FG accuses foreign firms of sabotaging rice policy, fine them N36.5 billion

FG accuses foreign firms of sabotaging rice policy, fine them N36.5 billion

Five foreign-owned rice producing companies in the country have
altogether exceeded import quotas by 70percent of what was allowed
by the Federal Government to them at a preferential duty rate, to
bridge the domestic rice supply gap.

Akinwunmi Adesina, minister of agriculture and rural development says the companies by their actions, are sabotaging the Federal
Government’s rice policy.

Adesina said only 223,902 metric tons was allocated to two of these
foreign-owned companies to import rice at the preferential levy of
20percent, instead of the normal 60 percent levy and 10 percent duty.

The remaining three foreign companies did not get allocation for rice
import at the preferential duty because they do not have Domestic
Rice Production Plans (DRPP).

Based on figures given by the minister, these five companies imported
altogether 732,555.55 MT of rice, which is 508,653.55 or 70 percent in
excess of the 223,902 MT that the first two were to import at the
preferential duty.

Akinwunmi says therefore, that these five companies are to pay
N36.5 billion as import tariff to the Federal Government treasury, out
of which about N31.2 of this amount is tariff owed to the treasury on
excess import.

On May 26, last year, a new rice policy was approved by the
government to encourage investment in local rice production and
milling through the introduction of an import duty differential on rice
(brown or polished) imported by rice investors, compared to rice
traders.

Investors that have milling capacity with verified Domestic Rice
Production Plans (DRPP) enjoy an import duty of 10percent and levy
20percent, while traders will pay an import duty of 10percent and levy
60percent.

The new rice policy also stated that importation of brown
or polished rice should be limited to the national supply gap for import-grade rice to be determined by an inter-ministerial committee chaired by the Federal Ministry of Agriculture and Rural Development
(FMARD), with membership drawn from the Federal Ministry of
Finance (FMoF), Federal Ministry of Industry, Trade and Investment
(FMITI) and the National Planning Commission (NPC).

Akinwunmi stated that during stakeholders’ meetings and
consultations, with members of the Rice Processors Association of
Nigeria (RIPAN) and Rice Importers and Distributors Associations of
Nigeria (RIMIDAN), a national supply gap of 1.5million MT was
determined.

This national supply gap of import grade rice is expected to decline to
zero in 2017, when the country is expected to become self-reliant in
rice production, when new rice mills being purchased by investors,
such as Dangote Group, Honeywell, Wacot and others, would come on
board.

These investors have acquired and are developing over 270,000Ha of
rice fields to supply their rice mills with paddy.

Akinwunmi stated that following a transparent exercise, 1.3million MT
out of the 1.5million MT of rice import quotas was allocated at the
preferential levy to deserving companies. To qualify for a final quota
allocation, all qualifying companies had to deposit a Domestic Rice
Production Performance Bond (“the Bond”). For each investor, the
Bond value will be equivalent to 30percent of the value of the quota
received.

This Bond must be secured at a qualifying bank approved by the
Federal Ministry of Agriculture and Rural Development. In the event
that an investor’s Domestic Rice Production Performance Bond is
called, the proceeds will be deposited in the National Domestic Rice
Production Fund (NDRP) Fund to support farmers and millers in
expanding production and milling operations in the relevant states.