Several Rice mills in the Northern Nigeria have shut down operation as a result of increase in production cost as well as the halt of intervention finance in the last 18 months. According to a survey report between 2015 and 2020, rice mills sprang up across the country especially in the Northern states, owing to the determination of the then Central Bank policy to ensure the country achieves self-sufficiency in rice production. Mr. Retson Tedheke is a farmer in Nasarawa state who keyed into the initiative but today nearly regrets committing millions to the venture as the current economic woes make the business almost unsustainable. While his mill is still running, the cost of operation is the highest it has ever been and there is no support from both government and private sector. Speaking he said, “I spend N1 million on diesel for our operations because electricity is not regular and we have to buy diesel at N1,400. I run a 300KVA diesel generation.” The price of diesel has more than doubled in the last 18 months, pushing energy cost for businesses to the roofs. This coupled with the new electricity tariffs for Band A customers has been a major blow to the business community.
Retson is not the only farmer complaining about the high cost of operation. Mr. Sadiq, another farmer, stated that the price of diesel has nearly tripled in the last 24 months coupled with the cost of maintaining rice mills in terms of parts which are mostly imported has made the business an unprofitable venture and necessitated the shutdown and even auctioning of rice mills. In a bid to stem the rise in diesel prices, the federal government recently announced the removal of 7.5% VAT on diesel imports; a similar move was made in December 2023 to help reduce the increase in diesel prices. Confirming the impact of high running costs, Mr. AY Hassan said that his rice mill has been shut down for over a year now on the back of the high cost of production and other problems. According to him, “We have stopped production in our mill for over one year now. We are planning on reopening when this economic crisis settles a bit.”
However, he didn’t provide a timeline for the firm’s proposed reopening. But it is not only the high running cost that is responsible for the spate of shutdown of rice mills. From the conversation with Messrs. Retson and Sadiq, other factors can be identified including the absence of rice paddies and the high cost of lending. Mr. Retson said that he travels as far as Cameroon to source rice paddy while for Mr. Sadiq Abubakr, middlemen have hijacked the process making sourcing the paddy by miller costlier. Getting rice paddy for mills has become a herculean task in the past few years owing to the significant disruption in rice supply following the destructive floods of 2022. The Lagos state government, which built a massive rice processing plant- arguably one of the biggest in West Africa has seen very minimal activity due to the absence of rice paddy. The state government had earlier appealed to the federal government to allow for the importation of rice paddy to put the plant to work. In August, the federal government granted approval for the importation of grains including white and brown rice paddy as well as maize and others.
Rice mills in northern Nigeria shutdown as economic woes bite, a bag now sells for N130,000
