Rice Price Rises As Demand Increases, Local Production Drops: Report

The consumption of rice in Nigeria has been steadily increasing and local production is not able to cope with the trend. Rice prices have skyrocketed in the country due to a gap of two million metric tons this year.

According to the AFEX Wet Season Crop Production Report for 2023, rice consumption now nearly matches the annual population growth projection of 2.6% at 2%, which has created a supply gap of about two million metric tonnes annually, reported Punch.

The price of 50kg of rice was N19,000 in 2019. However, it reached N40,000 in September.

Over the last decade, Nigeria spent more than $15 billion to meet the domestic demand for rice, which reached its highest point this year. One of the main reasons for this increase is India's ban on rice exports and El Nino's potential impact on local production.

Flooding in Nigeria is another factor that shot up the price across the country.

"The price of rice has increased by over 37% year-to-date, driven by reduced production in 2022 due to the effects of flooding during the wet season of that year," the report said. "The driving force behind this surge is the low opening stock amid reduced supply of the commodity in the international market. By the third quarter of 2023, our forecast suggests that the price of paddy rice is likely to stabilize within the range of NGN480,000 to NGN500,000 per metric ton."

The report also mentioned that the Nigerian food system is still trying to recover from the impact of the COVID-19 pandemic and the Russian-Ukraine conflict. Moreover, the cash crunch in the country after the new currency redesign policy mopped up over 70% of cash in Nigeria, causing an estimated loss of N20 trillion.

On top of that, Nigerians are also struggling with the impact of a fuel subsidy removal, leading to food inflation in the country. The announcement on fuel subsidy removal came on May 29 during President Bola Tinubu's presidential inauguration.

Since then, petrol prices increased from N195 per liter to N600 per liter. The government also implemented a 7.5% VAT (Value Added Tax) on AGO (Automotive Gas Oil), popularly known as diesel.

These are some of the major reasons behind the food crisis in the country, which led thousands of youth to attack the National Emergency Management Agency warehouses in the states of Kaduna and Adamawa in July.

Last week, another report suggested that the country's inflation rate jumped 27.33% in October.