₦airaland Forum

Despite multibillion-dollar investments in rice mills to boost local processing and production, many mills are closing or producing below capacity due to many reasons, as revealed by Weekend Trust in this piece.

The Nigerian rice economy was worth an estimated N2.5 trillion in 2018, growing from N1.1 trillion in 2016, according to KPMG market analysis.

According to the report, 10 per cent of all rice sales (N245 billion) takes place in formal retail establishments, with the remaining 90 per cent taking place in the informal market, where it is sold in loose form through traditional vendors.

Nigeria now consumes 33kg of rice per person, and its domestic demand is the greatest in Africa, with annual growth of US $5-6 billion (about N9.2 trillion at the current currency rate), according to the Nigeria Export Promotion Council (NIPC).

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The amount of rice consumed has doubled since 2008, reaching 6.3 million tonnes in 2017, and current estimates suggest that over 10 million tonnes would be consumed in 2025.

The Central Bank of Nigeria (CBN) shows that Nigeria’s current rice output is about 7.0 million metric tonnes, while the country’s consumption demand is 10.5 million metric tonnes. This results in a 3.5 million metric tonnes gap.

With 2.2 tonnes of rice imported annually, Nigeria ranks third in the world for rice imports, making up 36 per cent of domestic market consumption, according to the NIPC.

Importation of rice rose from 7 000 tonnes in the 1960s to 2.2 million tonnes by 2024, according to data from the Food and Agriculture Organisation (FAO) and CBN.

Current investments in mills

As at May 5, 2025, Nigeria has 268 rice mills. According to the Smartscrappers, a considerable number of these rice mills are sole proprietorships while some are affiliated with bigger companies.

Kano State has more than 68 integrated and medium-sized rice mills, followed by Kaduna State with 19 and Ebonyi State with 16. Kebbi has two (Labana and WACOT) large integrated rice mills, among others.

With an established capacity of 120,000 metric tonnes, WACOT Rice Mill in Kebbi State is a multimillion-dollar (N10 billion) investment. It might become the largest in Africa if the investment doubles the capacity to 240,000 metric tonnes.

The Dangote Group has spent more than US $1 billion building a processing factory in Hadin, Jigawa State. Paddy from their out-growers schemes is expected to be processed by the integrated mill.

Large mills in Kano, such as Umza and Challawa, cost their owners billions of naira. At the time of construction, the privately held, state-of-the-art Gerawa Rice Mills in Kano cost roughly N15 billion.

In Nasrawa State, Olam Nigeria Ltd invested over US $111 million in mechanised rice farming and processing. But some of these facilities are facing the biggest challenges for survival.

Our correspondent reports that in Kebbi State, a large number of mills, especially the smaller ones, have been forced to shut down due to the current circumstances, while the larger ones, including WACOT, Labana, Lolo, Rayhaan, Sajo and others, are now only partially working.

These mills said they were unable to cope with the multiple obstacles posed by the federal government’s policy on rice importation, smuggling operations, high paddy prices, a drop in the price of milled rice, farmers’ refusal to return to the farms, and the high expense of running the mills on a daily basis.

The general manager of Labana Rice Mill, one of the biggest mills in the country, Alhassan Yusuf, told our correspondent in Kebbi that these millers refused to give up in the face of the challenges because they were optimistic that the problems would soon fizzle away.

He said millers had spent extensively in the three categories of small, medium and large-scale rice production, with costs totalling billions of naira.

Yusuf explained that setting up a medium rice mill of 8 to 12 tonnes per hour and a large-scale rice mill of 16 tonnes – 32 tonnes per hour in Nigeria – hovered between N7 billion and N20 billion in investment, adding, “I am not talking about small rice millers that use the combination of Chinese and locally fabricated machinery for their production.”

The plan of the past administration of the late President Muhammad Buhari was to ensure self-sufficiency in rice by encouraging Nigerians to go to the farm, and at the same time supporting indigenous entrepreneurs to build and uptake all the rice paddy from local farmers.

