Investors reject rice import licence bazaar

The rice market is flooded – no thanks to an import licence bazaar that is threatening to run major investors out of business.

The industry’s stakeholders have cried out to the Federal Government to save their huge investments.

They are pleading that the Federal Government should:
•cancel the recent wave of rice import licences; and
•keep the government’s self-sufficiency plan on track by protecting those who have invested heavily in the sector, which is now threatened by a flood of imports.
In a protest letter to the government through the ministers of Finance and Trade and Investments, the stakeholders drew attention to the recent “indiscriminate and wrongful “ award of import licences as well as concessions to businessmen with “absolutely no investments in the rice sector “ who are now “making millions and billions of naira selling those licences to importers in the market”.
The fear of rice industry sources is that with the current developments “in which new comers without prior experience were favoured over and above operators who are investing billions of naira in line with the Agricultural Transformation Agenda (ATA), their investments may go down the drain.
“The way it is going, another few years will be wasted and the nation drawn back. With  oil prices falling, the ATA provides the best opportunity for the country to generate alternative revenue by reducing import and in the near future, join the export market. With this sort of policy,this thing is not going to work. The rice import allocations will derail the self-sufficiency efforts,” said the petitioners.
The industry players across the value chain, with existing substantial investments said the crisis they are facing is “imminent crisis of viability and closure” following the government’s “seemingly biased” allocation of import quotas.
Besides, if the situation remains, said the petitioner, the government’s Agricultural Transformation Agenda (ATA) may suffer severe reversals. It is their view that the allocations “provide a free ride for smugglers, thereby derailing the objectives on rice self-sufficiency. Nigeria, according to reports, “also stands to lose in excess of N 40 billion through smuggling and loss of Customs revenues.”
According to a Federal Ministry of Finance stipulated revised lower tariffs for rice imports in a circular dated July 8 2014 (entitled 2014-2017 Fiscal Policy Measures On Rice), bonafide “investors with rice milling capacities and verifiable backward integration programme” are entitled to import rice at the revised tariffs of 10% duty rate and 20% levy.
Pure rice traders (with no existing capacities/programme) are to pay a duty of 10% and a levy of 60%.
The allocations released by the Ministry of Agriculture include several beneficiaries who fail to meet the finance ministry’s stipulated criteria.
Of the 28 companies, only 16 have mills. The remaining 12 have no milling capacities, but account for higher imports than the qualified millers.
Many of the companies without any proven capacities are selling off the quotas to pure importers for a handsome margin, leading to huge loss of customs revenue and defeating the basic purpose of the allocations – the petitioners allege.
Some companies have only submitted business plans and expression of interests without verifiable form of investments in the sector may be enjoying waivers amounting to at least N20 billion as per the allocations.
The basis and pattern of allocations have raised furore and anguish amongst numerous existing investors who were waiting anxiously since July 2014 for the government’s quotas to augment their continuing investments in the rice value chain.
The gap between demand and supply forming the basis of the allocations seem to have been fixed at 1.5 million tonnes, whereas 2.74 million metric tonnes has been imported, into the country in 2014, including legal imports and smuggled rice from neighbouring countries, such as Benin, Cameroun, Niger and Togo.