IMPACT OF SUPPORT MEASURES AND PROTECTION OF RICE SECTOR IN NIGERIA

By Ken UKAOHA, Esq.

Ken UKAOHA is the President of the National Association of Nigerian Traders (NANTS),

Chairman of the Nigerian Trade Network (NTN) which is a coalition of national umbrella organizations in Nigeria working on trade related

interventions (NANTS, NACCIMA, MAN, NASSI, NAWE, NLC, SERI); andCurrent Secretary-General of the African NGO Consortium on Agriculture

and Trade.

Support Measures on Rice

Aims:• increasing efficiency of rice production in terms of

land, labor and capital;• increasing efficiency of rice processing and

marketing, • reducing cost of local rice.

Source: Sutcliff &Ayomide, 1986; Fed.Govt Budgets, 1984 – 1986; 1995-2000

Period Policy Position

Prior to April 1974 66.6% Tariff

April 1974 – April 1975 20%

April 1975 – April 1978 10%

April 1978 – June 1978 20%

June 1978 – Oct 1978 19%

Oct. 1978 – April 1979 Imports in containers under 50Kg were banned

April 1979 Imports under restrictive license only; Govt agencies

September 1979 6 months ban on all rice imports

January 1980 Import license issued for 200,000 tonnes of rice

October 1980 Rice under general import license with no quantitative restrictions

December 1980 Presidential Task Force (PTF) on rice was created and it used the Nigerian National Supply Company to issue allocations to customers and traders.

May 1982 PTF commence issuing of allocations to customers and traders in addition to those issued by NNSC

January 1984 PTF disbanded. Rice importation placed under general license restrictions

October 1985 Importation of rice (and maize) banned

July 1986 Introduction of SAP and the abolition of Commodity Boards to provide production incentives to farmers through increased producer prices

1995 100% tariff

1996 50%

1998 50%

1999 50%

2000 50%

2001 85%

2003 100%

Apart from the foregoing, there have been other measures stated by my colleague-presenters yesterday, including and not limited to:

• Operation Feed the Nation, • Green Revolution,• Fertilizer subsidy /assistance to farmers, • Micro-credit distributed by some state

governments and NGOs in particular, • The current Presidential initiative on rice• Today, in line with the same drive for local

production, the tariff on rice has been shot up to 110% with an intended absolute ban by July 2006.

Has local rice production been positively affected in line with the

intentions and objectives?

A direct answer to this is in the affirmative; yes! To an extent, local production has attracted interest of farmers (although young school leavers are still shying away from farming and this requires a serious concerted efforts by all to bring them back to the part of dignity in labour as against the new zeal to make quick money).

• An analysis of the performance of these policies and measures indicate two heavy loads and road blocks putting pressure and weighing against the good intentions. One is internal and the other is external.

The internal roadblocks are classified into the following question marks:

• Political will: why are there still doubts in the mind of farmers as to the strong political will to

perform or implement policies in spirit and letter of its purposes and objectives?

• Corrupt practicesthe corrupt practices by some government officials and bureaucrats who make policy

implementation on these measures very difficult – for instance, in the distribution of fertilizers, why are these fertilizers either sold out, given out to non-farmers or diverted to destinations where they were not originally meant for?

• Waivers: In terms of tariff, why are there duty waivers still secured by some influential

individuals and long-legged organizations when the law is meant to serve everyone?

• Porosity of the borders: why do we still see imported rice in all nooks and cranny of the country even during

the period when there have been absolute bans on rice importation? Where lies the duty of the Customs with regard to trade facilitation and security of our borders?

The external pressures seem to be mounting so heavy and manifest in the gospêl of trade liberalization seen by economic observers as a neo-colonial agenda by the west and her collaborators, the international organizations – World Bank, IMF, WTO, etc.

WTO’s Multilateral Rules

Global policies constitute serious wedge and impediment in the will of progress of the South particularly Africa. For as long as market access remains unattainable by our farmers and their products, there will be no incentive motivation to move further into agriculture, nay, rice production.