He explained that the government contributed to the current problems facing the rice industry presently in the country over its selective policy by giving licences to only two mills, the Imota Rice Mill in Lagos and BUA to import brown rice into the country from India, whereas the rice they are bringing had expired long ago in India as a result of rice glut in that country.

He posited that the government should understand that such a move would badly affect and discourage the efforts of the country’s rice industry.

The Labana Rice general manager said, “The implication of all these is that farmers are now not getting value for what they produced from their farms. Because of this, they are now afraid of going to the farms, thinking of the advantage of spending money on fertiliser, fuel, labour and other things and at the end sell their products cheaply and at a loss? Many of them are now discouraged.

“These are the areas where millers are incurring losses; hence they are now finding it difficult to cope.”

On the losses incurred by millers he said, “It is difficult to quote figures, but the amount put together is in billions of naira. Imagine all the major rice mills that produce more than 100 trailers at a prevailing cost of rice paddy, which was going for as high as 700/kg being forced to sell at a price that can only be obtained when the paddy is bought at N400. So, for every 50kg bag, a rice mill has been losing between N15,000 and N20,000. The worse is the fact that the rice mills are not selling because Nigerians prefer foreign rice, not knowing that most of the smuggled rice is expired but re-bagged for that purpose.”

According to him, rice mills are either shutting down or scaling down their production because the trend has continued unabated. He added, “Many rice mills have decided to keep their employees in the hope that government would do something to save the jobs of Nigerians. Others that couldn’t cope were left with no choice other than to declare redundancies.”

He also noted that smuggling was causing millers huge losses.

“Smuggling is the miller’s major problem, but there is the assurance that the government is doing something about it. The Office of the National Security Adviser (NSA) is doing something to curtail it. We heard that some arrests are being made. We are hopeful that these things would be put to check to safeguard the losses being incurred by the millers,” Yusuf said.

One of the operators of a major rice mill in Kano, Bala Dayyabu, said that after the withdrawal of fuel subsidy, rice milling operations had depended heavily on diesel generators due to unreliable electricity supply. He lamented that the rising diesel price, which nearly doubled between 2023 and 2024, increased production cost.

The miller said they spent billions of naira to establish a rice mill, but were concerned that with the current state of affairs, many of these investments may soon be a waste owing to negative government policies.

He said, “You see, at a small-scale milling status, a miller using diesel engines and powered by a generator spends an average of N700,000 per month on energy, which is very unhealthy for a small business operator. The high cost of power pushed the price of milled rice to a very high cost level, while many others have no option but to close down their mills. The few that remained in business were operating below capacity due to inconsistent power supply, high cost of power, importation or smuggling; and to some extent, multiple bank loans.”

In Taraba, only two of the large rice milling mills are operational, although at a reduced capacity, while the others have been closed.

Prior to the relaxation of the restriction on foreign rice imports, most milling plants processed between 130 and 240 bags of paddy per day, but the amount has decreased due to poor demand for locally processed rice.

Findings revealed that small milling machines located in Jalingo and other towns across the state are operating on a daily basis during the boom of locally processed rice.

A miller, Alhaji Hassan Tanimu, the owner of Haske Rice in Jalingo, said he set up the factory three years ago and employed 30 workers.

Tanimu said he began operations at full capacity and received patronage from Kano and other states, but once the current administration waived the importation of foreign rice, demand for domestically processed rice began to fall.

He noted that despite low demand and falling prices, production cost continued to rise, which makes the business unprofitable.

“I have suspended production and laid off the workers. I invested over N50 million in purchasing the machines, which include dryers, boilers, polishing and bagging machines, as well as borehole transformers and giant generating sets. I took part of the money I invested from the bank and my problem now is how to offset the loan and charges, which are rises every day,” he said.

