Controversy Shrouds Customs Action on Rice Investors

Nigeria’s major rice investors received a jolt on Tuesday when the Nigeria Customs Service (NCS) sealed their warehouses on allegations that they owe duties and levies. NCS alleges the duties were due as the companies imported rice in excess of quotas approved. However, controversy has raged in the industry owing to reports of flawed and delayed quota allocations for 2014, leading to cancellation of 2015 quotas as well.

The Public Relations Officer of NCS, Mr Wale Adeniyi, told a news conference in Lagos that the service would also not allow discharge of the companies’ imports in any of the nation’s ports.

The companies also involve multinationals Olam and Stallion that are the country’s largest investors and operators of fully integrated rice value chain and Ebony Agro, Popular Farms, Masco Agro and Conti Agro.

The circular on rice import quotas were intended to encourage existing operations and drive new investments by bonafide rice millers, but has now seems to have taken a adverse turn for these large multinationals.
While Olam has invested N 177 billion in the Nigeria’s agriculture sector, while Stallion runs the country’s largest capacity in rice production of 430,000 MTPA, with commitments to increase to 1.50 million MTPA together acting as catalysts for the huge increase in the country’s local agricultural operations.

Ebony Agro operates rice mills where the Ebony Gold and Ebony Super brands of parboiled rice are milled and packaged from locally sourced paddy.

Media stories revolving around the rice policy announcements and its implementation have dominated headlines in the country over the past few months. For instance, the quotas for the year 2014 were issued only in December 2014 by the Ministry of Agriculture, deemed very late as well as grossly inadequate to meet the country’s requirements for the year. While the importers were appealing for a fair allocation based on investments as originally intended, they were surprised to receive retrospective demands for duties by the NCS.

Furthermore, quotas for 2015 were issued, canceled and later on reissued again. However it is not clear if these quotas are being implemented in the scenario of Central restrictions on availability of foreign exchange for rice.

The implementation of the policy received a lot of criticism predominantly around the fact that the process followed was not in accordance with the Presidential directives, for example on the failure to establish a inter Ministerial Committee for computation of the national demand gap, as well as the timely allocation of import quotas to deserving investors.

Major investors in the country’s rice value chain with large established production capacities had represented in all forums that the quotas issued to them were insignificant compared to their financial investments. It was also alleged that several companies with no operating capacities were given import quotas, based only on future commitments. These companies thereafter allegedly sold their quotas in the open market.

In 2014, the Ministry of Agriculture had announced that the country’s local production capabilities have expanded considerably aided by investments by Multinational corporations like Olam and Stallion. Investments by these firms and the corresponding high output have made the product more readily available. “Nigerians eat our high quality local rice but do not know. We have totally changed the quality,” Akinwunmi Adesina, the ex Minister of Agriculture and Rural Development, said during his visit to Kwara State. He said “You may wish to know that Stallion ‘Shinkafa rice’ and ‘Stallion super’ are all locally-milled rice from Nigeria, not imported.

The USDA has estimated that the supply gap in Nigeria would be 2.5 million tonnes in 2015. In the absence of adequate quotas, this demand would regrettably be met through smuggling across the borders. The current action by the NCS with retrospective demands would hopefully be resolved in a fair manner so that the momentum on investments into the country’s rice value chain is sustained, thereby making Nigeria fully self sufficient.