More rice mills, fewer imports

Nigeria could switch from being the world's second largest importer of rice to self-sufficiency or even exporter status if it builds mills to process its production, the head of a USAID-funded market access group said on Tuesday.

Africa's most populous country imports 2.4 million metric tonnes of rice each year, more than a third of total consumption.

Nigeria produces about 4 million metric tonnes of rice a year, which it processes. However, the mostly inferior quality rice is destined for the lower end of the domestic market, leaving a gap filled by imported rice.

"The opportunity in Nigeria is to process rice grown in Nigeria and replace those imports," Timothy Prewitt, managing director of Chemonics International, told Reuters on the sidelines of an Africa agriculture conference.

Prewitt's USAID-funded project is working to improve Nigeria's production and sales of rice, cassava, cowpea, sorghum, sesame and fisheries sectors.

"They (Nigeria) have enough agricultural resources to easily feed their country and even export rice... but the bottom line is that there aren't enough agro-processors," said Mr. Prewitt.

He said even if Nigeria had up to 67 mills processing 36,000 metric tonnes of rice each, it would still not completely replace imports. Mr. Prewitt said it costs on average $10 million to construct a new mill.

The Nigerian rice market was dominated by two products - imported white rice for urban consumers and parboiled cottage-milled subsistence rice.

International companies were starting to see the potential for boosting production and capacity, with Singapore commodities trader Olam International running a new mill in Nigeria's Benue State with a capacity of 36,000 metric tonnes.

Notore Chemical Industries, 20 percent owned by Orascom, is also planning a 225,000 metric tonnes rice processing plant, which would be the largest rice plant in Africa when constructed, said Mr. Prewitt.

Using Olam's Benue plant as an example of what can be achieved, both in terms of food security but also economic spin-offs, Mr. Prewitt said the final rice product effectively competed with and eventually replaced imports.

"We estimate a $75 million positive impact on the trade balance because of increased local production in 2008," he said.

The calculation was based on the capacity of the Olam mill and last year's price of imported rice per metric tonne, he added.