Rice Value Chain: Its Critical role in Nigeria

By: Agbaji chinedu

A ‘value chain’ in agriculture identifies the set of actors and activities that bring a basic agricultural product from production in the field to final consumption, where at each stage value is added to the product. A value chain can be a vertical linking or a network between various independent business organizations and can involve processing, packaging, storage, transport and distribution. The terms “value chain” and “supply chain” are often used interchangeably.

Traditional agricultural value chains are generally governed through spot market transactions involving a large number of small retailers and producers.

Modern value chains are characterized by vertical coordination, consolidation of the supply base, agro-industrial processing and use of standards throughout the chain. 

A value chain encompasses the flow of products, knowledge and information, finance, payments, and the social capital needed to organize producers and communities.

Information is especially important to all value chain actors and flows in two directions: markets inform producers of price, quantity and quality needs, product handling and technology options, while producers inform processors and markets on production quantities, locations, timing and production issues. In a value chain, processors and marketing agents may provide producers with finance, inputs and training in technologies of production.

Rice is an increasingly important crop in Nigeria. It is relatively easy to produce and is grown for

sale and for home consumption. In some areas there is a long tradition of rice growing, but for many, rice has been considered a luxury food for special occasions only. With the increased availability of rice, it has become part of the everyday diet of many in Nigeria.

Nigerians spent not less than N1 billion daily on rice consumption, while spending had drastically reduced, consumption had increased because of increased local production of the commodity.

“The consumption rate now is 7.9 million tones and the production rate has increased to 5.8 tons per annum,’’This is as a result of CBN’s Anchor Borrowers Programme (ABP) with a total of 12 million rice producers and 4 million hectares of FADAMA rice land. Since inception of the program, it has created economic linkage between Small Holder Farmers (SHF) and reputable large-scale processors, thereby increasing agricultural outputs and significantly improving capacity utilization of processors. The unveiling of the world’s largest rice pyramid in Abuja is a good testimony of The Anchor Borrowers’ Programme (ABP), an initiative of the Central Bank of Nigeria (CBN), which has been described as a major agricultural breakthrough and a source of pride to the country, as rice farmers continue to count gains under the scheme.

Additionally, there has been a significant reduction in the country’s rice import bill, from a monstrous $1.05 billion prior to November 2015, to the current figure of $18.50 million, annually. The programme has also created an estimated 12.3 million direct and indirect jobs across the different value chains and food belts of the country. The agricultural industry is a sector that has huge lucrative business and career opportunities within the value chain especially in the rice value chain. If you have an interest in agriculture or open to learn about business ideas in agriculture sector, you don’t need to own a farm or practically engage in any kind in animal husbandry or crop production before making money from Agricultural business. In fact, people that make the most profit from Agribusiness are not necessarily farm owners.

In recent time, agribusiness has taken a dramatic turn to a better direction, creating all year-round wealth and making Millionaires through it in Nigeria and there is certainly no end to the prospects of creating more wealth through Agribusiness in the coming years.

As agribusiness plays a critical role in jump-starting the economic transformation through development and growth of agro-based industries, successful agribusiness investments stimulate agricultural growth by providing new markets and developing a vibrant input supply system to all sectors.

There is no doubt that agriculture is vital for the sustainability of most countries, as it supports the basic need of a consumer, provided it is placed in the right direction. Everyone in Nigeria, from the president to the man in the street, is talking about diversifying the economy from the oil-dominated mono economy to agriculture/food production focused-economy, with the Covid-19 pandemic that came with its attendant oil price crash, as demand dropped in 2021, yet we must not be deter in investing in green gold.

To sustainably develop agricultural business in Nigeria and make it an alternative source of income to the nation’s private sector is critical in the development of opportunities in the desired value chain component for our agricultural products. It is the private sector that drives the process and government role is to create conducive environment through sustainable policies which stake holders in Agricultural sector such as RFAN (Rice Farmers Association of Nigeria) and the parent body ALFAN (All farmers Association of Nigeria) should be part of, that will encourage private sector participation. For instance, government policy on rice importation ban paid off, the rice value chain has been improved as many investors invested into branding, processing and packaging and machineries that has improved the quality of our local rice, I can stand to say some our local rice can compete with the foreign both in quality and finishing. viable and sustainable jobs are now available within the value chain.

