By Faridat Salifu
Nigeria’s multi-billion-naira rice industry is facing a major crisis as several mills across the country shut down or operate far below capacity, following policy reversals, rising production costs, and the impact of rice smuggling.
Once regarded as a success story of the government’s agricultural transformation agenda, the local rice value chain is now on the brink, with stakeholders warning that the situation threatens years of investment and the nation’s food security.
Despite Nigeria’s position as Africa’s leading rice producer, local production still accounts for only about half of national consumption, leaving a supply gap of roughly three million metric tonnes.
Ironically, locally processed rice—expected to be cheaper—now costs more than imported varieties, which are often smuggled or re-bagged foreign brands.
As of May 2025, Business Hallmark investigations show that Nigeria had 268 rice mills. Kano State leads with over 68 integrated and medium-sized mills, followed by Kaduna with 19 and Ebonyi with 16. Yet, many of these mills are struggling to survive, with several already closed.
Large integrated mills in Kebbi State including WACOT, Labana, Lolo, Rayhaan and Sajo—are running far below capacity, while many small and medium-scale operators have completely shut down due to harsh operating conditions.
Professor Ropo Atobami, an agricultural economist, described the situation as a “massive setback for Nigeria’s rice revolution,” warning that billions of naira invested in the sector are now at risk.
“WACOT’s Kebbi mill alone cost about N10 billion to establish, while Gerawa Rice Mills in Kano gulped over N15 billion. Olam Nigeria invested $111 million in mechanised rice farming and processing in Nasarawa State. But most of these investments are now struggling to remain viable,” Atobami said.
Stakeholders say the Federal Government’s decision to grant import licences for brown rice to a select few companies has worsened the crisis.
The policy, which reportedly allows only the Imota Rice Mill in Lagos and BUA to import brown rice from India, has been criticised as “discriminatory” and damaging to local millers.
Alhassan Yusuf, General Manager of Labana Rice Mill, said the decision has discouraged investors and farmers alike.
“The government’s action has flooded the market with cheaper imported rice while local mills can’t sell their stock,” Yusuf said. “Farmers are losing confidence because they can’t recover production costs. How do you expect them to go back to the farm under such conditions?”
He explained that while paddy once sold for as high as N700 per kilogram, millers are now forced to sell processed rice at prices that only make sense if paddy were N400, leading to losses of between N15,000 and N20,000 on every 50kg bag.
Smuggling has further deepened the crisis, with large volumes of foreign rice reportedly entering Nigeria through porous borders.
Yusuf confirmed that the Office of the National Security Adviser (NSA) has begun efforts to tackle the problem but said the damage to the local industry remains severe.
For small millers, rising energy costs have become unsustainable. In Bacita, Kwara State, small-scale operator Anjorin Oniwala said the removal of fuel subsidy forced many to rely on diesel-powered generators due to erratic electricity supply.
“At a small-scale level, I spend about N700,000 every month on diesel alone,” Oniwala said. “It’s unsustainable. Many small mills have closed down because they can’t afford to keep operating. Those still running are barely producing at half their capacity.”
Data from the Foreign Agricultural Service (FAS) show that Nigeria’s rice production in 2023 peaked at 8.9 million metric tonnes of paddy equivalent to about 5.2 million tonnes of milled rice against a domestic demand of 7.7 million tonnes.
The 2024 AFEX Crop Production Report, however, projected a 2.6 per cent decline in output due to high fertiliser costs and insecurity across major producing states.
The United States Department of Agriculture (USDA) also forecasted a production drop caused by limited access to farmlands in conflict-prone areas and increased unrecorded imports that have made local paddy less competitive.
The 2023 export ban on non-basmati rice by India, Nigeria’s top supplier of raw paddy, worsened the shortage and forced many mills especially in Kano to suspend operations.
Industry analysts estimate that Nigeria’s rice economy was valued at N2.5 trillion in 2018, up from N1.1 trillion in 2016. Experts warn that without urgent government intervention, the sector’s value could collapse, jeopardising livelihoods and worsening food insecurity.
Agricultural expert Dr. Feyisayo Oke said insecurity remains the biggest threat to self-sufficiency in rice production, as farmers continue to abandon rice cultivation across northern states.
“Unless government tackles insecurity, no policy will succeed,” Oke said. “It’s the farmers who go to the fields that will produce rice bandits won’t. Until that is fixed, Nigeria’s rice policy will keep failing.”
