economy
Rice prices crash by over 20% in relief for Nigerian households
Amid the rising food inflation in Nigeria, rice prices are dropping in major markets, falling by 20-30 percent within two months.
This is a relief for Nigerian households who spent N88,000 for a 50kg bag of rice in February 2024 or earlier.
Nairametrics analyst who went round some markets in Lagos found that a 50kg bag of rice now costs between 50,000 and 65,000 in Oshodi, Ikotun, Ikorodu and other parts of the state.
In the same manner, a 25kg bag of rice sells between N25,000 and N32,500 depending on the brands, according to Nairametrics market survey.
Both Nigerian and foreign rice sell lower than N70,000 per 50kg in some markets visited in Lagos and Abuja by Nairametrics last week.
Nairametrics observed that the trend began earlier last week, with rice vendors reducing their prices despite food inflation. The food inflation climbed to 40% in March 2024, according to the latest data from the National Bureau of Statistics.
Mrs. Bosun Adeyeye, a trader who sells various food items in the outskirts of Oshodi, told Nairametrics that she started pricing her “long rice” below N70,000 last Wednesday, following her distributor’s sale of the product to her at around N60,000.
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She also told Nairametrics that the “short rice,” a different variety, is priced between N55,000 and N65,000, depending on the customer’s preference.
- “Since Wednesday, we have been selling between N55,000 to N65,000 depending on the type of rice you want to buy. The bags are different, and some are more expensive than others,” Adeyeye said.
A trader, who does business at Abule Egba in Lagos Mainland, Chima Emeka, stated that the market price for foreign rice has dropped to N65,000.
He attributed this price decrease to the strengthening of the Naira in the foreign exchange market.
- “I think importation is cheaper now unlike before when dollar was around N1,600 to N1,800. Then, we couldn’t get foreign rice for less than N80,000, but as of today that dollar is N1,100, traders are bringing down their prices. You know, foreign rice is first priced in dollar,” Emeka told Nairametrics.
Almost 30% slash in two months
In Abuja, the capital city of Nigeria, a Nairametrics analyst noted that the trend is similar, with traders in various markets across the north-central state selling a 50kg bag rice for less than N70,000.
This represents a significant reduction of approximately 26.14% in price compared to the last market survey conducted by Nairametrics Research Team in February 2024, just two months earlier.
Based on the prior survey from February 2024, the price of rice was around 88,000 for a 50kg bag—indicating a nearly 30% reduction in cost in under two months.
A rice dealer In Nyanya Market in Abuja, known as Mr. Lawrence Oke, stated that foreign rice is priced between N60,000 and N70,000, varying according to the product, variety, and quality of the rice.
A similar trend was observed in Karmo Market in Abuja, where a 50kg bag of rice is sold for between N60,000 and N65,000.
Meanwhile, Mr. Kabir Ibrahim, President of All Farmers Association, said that rice is even way cheaper in places like Kebbi, Sokoto and Kano.
- According to him, “these rural areas are the places the rice is being produced, like most places in the world.
- “All these urban states employ middlemen to transport the rice to their places for trade. They are traders, not farmers,” Ibrahim noted.
Factors responsible for drop in prices
Nairametrics observed that there are multiple factors responsible for the slash in price in rice, one of which is the appreciation of Naira in the foreign exchange market.
- “Most market activities in Nigeria are centered around the Dollar. The dollarization of the economy affects prices of these goods. In one word, the reason is Dollars” said President of Farmers Association, Kabir Ibrahim.
For President of Allied Farmers Association of Nigeria, Dr Austin Maduka, the slash in price can also be attributed in the increase in the numbers of players in the sector, particularly those who process rice in the country.
According to him, there are more players in the industry than before, who are processing rice as a result of the government incentives and support for local production and domestic farming.
- “Many people are going into the business of rice processing now than ever before. I think if the government can continue to do more to support local farmers, especially in the production of food items, the prices will go down even further,” Maduka noted.
A Possible boom and bust situation
Despite the reduction in rice prices, there remains a concern that this could lead to a potential boom and bust scenario.
Given the high rate in inflation which stands at 33.2% as of March 2024 according to NBS, some believe the price may not be sustained if inflation rate is not completely cut to a reasonable level.
The International Monetary Fund (IMF) predicted Nigeria’s inflation rate to drop to 26.3% in 2024, noting that the country’s economy will equally grow by 3.3% this year.
In addition, the Central Bank of Nigeria (CBN) increased the interest rate by 200 basis points to 24.75 percent, in a radical attempt to tackle inflation in the country.
But these factors are not enough to address issues such as insecurity, poor electricity supply and ease of doing business, experts believe. They say the fiscal policy side must complement the work of the CBN.
- “The price of rice may rise in the future if the dollar rate is not stable. For example, if you look at the purchase of equipment used in processing factories, you’ll realize that those machines are not assembled in Nigeria.
- “Power is also a huge factor. When you don’t have light, you need to use generators and that costs higher because these are heavy machineries.
- The Federal Government needs to do everything it can to mitigate against a possible boost and bust. I will say with constant supply of electricity, the prices will crash even more in the coming months,” Maduka added.
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