Investing in Rice Production, Processing Business

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By Godwin Uba

The Federal Government plans to make Nigeria self- sufficient in rice production. That is highly commendable. From research it has been proven that Nigeria rice is the best rice in the world as the taste and quality is far better than the imported ones from other parts of the world.

In Nigeria today, some states produce paddy rice in abundance. Some of these states are Enugu, Anambra, Abia, Kebbi, Imo, Kwara, Edo, Ogun, Ondo, Cross River State and some Northern States such as Sokoto to mention but few.

Therefore with serious efforts not only by Government but private companies and individuals, the self-sufficient policy is achievable.

Rice is now a staple food in Nigeria. Every household both rich and poor consumes a great quantity of rice every day. The demand for rice is very high. The huge demand for rice is further accentuated by increasing and expanding urbanization, endless social parties where rice is the main menu, Nigerians eating habits (preference for foreign rice).The preference for foreign rice should be stopped.

Of the total projected population figure of 200million, over 70% feed on rice.

Because of the demand, many Nigerians have embarked on importation of rice.

This situation should not be allowed to continue forever. These importers must channel their huge resources to establishment of modern milling plants in Nigeria instead of fastening the growth of some foreign countries.

From publications made by the Bureau of Statistics and Federal Ministry of Finance the importation figures of rice amounted to about one (1) Trillion of Naira as the end of 2012. This figure increased to over two (2) trillion Naira in 2016 and about three (3) trillion in 2018. The figure has always on an increase. Rice importation has the greatest figure of over 60% of total import figures.

The Federal Government of Nigeria had total closure of the neighbouring borders and it became clear indication that large quantities of foreign rice come into the country through the neighbouring ports. It became clear that there was huge importation of rice through illegal means. During this period of total ban and closure of borders, it became imperative that Nigerians can actually produce enough rice to sustain itself. Nigerians had survived and are gradually adapted to eating of local rice. Famers were happier, local processors of rice came back to life and they all make more money with less competition with imported products. However, the prices of rice, the staple food in the country rose on top of the roof. A common man can no longer afford the commodity, both locally produced and imported. Currently a bag of imported rice is as high as between N28, 000 and N30, 000 for a bag of 50kg; while the locally made rice is between N18, 000 and N20, 000. Government must therefore have to sustain the tempo of not allowing massive importation of rice into the country, but have a relaxed but full control of rice imports. It is not advisable to impose a total ban on importation of rice without first assessing and establishing exactly what the country can afford to produce; ensure that the country can produce at least 70% of what is needed in this country. There must be full record of what we can produce internally with projection of what our farmers can produce at full capacity.

Generally, encouraging local production or manufacturing, Agricultural production and processing is one of the good things that can happen to this country because the policy will generate more employment opportunities and put more foods in our tables.

The Federal Government has also concluded arrangements to roll out a new policy that will ensure that loans are available at single digit interest rate to farmers with effect from this year.

Corporate organizations such as Coscharis Group have gone into production, processing and bagging of rice. More individuals are being encouraged by the Government to invest into this sector. Here we discussed on how you can invest into rice processing and packaging business.

Investors can invest in rice farming and rice processing or rice milling plant. Rice milling project will best be sited in these areas where rice is grown in order to reduce cost of transportation of the paddy. To set up this project, a minimum space of a plot of land is required to dry paddy rice after harvesting.

The components of machines required to set up this project are cleaning facilities, Dehuller, Boiling tank, Polisher, Bagger and other miscellaneous equipment such as wheel barrows, weighing scales.

These machines can be fabricated locally. They can also be imported from Europe and some known Asian companies that specialize in the area. Prospective investors would be given details on these machine produces and specialists.
Also project vehicles and generating sets are essential for smooth running of this project.

Rice milling could be done on cottage, small, medium and large scale bases depending on availability of capital and the raw materials- paddy rice. Output could be from 2MT to 150MT per day. Generally one metric tonne of paddy rice yields about 60kg- 70kg of milled rice, depending on milling efficiency company management practice and the variety of rice purchased.

In the process of milling well parboiled rice free from sand, stones, unpleasant ordour with fewer breakages, a whole rice, broken rice and bran are obtained. Whole rice are packed and sold for human consumption. Broken rice is further milled into ‘’Tuwo Shinkafa’’ (a flour meal) while bran is very important input for manufacturing dietary products like rice bran bread which has been acclaimed good for the decrease of blood cholesterol, rice bran oil and livestock feeds. From rice you can also be obtained puffed rice, rice cakes, rice pudding etc.

The husks are used for the production of potassium Hydroxide solution or as fuel for milling plants. It can be seen that virtually all parts of paddy rice is useful.

The likely cost of total project will not actually be stated safely unless one knows the scope (whether cottage, small, medium or large scale) a proposed investors would like to embark upon. However, the cost ranges from N550, 000 – N10.2million for cottage level to N57million for medium size plant and over N500million for large scale. Basic factors to consider in determining the initial cost includes the capacity to produce, the source(s) of the machinery, whether to construct his own building or rent one, the location etc.

Therefore to embark upon this project, one needs a business plan (feasibility studies), with detailed costing for all the aspects of inputs, and before one can obtain the likely total estimated cost.

In conclusion, rice milling; an agro-based business is very profitable (45-55% return on investment), and sustainable. It has low capital requirement, technical know-how is not complicated. The machinery and equipment can be sourced locally. The project has a short pay–back period.

It is highly recommended for serious and aggressive promoters, local and state Governments and private investors particularly those that are thinking good for this country.

For details on comprehensive and bankable feasibility studies, investment Advisory services, funding arrangements, please contact the writer.

Uba can be reached via 08034494437