Introduction
Since January 2025, rice prices have fallen sharply across Nigeria. While this is good news for consumers, rice farmers and others in the rice value chain have expressed deep concerns with claims that local rice production is under threat from the importation of cheap rice. A bit of background to explain how we got here is necessary.
With food inflation at a three-decade high and nearly half its 220 million citizens living in poverty, Nigeria's food security reached a critical point in 2024. As the nation's economy struggled under the weight of a devalued Naira, exorbitant input and energy costs, widespread insecurity, and devastating environmental factors such as inconsistent rainfall and flooding, prices of commodities including rice kept climbing.
In an attempt to offer consumers some relief, the federal government implemented a temporary waiver on import duties for essential food commodities, including rice, effective July 15 to December 31, 2024. Rice imports for Market Year 2024/25 were estimated at 2.4 MMT, a 60 per cent increase compared to Post’s April 2024 estimate of 1.5 MMT. This excludes the quantity of rice that was smuggled illegally into the country. While this policy change has led to lower rice prices for consumers, there are early evidence that it might also risk casting a long shadow over Nigeria's ambitious journey toward self-sufficiency in rice production.
A Look Back: Key Policy Milestones in Rice Importation
To attain self-sufficiency in rice production, the Nigerian government implemented several bans and restrictions on rice importation over the years, targeting both land borders and seaports. Below are some of the key milestones in Nigeria’s Rice Importation Policy.
October 1985: Under President Ibrahim Babangida, Nigeria imposed a ban on rice imports to curb foreign exchange depletion and encourage local production (FAO)
January 2011: The government prohibited rice imports through land borders, restricting entry exclusively to seaports to reduce smuggling and ensure proper duty collection.
July 2015: A full ban on rice imports was introduced to promote self-sufficiency. However, this was partially lifted in October 2015, allowing imports through land borders upon payment of duties. The policy was reintroduced in March 2016 due to inconsistent enforcement and porous borders, which led to substantial smuggling, eroding government revenue and undermining domestic produce. This led to the restriction of rice imports exclusively through seaports with a 10 percent tariff and a 60 percent levy, a total of 70% on imported rice.
April 2023: FG released the Import Adjustment Tax list for 2023 Fiscal policy measures, the previous policy of 70% import duty was revised for importing paddy, and the government imposed a 10 per cent import duty and a 50 per cent levy. However, an integrated rice miller with a confirmed backwards integration program (i.e., to begin producing domestically) is eligible to pay a 10 percent import duty and a 20 percent levy, respectively.
July 2024: The Federal Government, through the Customs Service, announced the temporary waiver of all import (and associated levy) taxes for some food commodities, including rice, until December 31, 2024. As a result, husked brown rice import tariffs and duties went from 20% to 0%. This step was taken to ease food inflation, which had reached a peak of approximately 41% in 2024.
December 2024: Scheduled date for the end of the temporary import waiver on rice; however, imports from neighbouring countries have traditionally funnelled imported rice to Nigeria through informal trade channels, even though the importation of rice through land borders remains prohibited.
The Human and Economic Toll
Although all these interventions were introduced to promote local production, ensure affordable and accessible food to all Nigerians and to maintain healthy competition between local and imported rice, the unintended consequence was a flood of cheaper imported rice from countries like India and Thailand. Most importantly, continuous illegal imports from other neighbouring countries persist due to poorly enforced borders, outcompeting locally produced rice.
This significantly influences the price of Nigerian rice because smuggled foreign rice has no tariffs or duties to pay, hence it is significantly cheaper than domestically grown rice. This makes the foreign rice flood the industry, depressing the prices and undermining domestic producers' competitiveness.
Local farmers and millers find it difficult to compete against such low prices, resulting in low-income generation, factory shutdowns, and employment losses along the value chain. Although consumers may gain short-term price benefits, the long-term implications hurt the Nigerian rice industry. It discourages investment, compromises food security, and undermines the progress the sector has made towards being self-sufficient. This is why the tightening of border controls is important not only to protect price stabilisation but also to maintain the economic and social achievements the sector has registered in the last decades.
Voices from the Field: How Rice Miller is Responding
Rice farmers and millers, already grappling with insecurity and rising production costs, expressed their worries that the influx of affordable rice undercuts domestic production. They struggle to compete with the lower-priced imported rice circulating in the market.
In an interview with Magifem, a rice miller operating in Nigeria, he expressed his view on the immediate effects of the government’s temporary import waiver. Magifem said, "It has crashed the price, yet input and labour are expensive," Magifem explained. He expressed concern that while the intervention aims to make food available, it may ultimately discourage local production. "Do you know how many people have gone back to local products since the closure of borders?" he questioned.
Magifem emphasised that for a sustainable solution, the government should consider subsidising farm inputs, making machinery more accessible, and establishing a price control strategy. "What I feel a reasonable government should do is to subsidise farm inputs, make machinery available and accessible to the real farmers and producers, then set up a price control strategy," he concluded.
