By Simpson Global Media News Desk
Nigeria’s Federal Government has begun a fresh review of the country’s rice value chain after stakeholders reported that producing one hectare of rice now costs between ₦2.2 million and ₦2.3 million, with fertiliser accounting for about 35 per cent of total production expenses.
The review brought federal and state government institutions together with rice farmers, millers, processors and industry associations to examine the pressures affecting production, investment, supply, trade and the price consumers ultimately pay for rice.
The technical consultation, coordinated by the Presidential Food Systems Coordinating Unit (PFSCU), was held in Abuja on September 23 and followed a directive from the PFSCU Steering Committee chaired by Vice-President Kashim Shettima. The outcome is expected to feed into a consolidated technical report on the current state of Nigeria’s rice industry and possible priority interventions.
The discussions are significant because rice sits at the centre of Nigeria’s food-security and household-consumption debate.
Government policy has increasingly focused on expanding domestic production and processing, while consumers continue to face concerns about food affordability.
The latest consultation shows that increasing the quantity of rice produced is only one part of the problem.
The cost of producing the crop, access to irrigation and finance, storage, transportation, processing efficiency, market information and the interaction between domestic and imported rice all influence the final price.
Stakeholders are now seeking a more coordinated approach that addresses the entire chain rather than focusing on farmers alone.
The ₦2.3 million production challenge
The most striking figure from the consultation is the estimated cost of producing one hectare of rice.
According to the PFSCU statement, stakeholders reported production costs of approximately ₦2.2 million to ₦2.3 million per hectare, with fertiliser representing about 35 per cent of the total.
That figure captures the financial pressure facing producers before the crop reaches the mill or market.
Rice cultivation requires land preparation, seed, fertiliser, crop protection, labour, irrigation where applicable, harvesting, transportation and, in many cases, drying and processing.
When each input becomes more expensive, the farmer has to either absorb the additional cost, increase the selling price or reduce spending on inputs.
Each option has consequences.
Absorbing higher costs can reduce farmers’ margins and weaken their ability to finance the next production cycle.
Increasing selling prices can make locally produced rice less affordable to consumers.
Reducing input use can affect yields or quality.
The consultation therefore focused on finding ways to reduce the cost structure rather than simply asking farmers to produce more.
Fertiliser at the centre of the cost problem
The fact that fertiliser accounts for approximately 35 per cent of reported rice-production costs gives the input particular importance.
Fertiliser is used to provide crops with nutrients required for growth, but its cost is affected by several factors, including manufacturing, transportation, energy, exchange-rate conditions and distribution.
For rice farmers, fertiliser is also tied directly to yield expectations.
Using insufficient nutrients can affect crop performance, while excessive application can increase costs without necessarily producing proportional returns.
The government and agricultural stakeholders therefore face a dual challenge.
They need to improve farmers’ access to fertiliser while also making the broader production system efficient enough for farmers to earn sustainable returns.
Recent government interventions have included fertiliser distribution and other input-support programmes.
But the latest consultation suggests that input distribution alone cannot resolve the cost problem.
The production environment also needs irrigation, finance, storage, processing and reliable market information.
Irrigation emerges as a major priority
Stakeholders at the consultation called for increased investment in irrigation infrastructure, including solar-powered water systems.
The objective is to support year-round rice production and reduce dependence on rainfall.
For rice farmers, reliable water availability can have several effects.
It can allow farmers to cultivate outside the main rainy season.
It can reduce exposure to irregular rainfall.
It can make production schedules more predictable.
And it can potentially increase the number of production cycles that farmers can undertake.
Solar-powered irrigation also offers a potential way to reduce dependence on diesel and petrol-powered pumps.
Energy costs were specifically identified by stakeholders as one of the pressures affecting the rice value chain.
However, irrigation infrastructure requires more than installing pumps.
Farmers need access to suitable water sources, functioning irrigation systems, maintenance services and technical support.
Large-scale irrigation also requires careful water management to prevent environmental damage and ensure that competing users have adequate access.
Why year-round rice matters
Nigeria’s rice market depends on a combination of production from different regions and production seasons.
When output is concentrated within particular periods, storage becomes especially important.
A strong harvest can create temporary abundance, while inadequate storage can force farmers to sell quickly.
If many farmers sell at the same time, prices can come under pressure.
Later in the year, when stocks fall, consumers can face tighter supplies.
Year-round irrigation can potentially spread production across different periods.