In this year 2022, there are a whole lot of opportunities for those that wants to invest into rice value chain as RFAN launch dry season farming such as: –

• productive resources e.g., seeds, fertilizers, equipment, energy, machinery.
• facilitative services e.g., credit, insurance marketing, consultancy, branding.
• storage or warehousing,
• processing and packaging.
• transportation and distribution.
• Irrigation equipment and services

With revolution in Agriculture, the business of Agriculture within the rice value chain has been made attractive. Every kobo invested into rice value chain this year will have sure return on investment. The multiplier effects of the success of rice value chain on the Nigerian economy is far enormous, with the current agricultural income of the country, put at N15 trillion as against the potential value of about N40 trillion.

Nigeria could pride herself as an investment hub in Agriculture and put the nation back to limelight as an agrarian nation that can guarantee food security and generate foreign exchange through Agro produce exports with the improvement in the rice subsector of Agricultural sector I can say so. 

OPPORTUNITIES WITH THE RICE VALUE CHAIN

RICE INPUT DEALER: Rice input shop is an enterprise that makes it possible for availability, accessibility and affordability of all the inputs you need for rice to grow and be harvested such as fertilizer, agro-chemicals, improved quality highbred rice seeds, small farm implement, rice branded sacks, watering cans and irrigation apparatus etc. for farmers to purchase both in the rural areas and in cities. It is a growing business opportunity that federal Government and international agencies are interested in by establishing and commissioning of One-Stop-Shop Agro-inputs Centre to promote food security programs, Feed the Future.

RICE FARMING: Rice farming is an opportunity in rice value chain. You can make your money in the rice value chain farming rice; in some areas they farm rice four times in a year while some farm only once or twice. When you make it your business you will develop a system to will help you farm up to four times every year no matter the season and this money. We have different varieties of rice in Nigeria, short and long grains, brown rice etc. Rice in Nigeria test differently because of soil texture. Return on investment is high as the demand for rice is limitless.

RICE PROCESSING AND PACKAGING (RICE MILLING): A rice mill is a food-processing facility where paddy is processed to rice to be sold in the market for food. The entire product is procured from paddy fields, milled and processed hygienically in modern machinery and dust-free environment and cleaned through sorting machines. Rice processing involves several steps: removal of the husks, milling the shelled rice to remove the bran layer, and an additional whitening step to meet market expectations for appearance of the rice kernels.

Investors can go into rice farming and rice processing or rice milling plant. Rice milling projects will best be sited in these areas where rice is grown in order to reduce the cost of transportation of the paddy. To set up this project, a minimum space of a plot of land is required to dry paddy rice after harvesting.

The components of machines required to set up this project are cleaning facilities, Dehuller, boiling tank, dryer, Polisher, Bagger and other miscellaneous equipment such as wheel barrows, weighing scales. Some of these machines can be fabricated locally. They can also be imported from Europe and some known Asian companies. Prospective investors would be given details on these machines.

RICE DISTRIBUTOR: As a rice distributor you can make so much money from rice value chain. This is because you stand between the miller and the retailers/consumers. All you need is your capital and warehouse, but you need to know the market very well.

GIVING SUPPORT SERVICES: Supportive service such as farming and processing equipment service: This is a loan kind of in which the lender buys and owns equipment and then rents it for agricultural business at a flat daily or monthly rate for a specified number of days or months. It also could be warehousing, financial service, logistics, capacity building etc.

RICE PROCESSING AND PACKAGING BUSINESS: With the revolution in rice value chain, you are assured of getting enough quantity of local rice paddy and semi processed rice to process, package and brand into your own name. The local rice are available in different states in Nigeria such as Kano, kaduna, Enugu,Gombe State, Niger State, Kebbi State, Ebonyi State, Anambra State,Cross River etc.

Finally, the return on investment is sure as a result of ban on rice importation and Nigerians are now aware of the nutritional value of local rice to foreign rice which has little or no nutritional value. As far as you have good rice to your brand name you will sell and be patronized by Nigerians.

Agbaji chinedu: [email protected] 08035004617