Local rice production still weak with deep domestic demand, supply gap—LCCI
Leading industrialist and Director General of Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf has picked hole on the announced plan to shut land borders as a drive to end rice smuggling, saying “One big issue is the productivity output in our agricultural sector”.
He said in an interview that “If we want to promote self sufficiency and protect ourselves against influx of import, we must ramp up productivity. Our production capacity in the area of rice is still very weak and there is still a big gap between domestic capacity and the domestic demand of all most two million metric tonnes of rice”.
“So if we have that kind of gap, then you are already creating room for smuggling especially when there is a big difference of almost 50 percent in difference in price of rice locally and that of the neighbouring countries. The thing to do is to see how we can bring down the cost of production of rice, and improve the productivity of rice here.
While arguing that “The solution to the problem is not about closing the border,” Yusuf averred that “What we are seeing in terms of smuggling is a symptom of a problem and if you want to solve a problem, you don’t start fighting the symptom, you deal with the causes of the problem”.
In his further submission, he
He also advised the government to consider a down ward review of the tariff on rice, noting that if government adjusts its policy and allow legitimate people do the business that will help reduce smuggling and help get the needed revenue to support the rice industry, over time, local rice will begin to saturate the market and ease out smuggling in the long run.
“The tariff is also high. If you have a high tariff over a product which you don’t have enough capacity to do and there is high demand, then you are creating problem on smuggling. Then you create a problem where even decent people cannot go into the business. So the government loses revenue, business, create more problems for customs and create a lot of room for corruption.”
Yusuf noted that although the government has taken steps to boost agriculture and rice production, the demand, however exceeds the supply.
He said “Government has been doing quite a lot in areas of anchor borrower and others but the rice millers are still complaining about the cost of paddy. That is why if you go to the market, local rice is more expensive than imported rice. It is good to protect domestic industries and farmers but you have to do it within a policy frame work that is sustainable. It is the same problem we have with vehicle. The high tariff is so high that smugglers are having a field day and government is losing revenue and losing jobs to neighbouring countries.
Continuing, Yusuf gave an instance, saying “If you have something in short supply, and there is huge demand for it, and there is a big price difference between the neighbouring countries, then you have to adjust the tariff in a way that legitimate business people will be able to do business and they will pay tax and use the revenue to support the rice industry”.
On border security, LCCI boss recalled that “We have a country with less than 1400 illegal routes across the country, how do you police that? It is not only rice that is coming through the border, there are other economic activities taking place across the border. A lot of export is taking place through the border, if they close the borders what happen to those people? The economic is not just about rice, there is more to the economy than rice, a lot of manufactured goods are going through the border,”
It would be recalled that the Minister of Agriculture and Rural Development, Chief Audu Ogbeh had on Monday announced that the government was closing the nation’s border, in order to curb rice smuggling.
But on in a report published by Business Hilights on Wednesday, investigations showed that rice smugglers indicted security agencies and Customs in particular as being strong accomplice in the illicit land border business after all.