The Agreement on Agriculture courtesy of the Uruguay round has been implicated with hindrances in the performance of agriculture in Africa. Global trade policies allow the rich countries (European Union - EU and US) to spend billions of dollars in subsidizing their farmers to overproduce. These subsidized products are then dumped on to the developing and poor countries markets at a cheap price thereby undercutting the price of locally grown products. For example, in 2003 the US government spent $1.3bn subsidizing its rice farmers – a crop that cost $1.8bn to grow. Because of these massive subsidies, the US rice industry can export rice at 34 per cent LESS than it costs them to produce. Poor farmers in developing countries simply cannot compete.

• Apart from heavy subsidy, trade rules are lopsided in favour of then North.

• All kinds of measures are put in place by the developed countries to hinder our access to their markets while we are asked to leave our borders wide open.

• The rules are made in such a way that they would accept our raw materials and ban our finished products using administrative and technical barriers, and by so doing all we do is keep donating jobs and generating employments to them because for every raw material, they have researched and devised more than ten further end products therefrom, thereby incapacitating our local farmers who are producing in famished infrastructure, poor technology and subsistent method.

• Cotton, and the present state of our textile industries is a case to point at.

• Why have their heavily subsidized rice continued to account for more than 70% of food aid in Africa?.

• Our rice farmers cannot get the requisite pay for their travails in the farm land.

Regional Trade Agreement (typified by the EPA)

• One significant trade agreement which has debilitating consequence on rice and other agricultural commodities is the EPA which came in courtesy of the Cotonou Agreement and is being presently negotiated between the EU on one hand and the African, Pacific and Carribbean countries on the other. The negotiations are on going and ECOWAS is leading the sub-region in the negotiations.

• The EPA has necessitated a sudden awakening in a horrifying speed to go into a Common External Tariff (CET), under a roadmap hurriedly adopted by ECOWAS Ministers of Trade in Ghana. Some observers have questioned the rationale behind not only the speed but the reason EU had to quickly resurrect the Cotonou Agreement immediately after seeing the failure of Cancun which was more or less in favour of Africa and her other developing country-allies.

EPA is notably a free trade agreement with the following implications on the sub-region:

• Opening of the borders and the removal of tariff at the commencement of its implementation by January 2008.

• A CET which looks like a forced marriage on ECOWAS countries which have not been able to implement a Trade Liberalization Scheme (ETLS) which came into force with the signing of ECOWAS Protocol as far back as 1975; no common currency in place; no fully functional court of justice for adjudication of commercial disagreements or breaking of rules, weak regional Parliament to make requisite laws to foster regional integration; etc

• A sudden adoption of UEMOA rate of 20% tariff which does not have the capacity and cannot give protection to the region’s farmers.

• A well written ECOWAP which however does not have the democratic inputs, interests and concerns of local farmers in the region,

• In the case of Nigeria which has tariff as high as 150% in some commodities, it is a nose diving consequence not only to the farmers of RICE but to the economy which will crash-land, given that about 24% of government revenue/ budget is dependent on import tax raked by Customs.

• Where then will the funds meant to assist local farmers as a policy measure come from, especially under a mono-culture (oil-dependent) economy?

• Who is by the way pursuing us in the EPA negotiations? • Why this unprecedented speed? Why don’t we sit back

and review our regional integration efforts and put synergies for an inward unity before scouting for integration with the outside world…(charity they say, begins at home)

• The CET adopted also remains a de-incentive for the promotion of local production of strategic crops such as rice. The CET´s trade liberalization threatens the sustainable livelihoods of millions in Nigeria through unfair competition, who depend on agriculture.

• Studies have shown that Government revenue will also be suffocated, like Nigeria who will tend to lose up to $427 million in revenue.

The argument is this :

• If the borders are open and tariff is reduced and finally removed as is being rooted by the EPA, is there any hope for rice farmers both in Nigeria and other ECOWAS countries who are already dazed in the frustrations of keeping their livelihoods?

