My long-standing intellectual collaborators, Dr. Gunilla Andrae and Prof Bjorn Beckman published an interesting book in 1985 with catchy title “The Wheat Trap”. This was about how Nigeria became dependent on importation of wheat through an insidiously cultivated culture of demand for wheat bread. This created a burden on the national economy at the time when the government was making efforts to reestablish Nigeria’s international credit worthiness. The respond to address this burden of importation of wheat was the drive for local production of wheat in the country which ended in a massive corruption, unable to produce the wheat, creating a new burden on state resource. But it was also an exposition on the wobbling agricultural policy of the country.
The book was followed up by another report entitled “Industry Goes Farming: The Raw Material Crisis and Case of Textiles and Cotton”, published in 1987. While wheat trap focuses on wheat, this report was focused on the response of industry to the crisis of raw materials which necessitated the need for local industry to go into farming, to produce the cotton they needed for the textile industry. Again, this was not only a look at cotton farming in the country but also at the wider question of industrialization in the country. Like the wheat trap, the cotton trap (they did not call it that) was the response of industry to the import squeeze that had resulted from the drastic decline in oil earning in the country in the early 1980s. This led first to the implementation of the Second Tier Foreign Exchange Market (SFEM) in order to rationalize foreign exchange allocation which made access to foreign exchange more costly for industrialists and therefore they had to look inwards to source their raw material needs. But industry ended up not successful in turning to farming.
In both instances, the case of import substitution strategy was nationalistic but poorly articulated and pursued. The results in both cases were the availability of the item in question became more scare, thus impoverishing the citizens, aggravating corruption and reinforcing the trend of deindustrialization of the country.
I have recalled these publications because we are strikingly in a similar situation today and we are responding in the same way and likely to end up with same result. Indeed, it looks like history has played backwards and we are back in the 1980s. When Buhari took over in 2015, apart from fighting corruption, agriculture was the major plank of his efforts to diversify the economy. Like the earlier cases, government push was more about how to address foreign exchange utilization than in restructuring and transforming the economy. This is in spite of the rhetoric of the government about diversification of the economy through agriculture. The government has been loud in its lamentation of the amount of foreign exchange that is spent to finance the importation of food items
In spite of Nigeria’s rich agricultural land and the fact that over 60% of its population is involved in agriculture, it is a net importer of food items. Over the last couple of years import of food and drink according to Nigeria’s National Bureau of Statistics (NBS) has been progressively growing with the country spending nearly $2.9bn in 2015, rising to $4.1bn according to the NBS.
Rice in particular has been the most dominant of the important food items that Nigeria imports. The country spends an estimated $302 million annually in bringing rice across the borders of the country. In order to address this, the government embarked on a scheme to stimulate local rice production. Among the initiatives in the scheme is that government is committing to invest about $500m to support rice production over a five-year period. Last year, it spent about $165m subsidizing rice production. According to the UN’s Food and Agriculture Organization, local rice production has increased from an annual average of 7.1 million tonnes between 2013 and 2017 to 8.9 million tonnes in 2018. Yet there is still a wide gap between demand and supply. The Federal Ministry of Agriculture and Rural Development in 2016 estimated that national demand for rice was 6.3 million metric tonne while local production was put at 2.3 million metric tonne meaning that the country is only producing about a third of the national demand. This gap has to be filled through importation.
But importation of cheap rice from Asian countries is counterproductive to local production of rice as it lowers the price of local rice such that in the face of rising cost of inputs, farmers end up producing at a lost. The high cost of local production of rice is mainly due to the high costs of inputs such as fertilizer. Government has not shown enough commitment in enhancing local production of fertilizers as to meet the national demand for it and lower its cost. Instead, it is still a sore point of corruption as those who have no need for it end up getting it and sale to farmers at higher prices.
But peasant small-farmer land holding is also a hindrance to large scale mechanized farming which would allow farmers to benefit from economy of scale. This is also an area that government has not said anything. While a few states are already parceling out the lands of peasants to big time farmers in the name of attracting investment and boosting agriculture, there are no serious support programmes to make sure that the disposed peasants have alternative sustainable means of livelihood.
Additionally, much of the rice grown in Nigeria is cultivated is along low land areas and flood plains. These are areas affected by perennial floods. Across many states this year, like many other years before, many hectors of rice were swept away by floods, wrecking the hope of bumper harvest a mirage. Flood undermines the capacity for local production. There is no concrete plan to address it.
The importation of rice is thus a threat to rice production self-sufficiency. To deal with this and cut demand for foreign exchange in the face of decreased oil earning, the government, in 2015, banned the importation of rice along with 40 other items. However, the paradox is that in spite of this, importation of rice has continued through massive smuggling across the unpoliceable borders of the country. Early this year, the Central Bank decided to impose the ban on providing foreign exchange for importers of rice. This still did not stop the importation of rice.
When this failed to curb smuggling of rice, the government then clamped on importers by closing the borders and getting customs officers to seize rice smuggled into the country. This has the important effect of raising the price of rice in a country at a time when rice is gradually becoming the national dish. But this is not the first time Nigeria could ban rice importation. Between 1985-1994, the government as part of the structural adjustment program (SAP) banned the importation of rice along with other items such as wheat, leading to the wheat and cotton crises that Gunilla and Bjorn wrote about.
The fact that a lot of rice is still being smuggled is an expression of the failure of government to succeed in its other battle, which is fighting corruption. But there are also three other issues here. The first is that the level of local processing is still poor. Thus, people complain that local rice has stones in it. But there is also the fact that like the bread of the Wheat, the taste for foreign rice has been insidiously nurtured and developed that no matter the quality of processing of local rice, people will still prefer to eat imported rice. It is a symbol of status.
The second and most important factor is the cartel around rice importation into the country. These are powerful organizations and individuals who benefit greatly on the basis of the importation of rice, among other good items, that they are determined to scuttle any effort stop the importation of foreign rice. The key tool of a cartel is corruption as they bride their way across the border.
A third factor is that closing the borders against the importation of rice and other food stuff merely provides a new space for corruption within the customs itself. The customs might have been colluding with smugglers. There is of course the fact that the customs itself lacks the capacity to properly police all the borders of the country both in terms of personnel and technology.
The confusion has created an unstable market with price of rice increasing. Like the cases of industry goes farming and wheat trap before it, Nigeria is now in a new trap which is the rice trap. Banning importation is creating serious social tension as well as fueling price inflation and not bringing down price. Not banning will on the other hand discourage local production as rice farmers will opt out because it then will not be profitable. As Bjorn continues to recuperate, I wish he could pen a new book on the rice trap in Nigeria.
Y. Z. Ya’u, CITAD, Kano
