Rice mills struggle to buy farmers’ produce amid 'cheap imports'

Rice mills have thousands of tonnes of unsold rice stocks, and they are struggling to buy produce from farmers as a result of what they call an influx of relatively cheap imported rice on the local market, The New Times has learnt. The issue was reported less than a month after the Ministry of Trade and Industry (MINICOM) announced new prices at which rice should be bought from farmers for the harvest for agriculture season B of 2024. The prices announced on June 21, are based on rice quality and variety, with Rwf500 a kilogramme for short-grain rice, Rwf505 for medium-grain rice, and Rwf515 a kilogramme of long-grain rice. For Basmati rice, it was priced at Rwf775 a kilogramme. ALSO READ: Mixed reactions as govt slashes rice farm gate prices Speaking to The New Times, Apollinaire Gahiza, Chairperson of a rice farmers' union in the Rwamagana, Kayonza, and Ngoma districts, said that while the fixed rice prices at which factories have to buy the produce from farmers were high in the face of heavy importation of the relatively low-cost Tanzanian brand, farmers, on the other hand, are not willing to sell their produce at lower prices because of their investment costs. Some industries, he said, collected rice from the farmers without making payments or signing contracts with them. This creates problems. If the Ministry of Trade and Industry (MINICOM) does not step in to either reduce the importation of Tanzanian rice or lower the price for local industries, it will be challenging for them to operate, Gahiza noted. The impact on farmers is significant, affecting them both personally and within their families, he observed. “Farmers are experiencing losses, and this will also impact the next season because they won't be able to afford fertilisers and other necessary investments for rice cultivation, he said. Farmers are left with rice still on the fields or in sacks, risking damage from rain. The market price for our rice is slightly lower than desired, by about Rwf15 [a kilogramme], but it's still manageable. However, the presence of Tanzanian rice affects this balance, he explained. ALSO READ: How can Rwanda bridge its rice production gap? Nyagatare Rice Mill Managing Director, Laurent Basabira, told The New Times, on July 17, that the factory was receiving produce from farmers and was in negotiations with banks to get loans to be able to pay the farmers. But he said that selling processed rice is a challenge for the Nyagatare District-based factory, because of the imported Tanzanian rice that is relatively cheap on the local market. “The imported Tanzanian rice outcompeted our Rwandan rice on the market. That is the major issue,” he said, adding that the market reality makes the set prices at which rice mills have to buy the produce from farmers relatively high. He said the factory has more than 2,800 tonnes in its stock from last season [which he said was expected to have been sold out by June 2024] that it has not yet sold because of unfavourable prices. And from June up to now [current season harvest], he said, the factory has received 3,800 tonnes of rice supplied to it from farmers that it is unable to sell thus far. The factory, he indicated, planned to sell the last season’s rice at Rwf26,500 for a 25-kilogramme pack [as a wholesale price] so that it does not incur losses, and Rwf24,500 per 25-kilogramme pack of rice for the current season, the prices that are higher than Rwf19,000 for Tanzanian rice – for the same quantity. “So, we cannot be able to sell it [as we are outcompeted by the Tanzaniana rice on the market],” he said, pointing out that they could be able to sell if the amount of cheap Tanzanian rice available on the market gets lowered. Laurent Ndagijimana, Chairperson of the Rwanda Forum of Rice Milling Industries (RFRM), provided an overview of the current issues facing the local rice trade, indicating that the cheap Tanzanian rice was a major reason for limited sales. Rice industries already have large stockpiles, and we are working hard to pay farmers for all the rice that is still among farmers, Ndagijimana observed. However, rice is accumulating in many industries. Meanwhile, Ndagijimana said that [in some places in Rwanda], the price of Tanzanian rice increased from Rwf18,500 to Rwf21,000 just in few weeks, “and if it reaches Rwf22,000, Rwandan industries can start trading competitively on the market]. This price increase is promising. We believe that by next month, this issue will be resolved, he observed, reassuring “we are working very hard, hand in hand with the government, to reduce the burden on farmers.” Cassien Karangwa, Director of Domestic Trade at MINICOM told The New Times MINICOM is aware of the challenges expressed by mills that the prices of imported rice is cheap which makes them unable to trade locally processed rice on the same market. He said that the ministry held a meeting with the federation of rice mills and that of farmers, and the agreed upon solutions were adopted. We agreed that industries should start collecting rice directly from the fields and establish contracts with farmers. They are also tasked with exploring new markets and providing weekly reports on rice they have bought and the challenges they have so that we consider them together,” he said, adding that they also agreed that the mills improve quality for the local rice to compete with the imported brands. Another option, he said, is to look for other buyers including the school feeding programme. He pointed out that MINICOM's proactive measures aim to support local rice farmers and industries, ensuring they remain competitive and sustainable in the face of market challenges, and that they do not incur losses.

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Rice mills struggle to buy farmers’ produce amid 'cheap imports'