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Wednesday, February 1, 2023

In Two Months, Bag Of Rice Price Increased By 54%

In Two Months, Bag Of Rice Price Increased By 54%.

The price of a 50kg bag of locally parboiled rice in Nigeria soared by 53.6 percent in two months on the back of the floods that ravaged many parts of the country.

A BusinessDay survey of some markets in Lagos found that a 50kg bag of locally parboiled rice now sells for N43,000, up from N28,000 in September. The price of a 50kg bag of foreign parboiled rice rose to N45,000 from N31,000.

“The floods have affected the paddy rice session, which affected the volumes of rice in the market,” David Ibidapo, head of market data and research at AFEX Commodities Exchange, said.

Ibidapo said the floods have washed away a lot of crops belonging to farmers that had done dry season planting earlier in the year.

“Before the end of December, it might reach N50,000 per bag, and that’s on the back of expectation of lower production this year.”

Thousands of hectares of rice farms have reportedly been washed away in Taraba, Jigawa, Kano, Benue, Niger, Kogi, and Kebbi, among other states.

The floods submerged hundreds of rice farmlands and caused the price of paddy to jump from N200,000 to N300,000 per tonne, said Mohammed Abubakar, chairman of the Rice Processors Association of Nigeria.

“It has also worsened the diesel and transportation situation in the North,” he said.

This year’s flood incidents, the worst in a decade in the country, have destroyed 70,566 hectares of farmland, damaged 45,249 houses and displaced over 1.4 million Nigerians, with about 600 persons reported dead.

The floods have been attributed to the release of water from the Cameroonian Lagdo dam, which affected Nigeria because of its lack of flood defence mechanism. The Dasin Hausa Dam, which should have been built 40 years ago, would have been able to cushion the effect of whatever came from Lagdo.

Data from the United Nations Office for the Coordination of Humanitarian Affair, World Food Programme, and Telimer Research show that Nigeria has the largest number of people (3,480) hit by flooding among 19 African countries.

A recent SBM Intelligence report revealed that in Nasarawa State alone, $15 million worth of rice farms was submerged by floods, which means that there would be no harvest for this season for most parts until the next planting season.

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“The rice harvest, which is expected for November-December 2022, has been cut off, and Nigerians have to wait till the next rice harvest season, which is August-September 2023 for the South and November-December for the North. This means that in about one year, domestic production of rice will reduce considerably,” it said.

Apart from flooding, another major factor contributing to the surge in rice is the foreign exchange crisis in the country.

“The redesign of the naira notes has made people rush for dollars, spiking the demand for rice, especially the foreign ones,” said Muhammad Augie, former chairman of Rice Farmers Association of Nigeria, Kebbi State chapter.

At the official market, the naira traded around N830-N860 to a dollar on Tuesday at the parallel market, compared to N580/$1 in December last year.

Abiodun Olorundenro, operations manager at Aquashoot Limited said the demand for rice is “crazy right now” because people are buying ahead of the yuletide season.

“Ideally, even though there’s an increase in price, it should stabilise for a while, but because the demand is high, the sellers/importers are taking advantage,” Olorundenro said.

The country’s food inflation rate accelerated for the seventh straight month in September to 23.34 percent, according to the National Bureau of Statistics.

BusinessDay gathered that a tonne of maize now costs N250,000 as at Tuesday, up from N230,000 last week.

“A lot of farmers did not plant much maize this year because of the high cost of fertilisers caused by the Russia Ukraine crisis. Maize usually requires a lot of fertiliser. So, maize production was lower this season compared to last year. So that is pushing up prices. We have a huge demand for the commodity but there is limited supply,” a commodity analyst said.

Ayodeji Ebo, managing director/chief business officer at Optimus by Afrinvest Limited, said the surge in rice price will make people look for alternatives.

“It is just going to impact what people will consume. They will look for substitutes and quantities they can afford,” Ebo said.

Since Russia invaded Ukraine in February, the price of rice has been relatively stable amid accelerating inflation and dwindling household income. Experts attributed the price stability of the staple to an increase in local production.

Nigeria’s rice production will reach five million tonnes in 2022, slightly above the 4.8 million tonnes it predicted last year, according to the latest data from the UN Food and Agricultural Organization.

With this production, the country will still have a deficit of two million tonnes with demand at seven million tonnes, according to the Ministry of Agriculture.

Source: businessday

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