But irrigation alone will not solve seasonal price movements.
Farmers also need storage and aggregation facilities that allow harvested paddy to remain in good condition until processors and buyers need it.
That is why the consultation linked irrigation to storage, financing and market coordination.
The policy challenge is not simply producing rice.
It is ensuring that rice can move efficiently from farms to processors and ultimately to consumers.
Storage remains a weak link
Post-harvest losses and inadequate distributed storage were identified as important problems across the value chain.
Rice is less perishable than some fresh vegetables and fruits, but harvested paddy still requires proper handling, drying and storage.
Moisture management is particularly important.
Poorly dried or stored paddy can deteriorate, reducing its quality and value.
Storage facilities can also help farmers avoid being forced into immediate sales after harvest.
When farmers have somewhere safe to keep produce, they have greater flexibility in deciding when and where to sell.
The consultation therefore called for improved storage and aggregation infrastructure.
Aggregation can also help processors.
Rather than sourcing relatively small quantities from many individual farmers, processors can obtain larger volumes through organised collection points.
That can reduce transaction and transportation costs and improve the reliability of supply.
Finance is another major pressure
Rice farming is capital-intensive under current conditions.
The reported cost of ₦2.2 million to ₦2.3 million per hectare means that farmers cultivating several hectares require substantial working capital before harvest.
Many smallholder farmers cannot finance the entire production cycle from personal savings.
They therefore depend on loans, cooperative finance, input-credit arrangements, government programmes or private buyers.
The consultation identified limited access to appropriately priced long-term financing as another major constraint.
For farmers, the cost of borrowing matters.
A loan with a high interest burden can consume a significant share of agricultural income.
Short repayment periods can also create problems because farming revenue generally arrives around harvest rather than in regular monthly instalments.
Longer-term and appropriately structured agricultural finance can therefore better reflect the production cycle.
The same issue affects rice mills and processors.
Milling facilities require significant capital investment in equipment, power, maintenance, buildings and working capital.
If processors cannot obtain suitable financing, production capacity can remain below what farmers and consumers require.
Mills and processors are part of the solution
Nigeria’s rice value chain does not end when farmers harvest paddy.
The crop must be dried, cleaned, milled and packaged before reaching many consumers.
The quality and efficiency of those processes influence the price and competitiveness of Nigerian rice.
Stakeholders therefore called for stronger financing and refinancing options for viable mills and processors.
The focus on refinancing is significant because existing processors may already have equipment but need working capital or restructuring support to operate efficiently.
New investment can expand milling capacity, while financing for existing operators can help them maintain and upgrade their facilities.
Efficient mills can also provide more reliable markets for farmers.
When processors can purchase paddy consistently, farmers have greater confidence that their harvest will have an outlet.
That relationship can encourage production and reduce uncertainty across the chain.
From paddy to the consumer
The price of rice on a market shelf reflects far more than the cost of cultivation.
Between the farm and consumer, there are several stages.
Paddy has to be collected.
It may be transported to a mill.
It has to be dried and processed.
The milled rice must then be packaged, stored and transported again.
Wholesalers and retailers add further logistics costs.
Each stage can introduce additional expenses.
Fuel and energy costs affect transportation and processing.
Poor roads can increase vehicle operating costs and damage.
Long distances between farms, aggregation centres and mills can raise logistics expenses.
Storage shortages can force repeated movement of produce.
The latest government consultation is therefore significant because it examines the full value chain instead of treating the farm-gate price as the only issue.
The importance of market data
One of the proposed responses is the creation of an integrated food-market data framework covering production, stocks, imports, consumption and prices.
The government says better data would support more timely policy decisions.
Agricultural markets can change rapidly.
If policymakers do not know how much rice has been produced, how much is stored, how much is being imported and how much consumers are buying, decisions can be based on incomplete information.
Accurate data can help answer basic questions.
How much rice is available?
Where is it located?
How much paddy is awaiting processing?
How much milled rice is held by private companies?
How much is in strategic reserves?
How much is imported?
What are prices doing in different regions?
Better answers can allow policymakers and businesses to respond earlier.
Trade policy and domestic farmers
The consultation also examined imports and trade flows.
Stakeholders called for predictable trade and import decisions that take domestic production cycles into account.
They argued that large price differences between local and imported rice can create incentives for smuggling.
This is a delicate issue.
Nigeria has to balance consumer access to food with the interests of domestic producers and processors.