The chairman of the Medium and Small Scale Rice Millers in Bauchi State, Alhaji Aminu Barau Liman Katagum, said rice millers set up industries to support the economy and the society, particularly to provide jobs for the teeming population, but unfortunately, the opening of Nigerian borders, which resulted in a massive influx of foreign rice, caused numerous problems, threatening the existence of many milling companies in Bauchi.

Katagum said many rice millers closed due to lack of patronage and poor sales, adding, “Even in my rice mill, there are skeletal services. In the past, every day I processed more than 300 bags of rice, but now, the services have drastically dropped to a few number of bags because all the customers coming to buy rice from Lagos, Port Harcourt and Abuja no longer buy from our mills. Majority of them now buy foreign rice. We believe that this development is not a good omen for the society and the country in general.”


In Benue State, an entrepreneur, Ichor Michael Tersoo, who runs a mill at Wadata in Makurdi, said his business was put on hold because he was operating at a loss.

Michael said the complexities of the economy created by the current administration led him to shut down the mill.

“I closed down my business due to these difficulties. I am not ready to make any comprehensive financial assessment; I want to avoid counting my losses and reflecting on the past,” he replied when asked about how much he invested in setting up the rice mill.

Niger State, which was once a rice-producing and milling hub, is now confronting similar crisis. The milling plants’ lifeline has run out, leaving the companies gasping for air and farmers abandoning the fields they once proudly farmed on.

Alhaji Mustapha Sani Bello, popularly known as Sani Basket, one of the major rice milling factories in Minna, told Weekend Trust that he closed down his mill and laid off dozens of employees.

He said, “We stopped production because of various reasons, including the fact that we lost a lot of money. We bought paddy rice at a higher price and the government started importing cheap rice into the country. That made us lose a lot of money because when we produced, we had to sell it cheaply; and we had bought paddy at a higher price. That took us off balance in the market.

“Secondly, cost of energy, which is now three times higher than what we used to buy, also made us to stop production because we could not afford to pay for the energy required for the production.”


Like Sani Basket, Yazid Adamu, another rice miller in Minna, also told Weekend Trust that they were still producing but at low capacity, describing the situation as a nightmare.

“The supply of paddy rice is very low now. Even sellers have stopped selling because the price is seriously down,” he said.

Paddy supply declining

The managing director of Labana Rice Mill, on the other hand, said rice mills were not receiving enough paddy for output. And millers are also being cautious of the amount of paddy they buy because they are unsure of how long the industry’s troubles would last.


“In Kebbi, we procure paddy now at N400 and N450 per kg. With this, the final product is between N58,000 and N60,000 per 50kg. What is our assurance that if we rush to buy huge quantity of paddy, the rice price will not further crash as a result of massive importation of rice by the government? Gradually, we are procuring the paddy to keep our machines rolling. The target of the millers is to ensure that the machines are continuously put into use, pay staff salaries and other bills; no more, no less. That is just how it is now,” he said.

Our correspondent in Niger State reports that while many rice farmers are leaving the field, many millers have shut down due to low supply of paddy and falling prices, while a few other millers are holding on to old stock. However, few millers still operate because they stockpiled paddy from last year.

Findings by Weekend Trust revealed that factories in Niger State also face the crisis of falling market prices for milled rice.

Millers told our correspondent that some of them with old paddy in stock also closed because of the falling price of rice in the market, which has made it difficult for them to recover their investment.

Yazid Adamu confirmed to our correspondent that last year, millers bought paddy at N600 per kilogram, but today, the same kilogram sells at N450. Worse still, the 50kg bag of milled rice which sold at N78,000 and N80,000 last year goes for N59,000 and N60,000 this year.

With the introduction and launch of the Anchor Borrowers’ Programme (ABP) in 2015, rice milling and farming received a boost it had never received in history. The ABP stimulated a serious growth in the sector by increasing access to finance for farmers.


Paddy production increased from 4.5 million metric tonnes in 2010 to 10.9 million metric tonnes in 2022.

