Despite CBN interventions, rice records 92% price hike in six years

The price of a 50kg bag of locally produced rice rose by about 92 per cent between January 2016 and December 2021 despite the various measures taken by the Federal Government to drive down the cost of the staple, findings have shown.

A survey of markets across Abuja and Lagos states reveals that the current average cost of a 50kg bag of rice is N25,000, against N13,000, the price in 2016.

This means that within a six-year period, the price of rice rose by about N12,000 or 92.3 per cent.

This increase came amid interventions of the government through the apex monetary authority, the Central Bank of Nigeria, to crash the price of rice in the country.

The most recent intervention of the CBN was the unveiling of 13 mega rice pyramids in Abuja, purportedly containing over one million bags of rice paddy bags.

While unveiling the pyramids, the President, Major General Muhammadu Buhari (retd.), disclosed that the bags of paddy, when processed and supplied to markets, would drive down the price of the rice.

“I am aware that the bags of paddy will be moving straight from here to rice milling plants across Nigeria, which leads to the release of processed rice to the markets by the rice millers. The measure will aid our efforts at reducing the price of rice in Nigeria,” Buhari had said.

The pyramids assembled in Abuja are a part of the CBN’s rice revolution scheme ushered in by its Anchor Borrower’s Programme.

The ABP is an elaborate low-interest loan scheme launched in November 2015 by the President through the CBN.

Under the programme, concessionary loans with a five per cent interest rate are disbursed through Deposit Money Banks, development finance institutions, and microfinance banks to farmers.

The CBN Governor, Godwin Emefiele, had last week announced that the interest rate on the loans which were expected to revert to nine per cent by March this year, would remain at five per cent for another year, ending March 1, 2023.

According to the CBN, the broad objective of the programme is to create economic linkage between smallholders and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilisation of agricultural firms.

Categories of farmers captured under this programme include those cultivating cereals such as rice, wheat and maize, cotton, roots and tubers, sugarcane, tree crops, legumes, tomato and livestock.

As of February 2022, the apex bank had disbursed a total of N984bn to over 4,400 smallholder farmers across the country, the CBN’s chief revealed last week.

Since its introduction, the CBN has released and modified guidelines to the ABP to ensure its effective implementation.

Additionally, in 2015, the CBN stopped the importers of rice and other 41 items from accessing foreign exchange in the official window, in order to encourage local production.

It also banned rice imports across land borders and kept 70 per cent tariffs on imports coming through ports.

While these interventions may have increased local production, the price of rice appears to be unaffected.

Emefiele said during the launch of the rice pyramids that rice production rose to nine million metric tons as of the end of 2021 from about 5.4m MT recorded in 2015.

A feat, he attributed to the implementation of the ABP by the government.

Reacting to the development, stakeholders in the agriculture sector linked the surge in the price of rice during the review period to shortage of supply to markets.

The President, All Farmers Association of Nigeria, Kabir Kebram, attributed the low supply to insecurity in food-producing states, dwindling value of the naira, as well as the poor implementation of the ABP.

Kebram argued that the approach chosen by the CBN to disburse loans under the programme might be counterproductive as it greatly increased the chances of mismanagement and abuse of funds.

He said, “Well, there are many reasons for this, the principal reason being that there is inadequacy of supply. Also, the purchasing power of the naira has dwindled and this has affected the cost of almost all the products and produce we buy today.

“There is general food inflation as well as other inflation, even the World Bank has said that Nigeria has to do a lot to curb the inflation, because it is destabilising the economy.

“And the low supply is also dependent on many things such as insecurity which is preventing our farmers from going to their farms. We also have the Anchor’s Borrowers Programme of the CBN.

“If you are putting in a lot of money in the hands of people to produce items and you are doing it using due diligence, you are likely to cause some imbalance in the market and the psyche of the people. The reality is when there is so much money in circulation, abuse is possible or mismanagement.”

To drive down the cost of the staple, the AFARN president advised the CBN to swiftly release the paddy bags assembled as pyramids in Abuja to millers for immediate processing, stating that this would increase supply.