If imported rice is significantly cheaper than locally produced rice, consumers may seek the lower-priced option.
Domestic producers may then struggle to compete.
If imports are restricted without sufficient domestic supply, consumers may face tighter availability or higher prices.
The policy challenge is therefore not simply whether rice should be imported.
It is how trade decisions interact with production, stocks, consumer demand and domestic investment.
Predictability is particularly important for farmers and processors planning months ahead.
A farmer planting rice needs some understanding of the market likely to exist when the crop is harvested.
A miller investing millions of naira in processing equipment also needs confidence that the market will remain viable.
The smuggling problem
Stakeholders specifically warned that persistent price differences could create incentives for smuggling.
Smuggling can distort legitimate markets because goods entering outside official channels avoid some of the taxes, controls and regulatory requirements applied to legal imports.
It can also make it harder for policymakers to know the true volume of rice entering the country.
For legitimate businesses, illicit competition can create uncertainty.
For government, it can complicate efforts to manage food supply and trade.
For consumers, the issue is more complicated because lower-priced informal supplies may appear attractive when household budgets are under pressure.
That is why the consultation linked trade policy to domestic production costs.
If Nigerian rice becomes more competitive through lower production, processing and logistics costs, the market can function with less pressure from large price differentials.
Food safety and traceability
The government and industry stakeholders also highlighted food-safety, traceability, certification and testing systems.
These measures matter because consumers and processors need confidence in the quality of rice entering the market.
Traceability allows participants to identify where a product originated and how it moved through the supply chain.
Certification can establish whether specified standards have been met.
Testing can identify contamination or quality problems.
For exporters, compliance with recognised standards is particularly important because foreign markets can impose strict requirements.
Strengthening these systems could therefore serve both domestic consumers and Nigerian businesses seeking access to external markets.
It can also support the development of a more formal rice-processing sector.
Farmers are central to the consultation
The participation of farmers in the technical consultation is significant.
Agricultural policies can produce different outcomes depending on conditions at farm level.
A national policy that appears effective on paper may encounter problems when it reaches farmers because of land access, input distribution, transport, labour, finance or local market conditions.
The Rice Farmers Association of Nigeria welcomed the consultation.
Its vice-president, Mohammed Auwalu, said bringing farmers, processors, states and government together around the wider food balance was important for strengthening coordination and supporting continued production and investment.
That position reflects the interconnected nature of the sector.
Farmers need markets.
Processors need paddy.
Consumers need affordable rice.
Government needs reliable information.
Financial institutions need viable borrowers.
All of those interests depend on the same production system.
Nigeria’s rice ambition
Rice has long been central to Nigeria’s agricultural policy.
The country has sought to expand domestic production and processing as part of broader food-security efforts.
The latest consultation suggests that policymakers are now placing increasing emphasis on the economics of production.
That shift matters.
Producing more rice does not necessarily mean consumers will pay less.
If production costs rise at the same time as output, prices can remain high.
The government therefore needs to examine productivity alongside costs.
Higher yields per hectare can help reduce the cost per kilogram of rice if additional output is achieved without proportional increases in expenditure.
That makes improved seeds, irrigation, fertiliser efficiency, mechanisation and extension services relevant to the affordability debate.
Yield and productivity
The consultation did not announce a new national rice-yield target.
But the discussion of production costs raises the broader issue of productivity.
If a farmer spends ₦2.3 million to cultivate a hectare, the economic result depends partly on how much marketable rice is produced from that hectare and at what price it can be sold.
Higher productivity can potentially spread fixed costs over a larger volume of output.
But increased yields require appropriate agronomic practices.
Farmers need quality seed, timely planting, adequate nutrients, water management, pest and disease control and harvesting systems.
Extension services can help farmers adopt those practices.
Mechanisation can reduce labour constraints in land preparation and harvesting.
Irrigation can reduce exposure to rainfall variability.
The government’s rice strategy therefore intersects with many other agricultural programmes.
Climate risk
Weather adds another layer of uncertainty.
Nigeria’s agricultural production remains highly exposed to rainfall patterns, flooding and dry spells.
The Food and Agriculture Organization’s September 16, 2026 country brief said prospects for Nigeria’s 2026 cereal production were uncertain in some areas. It reported that cumulative rainfall from April to July was generally near average in southern and central bimodal rainfall areas, but dry spells affected parts of Oyo, Kwara, Osun, Ekiti, Ondo and Edo.