• Is there any hope for food security of the sub region when we are just coming from the delusions that visited countries like Niger in recent time?

• Would our support measures to local farmers be any longer relevant in the face of undue competition coming from EU farmers?

• Of course that would be the beginning of the collapse of every kind of support measures our farmers have been going to our helpless governments with caps in hand.

• Amidst all these calculated and deliberate ravaging and devastating policies, one must commend the intentions and commitment of government to boost local rice production over the years.

• The policy battle enunciated with the table above is clear indication of efforts of government’s resolve not only to industrialization, but to the protection of livelihoods of her citizens, creation of jobs to her teeming school leavers, etc; and it must be put on record that the Nigerian government is the only government in the whole of Africa that can still use import bans and prohibitions against the flooding of the local market with foreign rice under the whims and caprices of the developed nations and their cohort-messengers

The WAY FORWARD If local rice production must take its rightful place and

respond to support measures and policies; then:

• Our agricultural policies must wake up to the realities of unfair competition at the global trade environment.

• Our trade policies must be made to fall in benefiting marriage with our agricultural policies so as to respond to yearnings of market access.

• The above two policies must be in congruent with our overall national development strategy or the poverty reduction strategy as a creed to meeting the MDG

• ECOWAS must link up with other like-minded regional blocks and groupings like the G90, G22, Etc, within the developing economies for a fight against the dumping of rice in the sub region.

• There must be a concerted efforts at ensuring that rice for the region is placed in the special product list or sensitive product line of the WTO even as the whole world is moving to Hong Kong for the ministerial come December 2005. The lessons of Cancun must not be forgotten in a hurry – rice farmers freedom is possible

• There must be the political will on the part of governments to effectively implement support policies to rice farmers to the letter. This must however be done government avoiding policy reversals and inconsistencies that drain the purse of tax payers funds

• The Parliaments in the region must awake to realities and give supportive legislations to local farmers as it is in the developed economies where the legislature does not allow the executive to tamper with the welfare of farmers, and this in recognition of the fact that they voted them to power. Law makers must formulate anti-dumping legislation and develop a credible plan to address the commodity crisis so that farmers can receive fair returns for their rice.

• We must continue the fight against subsidy by the West, but if the continue, there is no crime on our part in subsidizing our local production of rice if the funds are there (and it should be there after all rice constitutes a staple food for which we spend millions importing every year), if the US and the EU among others are heavily subsidizing their local production of rice. It is only when Nigeria subsidizes petrol cost that the World Bank and IMF would signal foul to subsidy.

• EPA in almost all its ramification is deadly to the economy of West Africa with regard to our agricultural products where we posses the only comparative advantage. We must discontinue with the negotiation in its present form that does not recognize non reciprocity, trade preference and safeguard measures which are tools abinitio recognized by the same WTO. We cannot afford the consequences of opening up our borders to influx of goods and unrestrained import surge.

• In the same vein, a CET put in place for the region even at the present fifth tariff band of 50% which Nigeria is currently requesting is not enough to protect our rice and other agricultural commodities sector; we must therefore look for a higher protective tariff.

ConclusionRICE can help our economies if we have the will to play

complementary roles at holding our governments in the demand to go back to agriculture as a sector to sustain our future.

If an ECOWAS CET is imperative at this

time, then we must begin to reflect on: (i) what are the most important agricultural sector or sub-sector that

will be affected by this partnership?(ii) What are the disaggregated roles of men and women involved in

this trade who will be affected? (iii) Who are the people (especially women and youths) that will be

affected by this pact and what remedy or restitution is available? (iv) What are the major impacts of the tariff abolishment? (v) Why must we abolish or reduce tariff especially with the

emergence of EPA (vi) At the entrance of EPA it started preaching integration, what is the

dimension of such integration? Is it for regional integrations in term of sub regional integration or the pressured so-called integration within the global economy?

(vii) Is it possible to dwell in CET for the sub-region and refusing EPA? (viii) What then are the implications of a CET adopted to facilitate

EPA?