Rice Exports Slump As Traders Fall Foul Of Nigerian Customs

A cheeky move to dodge taxes has backfired, leaving Indian rice exporters high and dry, with the Nigerian customs sleuths hounding them to boot. Some Indian traders from non-Basmati growing areas too have stakes in this international game of cat and mouse.

The Indian spirit of dodging taxes is being blamed for the decline in rice exports to West Africa over the last few months. Nigeria, the most populous country in West Africa, has been traditionally a large consumer of low and medium quality rice from Chhattisgarh and Vidarbha. But since Diwali, exports have steadily fallen to negligible levels.

Last year, Nigeria hiked duty on rice to 110%, which set Indian traders thinking. Almost all consignments heading for West Africa, especially Nigeria, began landing in neighbouring Benin, a tiny country where no duty is imposed. The consignments were later smuggled into Nigeria over land.

This move by traders backfired when the Nigerian rice traders lobby complained, leading to swift raids by the customs. The traders even donated vehicles worth around 50 crore to the sleuths to hunt down the rice smugglers.

The Rice Millers Association of Nigeria (RIMIDAN) has been actively lobbying for the crackdown on smuggling. RIMIDAN president Tunji Owoeye told TOI over telephone, "Although I am not supposed to divulge names, it is correct that Indian traders are involved in rice smuggling. They will be prosecuted."

Owoeye said the action was necessary because smuggling is severely hampering their economy. "The indigenous rice miller cannot compete against cheap, smuggled rice, which has in turn affected local cultivation to the extent of food shortage in the country," he said.

An email to the Nigerian Customers Service (NSC) seeking details did not elicit a response.

Huge quantities of rice are held up at the Cotonou port in Benin, so no fresh orders are being taken, say sources. According to an exporter based at Itwari, Nagpur, as against consumption capacity of 2 lakh tonnes of rice over 15 lakh tonnes of consignment have reached Benin. But they are not moving ahead due to the crackdown.

A month on month comparison at Concor's Inland Container Depot (ICD) in Nagpur shows that as against 2,600 containers dispatched in October, only 1,500 were sent in November.

A senior official handling operations at Kakinada Port Trust also confirmed a fall in exports. "Almost 22 vessels are waiting at Benin. It was due to some taxation issue with Nigeria. A couple of days ago eight more vessels have left for the country. Maybe the issue has been resolved," said the officer.

Back in Nagpur, sources say as against export of 3,000 containers a month till Diwali, volume had gradually come down to 50 or 100 containers. Till last year, consignments were sent directly to the specific country in West Africa as per demand. This year, traders started routing all consignments to West Africa via Cotonou in Benin. Till then, not many in the business of forwarding had even heard of this place.

Local traders are hoping for business to revive in a fortnight. Sources say traders have come up with a new idea, and this time powerful lobbies have been roped in too.

The plan is to send rice to Nigeria by paying the entire duty. Later, a refund will be claimed by declaring that the rice was meant for charity. Agents say the new idea might work.

Source : timesofindia.indiatimes.com