approaches, according to grain sellers within Lagos who spoke to The Nation Newspapers.
They say, among other factors, many people, including traders usually cash into the opportunity to stockpile rice that they will eat or sell during the lean season. “Now the price has started climbing up, people that bought about a month ago are now selling with good profit,” noted a rice dealer.
Regarding the high cost of locally cultivated rice, the Nation investigation discloses that Nigeria’s rice production has hit the lowest level in four years as high production costs force farmers to reduce their cultivation areas.
Rice production declined by 7 percent in the 2024/2025 season to 5.23 million metric tons (MT) from 5.61 million MT in the 2023/2024 season, according to data from a new report by the United States Department of Agriculture (USDA). One report estimates that the decline could be between 15 and 23 per cent over the period.
The USDA data indicates that the figure is the lowest the country has recorded since 2020 when the COVID-19 pandemic obstructed farming activities.
Farmers say their rice revenues and profits are hard hit by the rising input prices, with insecurity, climate change and the influx of cheaper foreign varieties making it even harder for agro-based firms to stay afloat.
These factors, it is noted, have forced several rice farmers to shift to other crops with lesser production costs, noting that those still growing rice grain have reduced their production areas.
Last year, the federal government suspended the Anchor Borrowers Programme – a key initiative targeted at boosting rice production. It was suspended over fraud allegations and farmers’ failure to repay loans extended to them.
Millers are also hit by the shortfall in production and rising input costs as prices of paddy surged by 100 per cent to between N70,000 to N80,000 per 80kg bag, depending on location and quality.
According to RIPAN, Nigeria needs 11 million metric tons of paddy to meet the current domestic consumption. It puts production at 4.6 million MT.
The country’s rice milling industry has a processing capacity of 7.5 million metric tonnes, according to data from the association.
The association in a 2023 snapshot report said most millers had large unutilised capacity and hence huge overheads per unit of capacity utilised owing to macroeconomic challenges.
“A large number of millers have shut down operations owing to rising production costs,” Peter Dama, National Chairman, Rice Millers Association of Nigeria (RIMAN), said in response to questions.
To address issues of millers, President Tinubu granted import-free waivers for importers of rice paddy, but the foreign exchange volatility has made it difficult for processors to import and mill at competitive prices.