The FAO also reported that second-season maize planting was continuing in southern and central areas and that harvesting of 2026 cereals had begun in northern unimodal rainfall areas.
Although those observations cover cereals broadly rather than only rice, they illustrate why agricultural planning increasingly involves climate risk.
Rice farmers need predictable water.
Where rainfall is unreliable, irrigation can provide an alternative.
But irrigation infrastructure also requires investment, maintenance and careful management.
Solar irrigation
The call for solar-powered irrigation systems reflects an attempt to address two problems at once.
The first is water availability.
The second is energy cost.
Conventional irrigation pumps often rely on petrol or diesel.
Fuel costs can become a major expense, especially for smallholder farmers.
Solar systems use an alternative energy source once installed.
They require upfront investment but can reduce exposure to recurring fuel expenses.
Their effectiveness depends on equipment quality, sunlight availability, water-source suitability, maintenance and the ability of farmers to manage the systems.
The consultation's recommendation does not mean every rice farm can immediately shift to solar irrigation.
Rather, it identifies renewable-powered irrigation as an infrastructure option for supporting more consistent production.
Aggregation and logistics
Another issue is the distance between farms and markets.
Rice-growing areas are not always close to major urban consumption centres.
Paddy can therefore travel long distances before processing.
Transportation costs can add significantly to the final price.
Aggregation centres can reduce this problem by allowing farmers in surrounding areas to bring produce to a central point.
Processors can then collect larger quantities in fewer trips.
Aggregation can also facilitate quality control and record-keeping.
It may make it easier for financial institutions to finance groups of farmers and for processors to establish supply contracts.
But aggregation centres require roads, storage, weighing systems and transparent management.
The government’s consultation specifically identified improved storage and aggregation infrastructure as part of the response to value-chain inefficiencies.
Weighing and market transparency
Accurate weighing is another practical issue in agricultural trade.
If farmers and buyers do not have access to reliable weighing systems, disputes can occur over the quantity of produce delivered.
Transparent measurement helps establish a common basis for pricing.
It also improves data.
If government and industry know how much rice moves through formal aggregation points, they can build a better picture of production and market supply.
The PFSCU’s proposed food-market data framework would benefit from such information.
Production statistics are more useful when they can be connected with actual stocks, sales and processing activity.
The consumer side
The government's objective is not only to protect farmers and processors.
The consultation was explicitly linked to consumer affordability.
Rice is a major staple in Nigerian households, meaning changes in its price can affect household food budgets.
When rice becomes more expensive, families may reduce consumption, switch to alternative staples or spend a larger share of their income on food.
The government therefore faces the challenge of supporting producers without creating conditions that make the product inaccessible to consumers.
The value-chain approach attempts to address that tension by reducing underlying costs.
If irrigation becomes cheaper, storage improves, financing becomes more accessible and transport costs fall, the potential exists for some savings to move through the supply chain.
Whether those savings ultimately reach consumers will depend on market conditions and competition.
The role of processors
Processors occupy an important middle position.
They purchase paddy from farmers and transform it into a product that can be sold to wholesalers, retailers and consumers.
Their costs include energy, labour, equipment maintenance, packaging, financing and transportation.
When processors face high operating costs, those costs are reflected in the price of milled rice.
The government’s call for stronger financing and refinancing options for viable mills is therefore aimed at improving the capacity of the processing segment.
Better processing can also improve quality.
Modern milling systems can produce more uniform rice and reduce losses during processing.
That can make locally processed rice more competitive with imported brands.
Private investment
The government also wants to encourage private-sector investment in the rice industry.
Private investment can provide capital for farms, irrigation, processing plants, warehouses, logistics and distribution.
But investors require predictable market conditions.
That is why the consultation included trade policy, market data and investment conditions alongside production costs.
An investor considering a rice mill needs to know whether sufficient paddy will be available.
The investor also needs to understand energy costs, financing conditions, market demand and competition from imports.
Better information can reduce some of the uncertainty.
Predictable policy can reduce another part.
States have a role
Agriculture is not managed solely from Abuja.
State governments influence land access, extension services, irrigation projects, rural infrastructure and local agricultural programmes.
Rice-producing states therefore have direct knowledge of conditions on the ground.
The participation of major rice-producing states in the consultation was intended to bring those experiences into the national discussion.
Coordination between federal and state governments can
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