In a recent revelation from the AFEX Wet Season Crop Production Report for 2023, Nigeria faces a critical challenge as the demand for rice significantly outpaces local production. The annual supply gap of approximately 2 million metric tonnes has triggered a noteworthy 37% surge in rice prices in 2023.
Impact on Rice Dealers
Rice dealers across Nigeria are grappling with the immediate repercussions of this price surge. Daily fluctuations in the commodity’s price are impacting businesses, leading to a notable decline in their customer base. One dealer expressed concern over the sharp increase, stating, “This time last year, the bag was N28,000, but this year, it is N42,000, and customers are raising complaints about the costs.”
Consumer Adaptation to Rising Costs
Consumers, feeling the weight of these soaring prices, are adjusting their purchasing habits. Vera Abua, a concerned customer, remarks, “Most Nigerians are complaining about the increase in the price of rice, and now we don’t buy like we used to before.”
The AFEX report highlights a steady increase in rice consumption in Nigeria, aligning closely with the annual population growth projection of 2.6%. The year-to-date price surge is attributed to reduced production in 2022, primarily caused by the adverse effects of flooding during the wet season.
Challenges to Self-Sufficiency
Richard Ogundele, an agricultural expert, sheds light on Nigeria’s struggle to achieve self-sufficiency in rice production. In 2016, the country met 84% of its local demand, producing approximately 5.4 million metric tonnes. However, challenges, including population growth and insecurity, have hindered progress since then.
Ogundele underscores the impact of inflation on input costs, stating, “Our yields are low, and we operate in a single cropping season. You can’t compare that with Vietnam and China that do two circles and achieve much higher yield levels.” He emphasizes the need for mechanization and subsidization to address ongoing challenges, suggesting that without these interventions, Nigeria will continue to grapple with production differentials.
As Nigeria confronts the immediate consequences of declining local production, the future of the rice market remains uncertain. Businesses and consumers alike are anxiously awaiting sustainable solutions to stabilize prices and secure the accessibility of this crucial commodity in Nigeria.
By: Montel Kamau
Serrari Financial Analyst
5th December, 2023
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