Economic impact of the Nigerian Rice sector
Beyond the present worries expressed by several players in the rice value chain, it is important to recognise the broader impact of the Nigerian rice sector and intervention from both government and private organizations. Rice is more than just a staple food, it is a vehicle for rural employment, industrial growth, agribusiness investment, and food system resilience. Over the past decade, the sector has created thousands of jobs across farming, processing, transportation, and marketing, providing millions of Nigerians with sustainable livelihoods and the chance to gain relevant agribusiness and technical skills.
The sector has seen a notable expansion in the area cultivated and in production quantity. The area cultivated for rice production increased by approximately 650%, from 0.6 million hectares in the 1980s to 4.5 million hectares in 2023. At the same time, production rose from 1.1 million metric tonnes to 8.9 million metric tonnes, reducing reliance on importation. This growth has been accompanied by increased engagement across the value chain: input suppliers, logistics providers, aggregators, equipment service, and processing enterprises (large companies, SMEs, etc), contributing to its ripple economic effect.
As previously discussed in our rice industry review, “Nigerian Rice Aspiration: The Journey So Far” (Vestance, 2024), Nigeria's rice milling business is currently undergoing significant industrialisation. Today, more than 100 mills are in operation, with growing capabilities in processing capacity, parboiling, and packaging. Integrated companies are getting involved with contract farming schemes, providing critical linkages to small farmers and assuring paddy supply to mills.
Despite this, the sector is still beset with a high cost of production, whose impact is directly on the price competitiveness of Nigerian rice compared to low-priced imports from other countries. Tackling such cost drivers is important to attaining sustainable self-sufficiency.
Sneak peek into the Price of Nigerian Rice over the years (2016–2024)
According to price data from the National Bureau of Statistics (NBS), a review of the price trends for Nigerian Rice between 2016 and 2024 reveals that prices remained relatively stable with modest fluctuations between 2016 and 2020. However, from 2021 onwards, the price experienced a steep and continuous increase, peaking sharply in 2024, with a drastic rise of over 150% between 2023 and 2024. This surge was fueled by inflationary pressures, naira devaluation, high production costs and inconsistent policies, which have made rice increasingly unaffordable for many Nigerian households.
Likewise, market responses have compounded the problem— several farmers, in anticipation of further price hikes or in response to volatile market conditions, turned to stockpiling their produce to sell in times of scarcity. Not only did this lower the current supply of rice in the market, but it also further exacerbated price increases, and the price of rice continued to become unaffordable for most Nigerian homes.
To effectively address these multifaceted challenges, a comprehensive and inclusive approach is essential. This approach not only provides immediate relief but also lays the background for long-term resilience in the agricultural and food sectors. Policy recommendations include:
Border Controls and Anti-Smuggling Measures: Illegal importation of rice has long been one of the major challenges Nigeria faces, exerting a negative impact on the rice market in the country. To boost domestic rice production and competitiveness, border security must be strengthened to prevent informal and illegal imports. This includes using advanced surveillance technologies, enhancing cooperation between border agencies, and engaging in regional cooperation to track and stop smuggling syndicates.
Support for Farmers and Millers: Offering subsidised inputs, enhancing access to credit (working capital) at reasonable rates, and providing capacity-building initiatives like training in advanced farming as well as milling techniques can effectively cut the cost of production. These initiatives will improve yields, enhance product quality, and make the product more competitive in domestic as well as foreign markets. The GIZ-MOVE, Bühler Group, and Partners’ intervention in offering a unique in-depth training & coaching program for rice processors in Kano and Lagos states is a key support in enhancing rice production and the supply chain.
Investment in Infrastructure and Security: Upgrading rural infrastructure, such as roads, warehousing, irrigation, and electricity supply, is essential in addressing post-harvest losses, high energy costs, and ensuring effective supply chains. Furthermore, rural insecurity can be dealt with through community-level interventions and assistance for local security programs, to stimulate farm investment and consistent farming activities.
Continued Monitoring of Global Trends: With India’s recourse to export restrictions and import policy changes, Nigeria must closely monitor global developments in the marketplace. Having an early-warning system and a separate unit for policy analysis can facilitate the response in good time to global supply shocks, insulating the national food system from outside vulnerabilities.
Conclusion
The rice industry in Nigeria is at a crossroads between short-term stabilisation of prices and long-term agricultural sustainability. While global declines in prices coupled with waivers by the state have relieved consumers for the short term, they have also revealed the vulnerabilities of the domestic sector. Moving forward, there is a pressing need for a strategic and inclusive approach, one that empowers local producers, secures the supply chain, and promotes market stability. Such a response is essential not only to ensure food security but also to build resilience and drive sustainable development within the rice industry.
References
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