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The United States Department of Agriculture (USDA) has predicted Nigeria's rice imports to fall by 500,000 tonnes to 2.5 million tonnes in 2016, from last year's imports of 3 million tonnes. The USDA Post also forecasts that rice imports will drop further by 400,000 tonnes to 2.1 million in 2017.

According to the latest USDA Global Agricultural Information Network report published last week, the key factors influencing this decline are the foreign exchange restrictions imposed by the Central Bank of Nigeria, the current ban on importation of rice via land borders, and inflation which has shifted consumer demand to more affordable alternatives.

As declining oil prices continue to restrain Nigeria’s government revenues, adding more pressure on foreign exchange reserves, the CBN has retained strict restrictions on forex and the ban on access to forex to 41 imported items, including rice. Food importers say they are able to obtain only 20–30 percent of their foreign exchange demand from official sources. Rice imports are now mostly funded through off-shore funds or from the parallel market, which is over 60 percent more expensive than the official exchange rate of N200 per dollar.

Nigeria mostly imports rice from Thailand, India and Brazil as imported rice has become more popular among citizens. Local rice is considered to be of lower quality despite efforts by public and private sector stakeholders who are promoting local rice production as fresh and more nutritious compared to imported rice.

In October, the Nigerian government lifted the ban on importing rice through neighbouring countries. The ban was reinstated last month. The ban on importation was restored as backward integration in the form of installation of rice mills and direct farming seems to be gaining ground. The USDA Post estimates Nigeria’s 2016-2017 rice cultivation will remain unchanged at 2.5 million hectares and production at 2.7 million tonnes in the same period.

Due to the inflation on food prices, the USDA report says Nigeria’s per capita consumption of rice, estimated at 40 kilogrammes, is also declining. Meanwhile, consumption of cassava and yam is increasing. The USDA Post estimates that rice consumption will decline by 5 percent from 5.7 million tonnes in 2014/2015 to 5.4 million tonnes in 2015/2016. Consumption is expected to further decline by 4 percent to 5.2 million tonnes in 2016/2017 as the supply situation becomes tighter.