Rice Mills Suffer Shutdown In Nigeria As FG Halts Support

Rice mills across Northern Nigeria are facing closures and operational challenges as rising production costs and halted government interventions strain the sector.

According to Nairametrics, once boosted by federal initiatives aimed at achieving self-sufficiency in rice production, these mills are now struggling to stay afloat in the absence of critical financial support.

Nairametrics reports that in the years from 2015 to 2020, numerous rice mills were established across Nigeria, especially in the North, fueled by the previous administration’s “grow what we eat” policy. However, the recent surge in production costs, driven largely by high diesel prices and costly electricity tariffs, has placed heavy burdens on rice mill operators.

Mr. Retson Tedheke, a rice farmer and mill owner in Nasarawa State, told Nairametrics that energy costs have escalated sharply, with diesel now costing N1,400 per liter.

“I spend N1 million monthly on diesel alone due to irregular electricity supply, which makes running a 300KVA generator necessary,” he stated.

Other operators report similar struggles. Mr. Sadiq Abubakr, another rice miller, told Nairametrics that diesel prices have nearly tripled over the past two years, coupled with maintenance costs for imported parts, making the business unprofitable.

The combined pressures have forced many rice millers to either shut down or auction their facilities to recover investments.

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The scarcity of rice paddy, partly due to the destructive floods of 2022, further exacerbates the problem. The limited supply has driven up costs, making it challenging for millers to source raw materials locally.

Some operators, like Mr. Tedheke, now travel as far as Cameroon for rice paddy, while others cite challenges in dealing with local middlemen who have driven up prices.

While the federal government recently removed a 7.5% VAT on diesel imports to help mitigate costs, this has offered little immediate relief to operators. Furthermore, a shift in the Central Bank of Nigeria’s (CBN) monetary policy has seen interest rates rise to 27.25%, making borrowing costs prohibitive.

The previous administration’s substantial financial interventions in agriculture, particularly in rice production, have been reduced, with the current administration citing economic constraints and a return to orthodox monetary policies.

Dr. Augustine Maduka, President of the Community Allied Farmers Association of Nigeria, told Nairametrics that the shutdowns were “expected” given recent reforms and called for input subsidies for millers to alleviate the financial strain.

He also urged both federal and state governments to prioritize dry-season farming to address supply shortages.

With inflation at record levels, rice prices continue to rise, placing further pressure on consumers. According to the National Bureau of Statistics, the price of rice has increased by over 140% within the past year, with a 50kg bag now selling for around N100,000—far above the national minimum wage.