Rice may trigger trade war between Nigeria, Thailand, China, others

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2020

As rice assumes the world’s most consumed food, especially in developing countries, its trade imbalance my pit Nigeria against the world biggest exporter of the commodity.

The resolve by the military junta that overturned the Thai government in 2014—to flog the international market with its 700,000 tonnes of rice from its 18-million-ton stockpiles—is hurting Nigeria
Despite the fall in Nigeria’s inflation rate to 17.24 percent in May, prices of staples have kept their upward moves. And Nigerians are particularly worried about their staff of life—rice.

Efforts have been made to help domestic production inch up to 5.8 million tonnes, according to RIFA. But the prices of local the commodity remains as high as N15, 000 per bag, compared to imported brands from Thai selling at N13,00o per bag.

The government however suspects some cleverness on the side of the exporters.
Speaking recently with senior civil and public servants on the Executive Order ((EO1) on transparency and improving the business environment in the country, Acting President Yemi Osinbajo explained how Thai, China and others began heavy subsidizing of their rice exports since Nigeria began moves to be self-sufficient in rice production.

“In order to sustain their rice export, the governments of such countries now highly subsidise rice production, culminating in lower cost to farmers,” he said.

Up to the beginning of this administration in 2015, Nigeria imported $2.6 billion worth of rice annually—that was about 500,000 tonnes yearly, according to former Agric. Minister Akinwumi Adesina.

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To further emphasise the country’s robust appetite for rice, Adesina said the consumption rate has been increasing 7 percent annually. And by 2050, Nigeria, with its exploding population, will be consuming 35 million tonnes of the grains.
Attempts, including monetary ones, to reduce the nation’s dependence on rice import have been haphazard—just as their results have been.

The Central Bank of Nigerian prohibited sales of forex to rice importers in 2015. All along, a tariff of 74 percent was placed on rice import. But analysts insisted without sufficient local production of the crop, government taking forex measures to address the problem would fail.
And so did it.

The apex bank lifted the ban last week.
The policy to strengthen local rice famers was commendable at its launch. And the yield was encouraging in the interim.

Former President Goodluck Jonathan delivered a string of intervention funds to the agriculture sectors, including a N13 billion-rice fund. Last year, the CBN, through its Anchor Borrower Programme, also backed local rice milling with about N16 billion.

Swathes of rice plantation sprang up in Kebbi, Ebonyi, Anambra, and other states to that effect. And Agric. Minister Audu Ogbe was almost cocksure Nigeria would soon be exporting rice soon.

But the deliberate export subsidy policy by China, Thailand, and others are giving domestic producers headaches in Nigeria. Commodity experts believe it will take a lot of doing for the local farmers to compete.

Thailand has spent $270 billion so far subsidising the commodity trade. As for China, the combined support added up to $100 billion last year—for rice, corn, and wheat on the international market.

Farmers all over the world are actually in the same boat as Nigeria’s. The impact was so bad the US had to file a complaint against Beijing at the World Trade Organisation.

The international politics that play on crude production and exporting is heaving into sight in rice trading, too.

It appears the government will take its intervention in the rice policy beyond ensuring local production for self-sufficiency—to helping the farmers make a forex earner of their produce.

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