First wave: Priority commodity value chains

15. First wave: Priority commodity value chains

Rice, cassava, sorghum, cocoa and cotton agricultural value chain transformation

 

 A. Rice Transformation Plan

Nigeria will be self sufficient in four years

We must become self sufficient in rice in a manner that grows the agriculture sector and creates jobs

 

Growing demand in Rice

 

 

Fig 42: Projected consumption in Nigeria

 

  • Nigeria: Projected to be 36M MT market by 2050
  • Nigeria is the worlds No. 2 importer, importing 2 Million MT of rice
  • Rice export trade market is very thin
  • Rice prices highly volatile, Thai government positioned to significantly increase price of rice by over 50%
  • Rice grows all across Nigeria, hence, self-sufficiency will positively impact all geo political zones

 

Drivers

 

 

Fig 43: Nigeria’s population

 

Fig 44: Rice as a percent of a Nigerian’s diet

 

 

Limited options for import with high volatility in global markets

 

 

Fig 45: Excess production of major producers

 

 Fig 46: Highly volatile rice prices due to thin trading volumes

 

 Focus on two key value chains

  • Parboiling is a process of precooking the rice during the manufacturing process
  • Required significantly more equipment and energy costs as heat is used for precooking and drying the rice after precooking

  • Rice is harvested with high moisture levels, dried in processing plant to optimal moisture levels and milled.
  • Processing is much simpler and cheaper.

 

Demand Side Targets

Consumer shift to high quality lower cost milled rice vs. parboiled rice

 

Parboiled Rice Demand Side Targets

 

 

Fig 47: Annual Projected Demand for High Quality Parboiled Rice in Nigeria

 

  • Our expectation is that with the advent of high, quality lower cost milled rice, a significant portion of demand in the domestic rice market will shift from parboiled rice to milled rice.

 

Milled Rice Demand Side Targets

 

 

Fig 48: Annual Projected Demand for High Quality Milled Rice  in Nigeria.

 

  • Milled rice production will occur in well organized irrigated farm clusters.
  • The level of organization will increase the quality and reduce the production costs enabling the new product to have a cost and quality advantage over parboiled rice.
  • The cost and quality advantage will enable the product to rapidly gain market share in the domestic market.
  • Promote Nigerian rise at state functions and in media

 

Supply Side Targets – Parboiled Rice

Target aggregation of supply from less organized small holder farmers

 

Import Substitution of Parboiled (PB) Brown Rice for Local Processors

 

 

Fig 49: Annual Brown Rice Supply Options Import vs. Domestic Supply

 

  • Replace imported brown rice with locally produced brown rice by 2013
  • Incentivize the private sector to invest in large parboiling and dehusking facilities in regions of high current production e.g. Niger State, Cross River State e.t.c.
  • Partially Finance incentives through increased import levy on brown rice.

 

Import Substitution of Parboiled (PB) Finished Rice with Local Production Facilities

 

 

Fig 50: Annual Finished Rice supply options import vs. Domestic Supply

 

  • Imports of finished rice will be substituted by stimulating private sector to invest in rice processing facilities in areas of current high production
  • Incentives can be partially financed through increased import levy on finished rice.
  • Target locations will be in lowland rice growing regions

 

Supply Side Targets – Milled Rice

Target aggregation of supply from well organized small holder farmers with in Nucleus Farm model

 

Import Substitution of Parboiled Rice for Locally Produced Milled Rice

 

 

Fig 51: Annual Milled Rice Supply Options Large Clusters vs. Medium Nucleus Farms

 

Key Steps

Step 1: Rehabilitate Target Irrigation Programs

  • Utilizing labour intensive methods to rehabilitate target irrigation schemes that have existing reservoir systems and require only irrigation canals and drainage canals to be developed

Step 2: Incentivize Investors to Invest in Nucleus Farms

  • Leveraging investment in rehabilitating irrigation schemes, incentivize investors to develop nucleus farm estates.
  • Already sent high level team to meet with potential investors in Kenya and Ghana.

Step 3: Replicate Nucleus Farm Model on Medium Scale

  • Replicate model to rapidly target community level production and processing.

 

Inputs Required to Achieve Rice Production Targets

Land|Improved Seed|Fertilizer

 

Land

 

 

Fig 52: Annual Land Cultivated

 

  • Milled rice production will be focused on well organized nucleus farms with small holder out grower farmers, in irrigated areas.
  • Parboiled rice production will be focused on aggregating supply from small holder outgrower farmers producing in lowland areas

 

Seeds

 

 

Fig 53: Annual Required Volume of improved seeds

 

  • Leverage the ECOWAS seed treaty that enables private sector seed companies to import seed from the West African region.
  • Importation will be preferentially provided to companies that are demonstrating significant investments in local production of improved seed varieties

 

Fertilizer

 

 

Fig 54: Annual Regulated Volume of Fertilizer

 

  • For each of the targeted regions for rice production analysis will be conducted and tailored fertilizer blends for the identified rice varieties will be developed.
  • Nigeria currently has enough installed capacity to produce the required volume of fertilizer for the investment

 

Rice Job Creation Targets – 1 Million by 2015

Primary Production|Plantation Establishment|Value Chain

 

Primary Production

 

 

Fig 55: Annual Job Targets – Primary Production

 

  • High labour requirement in rice estimated at 200 man days per hectare
  • Irrigated areas cropped twice per year increase the labour requirement

 

Irrigated Land Preparation

 

 

Fig 56: Annual Job Targets – Irrigated land Preparation

 

  • The preparation of the irrigated area, including land clearing, irrigation, canal and drainage development require significant amounts of labour.
  • Approach will integrate effective labour intensive methodologies to stimulate employment
  • Estimate of 150 man days per hectare

 

Value Chain

 

 

Fig 57: Annual Job Targets

 

  • The rice value chain is relatively labour intensive
  • Estimate that for every 5 jobs created in primary production, 1 job will be created within the value chain
  • The value chain includes, input supply, service delivery, aggregation of output and processing.