However, even before the Buhari administration left office, the programme collapsed, undoing the progress that had been gained.

Many farmers cut back on their output this year due to the poor pricing, which deterred production.

Farmers frustrated

The deputy secretary-general of the Kano wing of the Rice Farmers Association of Nigeria (RIFAN), Alhaji Ado Hassan, said the issue at hand was very worrisome as many farmers had decided not to cultivate rice this year.

He explained that federal government’s policies had drawn the staple food production sector backward, stressing that with the unfavourable market price of paddy and high cost of fertiliser, many farmers had resolved not to cultivate rice this year.

“We cannot convince our members to grow rice, taking into consideration what is happening to the sector. We are not saying that paddy should be expensive; what we are saying is – let farmers access agricultural inputs at a very reasonable price and that will allow them to sell at a very cheaper price and still smile home. But with what is happening now, I don’t think it is wise for them to grow paddy. However, this is a setback to the country’s economy. The government should understand that what is happening today will negatively affect the country in the future,” he said.
[quote]Alhaji Abubakar Ibrahim, a rice farmer and miller in Kano, explained that it is indeed very alarming that farmers are currently rejecting inputs that were initially given to them under the company-farmer agreement for fear of not being able to pay back.

“We have entered into an agreement with some farmers: we give them inputs and they produce, while we buy from them. The system entails that we remove the money of the inputs given to them and the surplus is theirs. Ironically, these farmers have backed out, claiming that with the current trend, they may not be able to pay us back. Therefore, this is serious and there is a need for the authorities concerned to do something about it,” Abubakar said.

The chairman of the Medium and Small Scale Rice Millers in Bauchi State, Katagum, said rice millers set up industries to support the economy and the society, particularly to provide jobs for the teeming population, but unfortunately, the opening of Nigeria’s borders, which resulted in a massive influx of foreign rice, caused numerous problems, threatening the existence of many milling companies and leading to job losses.

He said, “In the past I had 48 workers in the rice mill alone, but with the recent development, I relieved over 30 workers, leaving only 18. Among the workers at the rice mill we had graduates, including master’s degree holders. But I have to disengage them because I cannot afford to pay them due to the deteriorating condition of service as customers no longer patronise the company from outside and even within Bauchi. We are now providing services to few farmers who bring their paddy rice to feed their families. Customers in the markets have stopped coming to the rice mill.”

On his part, the managing director of Labana said the company was just managing the situation, adding, “We learnt that some millers are cutting jobs in Kano; but we haven’t done that here because we believe that with time, everything will come back; but if it continues like this, we may not have any other option than to do so. But essentially, it is the hope of the millers that the government would intervene and reintroduce some incentives in the industry for people, particularly the young people, to go into farming. With this, we will have more farmers, and with more farmers, there will be more paddy to be supplied to the rice mills. This will be a win-win situation and we can get back on our feet,” he said.

Tintinnoty:
All will be well with them.
I don't pity them a bit. Majority of them collected loans from the past administration but refuse to reduce price of rice in the country.
That is one of them encouraging his fellow farmers to hoard grains.

madridguy:
Let them collapse and sell their equipments as scrap to iron condemn people.

Late President Buhari came up with a brilliant ideal, to help local production and only for the farmers to suddenly turned hyenas over night.

While we are buying from Cotonou, a bag of stone free foreign rice was sold less than 20K but our farmers started selling stone rice above 100K. Rice that used to be very cheap have now turned to luxury.

Biodun556:
They should collapse if they will continue to put Nigerians in hunger and suffering

Under Buhari, they collected grants, loans and greedily hoard rice and increased price. They are useless.

Raf4:
Local rice millers have failed Nigerians.

According to the report, 10 per cent of all rice sales (N245 billion) takes place in formal retail establishments, with the remaining 90 per cent taking place in the informal market, where it is sold in loose form through traditional vendors.