Multiple taxations responsible for rising rice price – Operator

A leading rice farmer and processor in Gombe State and Northeast region, Musa Arab, in this interview with CHIMA AZUBUIKE, explains why there has been an incessant rise in the price of rice and sundry issues

What is the situation of things regarding the rice business in Gombe State?

There are multiple taxations, which are currently affecting the flow of business in the state. For us in the industrial cluster area in Nasarawo, where we operate our machines, there are a lot of issues coming up now. Local and state government officials are always coming to collect one thing or the other from processors in the area. At the end of the day, it is the consumer that would suffer at the end of the day. Multiple taxations is why the price of rice is increasing astronomically. All these collections would make processors channel the impact on buyers, thereby, making the price of rice high. Sometimes it scares our buyers away. They would then go elsewhere to buy. Indirectly, it is affecting so many people. If I were to advise the government, it is for them to harmonise some of the taxes, so that once you pay once, you don’t need to pay for another one,  But what you have is a situation where this one comes, another set will come and another set.

Can you break down the issue of multiple taxations and what is obtainable in the cluster regarding multiple taxations?

For any truck you load, they would collect tax from you. For instance, if you load 10 trucks in a day, they will collect money per bag in each truck. They collect at least N10,000 per truck. Sometimes you negotiate because if it is per bag, the money will be much. For the state, N10,000 is collected per truck and the local government collects N5,000 and even our union at the cluster would also collect its own. So, you see why we complain that it is too much.

How much is a bag of rice is supposed to sell without the alleged multiple taxations?

We usually process 50kg of rice at the rate of N24,000. But after adding the cost of settling taxes from different quarters, it will add up to N26,000. You can imagine what the addition of N2,000 will do to a business.  Only a few will buy it without complaining. Only a few will patronise you. There are other factors.  Transportation has become very expensive.

How much is the cost of transporting rice to the South?

Before we used to pay N800 per bag to Port Harcourt but now it is N2,500 per bag as a result of the high price of gas. So, it is adding another cost to our existing pain. Imagine the difference from the previous N800 per bag to N2,500 per bag.

Some of you have farms in other Northeast states. What is different about Gombe State?

Gombe State is different because the taxes here are enormous. I know other states are friendly when it comes to collection. Here, the local government will collect a separate tax and the state government will also collect another tax. In other states, you only pay once.

What are your other challenges aside from the multiple taxations?

It is the issue of power. In December, we had an issue with Jos Electricity Distribution Company (JEDC) about the power supply. They came to install prepaid metres for us when we started, we saw that it was not possible.

Why is it not possible to use prepaid metres?

These are industrial machines. In one day, you can consume over N8,000. Once you put card, the next minute the unit has been exhausted. If you compare it with the current operation, it is not commensurate. So, we processors said it wouldn’t be right to use cards for machines. This is not a house but a factory. There was the need to devise means we can cope with. Due to our refusal to continue with cards, they had to cut our power supply for some time. It took the intervention of our emir, and our dialogue to resolve the issue. We soon settled for N30,000 per month for each shop in the cluster but has been increased to N50,000. Whether you worked or not, you will pay N50,000. At the moment, they said they are going to reintroduce the metre again but we have continued to reject it, saying that it was impossible to introduce such to a small industry like this. How much are we getting from processing the rice?

What is the cost of processing a bag of rice?

It costs just about N500 to process and polish a bag of rice. So, how much are you going to gain? This means you will have to charge about N4,000 to N5000 to process a bag of rice. Unfortunately, poor people won’t be able to buy processed rice based on what they are planning to do now.

What attempts have been made to draw the attention of the government to this, going by the accolades the current administration in the state has received on ease of doing business?

The union will meet again by next week to take our complaints to the government. It is not that we don’t want to pay tax but let them harmonise it so that at the end of the day, they will separate and share it among themselves. So that once we pay, we would know we have settled the government. This is our plea.

Tell us how economically viable is rice business.

It is profitable because rice is a staple food and there is demand for rice everywhere. If we can overcome the challenges of multiple taxation and the high cost of electricity, rice is a very good business. Take for instance, when Covid-19 came up, had it been we don’t have rice and small processing machines in the country, I don’t think we could have survived because of the closure of transborder businesses, airports and so on. Thank God farmers were motivated and production has really increased. Rice is a very profitable business and it has come to stay. However, the profit margin is not something to write home about because of the countless demands. At the end of the day, you process rice and make just a meagre amount. If you manage to recover your money, there is no profit. Sustainable

Do you think we have enough rice to feed the Gombe market and the nation at large?

Exactly! One of the advantages of Gombe is not just because all the rice we see in the Gombe market is from Gombe but in the whole of the North-East, Gombe is the only place where you have the processors, the machinery and the manpower, where you can process the rice. Taraba and Yola States have more paddy than Gombe but you cannot go to their market and see processed rice like in Gombe. We usually bring more paddy from Taraba and Adamawa. So, people from South-South, South-East and South-West usually come to take parboiled rice from Gombe State.

What is unique about Gombe State and rice processing?

This is because only Gombe State has an industrial cluster area. You can’t find it elsewhere in the whole of the Northeast. This is the only state in this region where you see machines and the availability of power. We have a dedicated line of 33KVA and we have a power supply for 24 hours. That is the advantage we have.

 What are the advantages of border closure and the recent opening of some of them by the Federal Government to rice business?

If they open the border, automatically they are going to demoralise our people. The closure of the border has really helped our businesses. It was the closure of the border that made people look inward. If the border is opened for people to bring rice from Thailand and India, we would be worsening the economy because we are giving employment to other people in their countries. Food security is very important. We can’t continue to allow people to be feeding us. We have the land, water, labour, etc.

How large is the workforce in the industrial cluster area?

We have over 2,000 small-scale processors doing business. Some do cakes for poultry feed, produce groundnut oil and so on.

 What is the economic relevance of rice processors to the government?

Our relevance is in various ways, from reducing unemployment in the state, especially among youths to add to Gross Domestic Product (GDP).

 What is your advice to the government?

The government should provide an enabling environment so that businesses can thrive. In the case of power, the government should come in and see how it can be reduced to encourage businesses to grow. There should be incentives. Let them subsidise for us so that business can pick up. And on the issue of tax, there should be harmonisation of collection by the various authorities.