The countries that comprise the ECOWAS region (Ivory Coast, Senegal, Ghana, Nigeria, Guinea, Cameroon etc.) have since time immemorial had a diet that comprised of rice (as the staple grain) along with curries made with meat, vegetables or seafood. There is nothing startling about ingredients used in curries, but there is one shocking observation that it was all consumed with rice. You may ask- What is the big deal about that? Well, the big deal is not that they use rice as their staple grain, BUT the fact that almost 40% of that rice is imported into the region from countries that produce surplus rice- predominantly India, Thailand, Vietnam, and Pakistan. Most West African states have no shortage of arable land or fresh water supply (via natural sources or monsoon) and have the potential to feed its entire population. So it is mind boggling that they would prefer to import a sizeable proportion of their staple food. If you peruse through any economic reports for this region, you will find that this region has historically been quite impoverished even when compared to their neighbors in Eastern and Southern Africa. This begs the question- Why sacrifice hard earned dollars to import your key source of nutrition and create reliance on others for your needs, when you can very easily do it on your own? This question is extremely hard to answer since it would involve a multi-dimensional study of myriad reasons that would have led to the current state of affairs.
One of the most convincing argument is that when there is plentiful supply of rice from countries that have surplus (after accounting for their local consumption and emergency stocks), then why bother allocating vast tracts of land to rice cultivation. Such land could be put to better use in cultivating cash crops (both food and non-food) and earning precious foreign exchange. Indeed a very credible argument! Truth be told- there is nothing wrong in this business since the entire infrastructure not only generates millions of jobs on both sides of the trade, but also ensures quality nutrition for those that need it at the best possible price. And that is why for decades, rice has been supplied by eager exporters from source countries and imported by equally eager entities based in ECOWAS countries, for further distribution to the general population. This trade has continued unabated for many decades making West African region the biggest importer of rice, and accounting for 20% of global rice trade.
Terra Firma Commodities, like many others, has also been a critical component in this business since 2014 with particular focus on markets of Ivory Coast, Burkina Faso, Mali and Ghana. Our local brands are extremely popular and well known for quality amongst the biggest wholesale distributors in the region.
So the wheel keeps moving along until one cog falls off! And that event happened when India (the biggest rice exporting country) banned all exports of white rice (excluding basmati) in September 2023. All hell broke loose, and broken white rice prices climbed almost overnight by $100-150 per MT (from an earlier blended average price of $400 per MT). All of a sudden the same imported rice looked very expensive compared to its locally grown cousin and it was unpredictable if remaining countries could pick up the gap in supply created by this ban. India had its own myriad reasons to take this policy decision even though it was known well that this would create immense strain in the system. Such strains still reverberate throughout and rice prices have not budged and sit stubbornly at $600-650 per MT. Not a good scenario when you import this expensive rice!!
As a participant in this business, Terra Firma Commodities has enjoyed reaping the benefits of this trade, with good incentives for owners and company employees alike. BUT it seems that for now the system is broken and it will not be “business as usual”. As a Company we have realized that we cannot just do an arm’s length transaction with the region and need to be invested down the value chain. We have gained plenty from this region and it is time now to return back the favour when they need it most. Since the ban in Sept 2023, Terra Firma stakeholders have initiated discussions with government policy makers and other relevant actors to support indigenous rice farming. Discussions are ongoing with cooperatives to support farmers with high tech machinery for farming and milling, together with cutting edge rice farming best practices.
It may take many years for the region to become self-sufficient, BUT we are taking a step in the right direction!
