Investing in Commercial Rice Farm & Rice Milling Plant

The National Bureau of Statistics (NBS) most recent publication said that about 130million Nigerians representing 63% of the Nation’s population are poor. In a Multidimensional Poverty Index Survey released in Abuja said that the poverty index is mostly experienced in the rural areas especially in the North with women and children being the most hit. The poverty index survey was conducted by the NBS, the National Social Safety- Nets Coordinating Office (NASSCO), the United Nations Development Programme (UNDP), the United Nations Children’s Fund (UNICEF), and the Oxford Poverty and Human Development Initiative (OPHI).

The crushing scarcity of foreign exchange, depreciating naira exchange rate and high inflationary pressures, now posing severe impediments to businesses in the country may have forced manufacturers to reduce production capacity to less than 30 percent to remain afloat.

The worst problem that can hit a nation is food insecurity. The prices of food stuffs are rising at very high speed on daily basis. For instance, a bag of 50kg rice sells at between N45, 000 and N55, 000. There is fear that the prices of foods will increase further due to the devastating effects of floods in the country, particularly in some rice producing states of the federation.

In Nigeria today, some states produce paddy rice in abundance due to favorable climatic condition for rice production. Some of these states are Enugu, Ebonyi, Anambra, Abia, Imo, Kwara, Edo, Ogun, Ondo, and some Northern States such as Sokoto etc.

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 large space 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 equipments such as wheel barrows, weighing scales.

Also pickup vans and generating sets are essential for smooth running of this project.

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.

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 ton 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 odor with less breakages, etc from purchased paddy, 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 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.

From market analysis, the market for rice is National. With the estimated national population growth rate of 2.9% and population figure estimated at over 200million, Nigeria is a large market and demand is so high and local supply, so low that rice importation into the country is a very big business.  Hoarding, rationing and smuggling and sharp black market practices were the profitability associated with the business. This situation should not be allowed to continue forever. Those importers must channel their huge returns to establishment of such producing firms in Nigeria instead of fastening the growth of some foreign countries.

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.

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 investor would like to embark upon, 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 he can obtain the likely total estimated cost. To do otherwise is to take a leap in the dark or take our characteristics short-cut to distinction that is always ruinous.

In conclusion, rice milling, an agro based business is profitable (35-45% on sales), and sustainable. It has low capital requirement, technical knowhow is complicated. The machinery and equipment are 100% locally available. 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, Godwin

Global Trust Consulting,


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