The question of which country – Ghana or Nigeria – has the best rice farming policy has become a central economic and political issue.
The Covid-19 pandemic mutated from a health crisis to an economic crisis in which 22 million Africans lost their jobs and developing country debt spiralled. Now the war in Europe is triggering a global financial and supply crisis.
In this particular frontline are the developing world’s food producers. But there is no consensus on policy in this crisis.
Ghana’s rice farmers are urging their government to learn from the Nigerian government’s interventionist policies backing local producers with cheap loans and 70% tariffs on imported grains.
Both governments want to keep prices down but have differing strategies.
However, the national statistical bureau in both countries recorded the same figure for consumer price inflation last month: 15.7%.
The core difference between the two countries is that Nigeria is now growing a far greater percentage of the food it consumes than Ghana.
But in both countries the farm yields per hectare are way lower than the international average and post-harvest losses are far higher due to poor roads and market access.
Nigeria’s interventionist policies have at least created more jobs for farmers and its yields are higher than Ghana’s, thanks to state intervention. The government in Abuja made a virtue out of necessity when oil prices crashed in 2016 and the country could no longer import millions of tonnes of rice with state-subsidised foreign exchange.
Ghana: ‘Scrap that benchmark value’
Ghana with its 32.4 million people is the 22nd biggest rice importer in the world. It consumes about 1.4 million tonnes of rice a year but more than half of that is imported according to the US Department of Agriculture.
Its government tried a hybrid policy of encouraging local rice farmers but also allowing ‘cheap’ rice imports from Vietnam, Thailand, India and Pakistan.
Giving subsidy in the name of benchmark value discounts for people to bring in rice from outside the country means that they will be able to sell the imported rice at a cheaper price than the local rice and that arrangement is indirectly affecting local rice farmers.
Rice farmers in Ghana say they would win a greater share of the market if the government imposed higher tariffs on rice imports, then used part of the extra revenues to finance inputs and training for local producers.
The government’s 30% benchmark value formula on tariffs gives importers of rice a massive advantage say the farmers. This tariff formula averages out global prices and tariffs, then calculates a discount for local traders.
At first, the government’s benchmark value discount was 50% for general goods. After negotiations with producers, it was cut to 30% on 1 March.
But that still makes it hard for local rice farmers to compete with mass volume producers in who can undercut them in Ghana – even after shipping the rice from south-east Asia and paying import tariffs at the 30% benchmark value discount.
Now Ghana’s rice farmers and millers want the government to scrap the benchmark discount formula on tariffs and support them to dominate the local market.
According to the Ministry of Trade and Industry in Accra, about $1.1bn was spent between 2017 and 2020 on the importation of rice. Analysts predict that could double in the next three years.
“Giving subsidy in the name of benchmark value discounts for people to bring in rice from outside the country means that they will be able to sell the imported rice at a cheaper price than the local rice and that arrangement is indirectly affecting local rice farmers,” Charles Nyaaba, president of the Peasant Farmers Association of Ghana, tells The Africa Report.
Nyaaba’s association and other stakeholders in the local rice value chain in Ghana including millers want the government to reverse the discount to provide an equal playing field in the local rice market.
“We want them to scrap that benchmark value and that revenue raised can be used to support local farmers to produce more and become competitive. With proper investment, we can produce enough for local consumption and export,” he says.
Nigeria: ‘A shining example’
The push by Ghanaian rice farmers for support comes on the back of reports of a rice production boom in Nigeria.
“Nigeria did what we are pushing for we can all see the results,” says Nyaaba.
In January, Nigeria’s President Muhammadu Buhari unveiled what he described as rice pyramids that the government claims will meet local demand of about 7 million tonnes for Nigeria’s 220 million people.
The government claims that its Anchor Borrowers’ Programme spearheaded by the Central Bank of Nigeria has boosted local rice production from 4.5 millon tonnes a year to double that.
Independent analysts question those figures and say that much of local demand is met from smuggled rice. With tariffs on imported rice at 70% smuggling is immensely profitable.
Even local critics concede that local production has increased under the Buhari government’s interventionist policies. Farm inputs and financing were made available by the government. And it would buy back the harvested rice for distribution to mills across the country.
Nigeria’s government also denied importers access to foreign currency, banned importation of rice from neighbouring countries and introduced a 70% tax on all other imported rice.
According to the governor of the Central Bank of Nigeria, Godwin Emefiele, the country imported only 2,160 metric tonnes of rice in 2021.
‘Taste and preference’
Besides the price war, local rice farmers are also fighting a battle over customer tastes and preferences.
At the University of Ghana night market, Nana Adwoa, who sells different brands of rice says her customers often choose imported over local rice.
“They tell me imported rice tastes better and gives more value,” she says. But the convener of the Rice Millers Association of Ghana, Yaw Adu Poku disputes that.
“It is a fallacy that the quality of the local rice cannot compare to the imported ones. We have brought the same seeds in Thailand, Vietnam and India and with our scientists, we have developed over 23 varieties currently on the Ghanaian market of good quality,” he tells The Africa Report.
Abraham Dwuma Odoom, a former parliamentarian in Accra who served as consultant for the Competitive Africa Rice Initiative (CARI) project in Nigeria in 2015, said Ghana can emulate the Burhari government’s approach to increase its local rice production.
“Nigeria’s template will work for Ghana if we can get the central bank’s buy-in. The Bank of Ghana will be able to give loans to the banks to also lend to the farmers at a special rate. The Nigeria rate for instance was 9%. You can’t take a loan at 35% and be competitive,” he told Citi TV in Accra.
Data suggests that Nigeria produces between four and five tonnes of rice per hectare compared to Ghana’s average of 1.7 tonnes per hectare.
Despite the countries differing market sizes and access to finance, Nyaaba believes that taking Nigeria’s path will help Ghana meet its target of being rice self-sufficient in 2024.
The Ghanaian government says it is determined to take action to protect local farmers. But is far from certain if the government would end the discount import duties on rice – a move which would lead to sharp price rises in the market.
Instead of raising import tariffs, the Ministry of Agriculture in Accra has promised to protect local farmer by providing more fertiliser and improved seeds.
In the economic storms ahead, that might not be enough for Ghana’s tax revenue collectors or for its ambitious rice farmers.
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