Contract Farming: Rewriting the Story of Rice Production in North-West Nigeria 

For years, rice farmers in the Dan Kwalli community in the Argungu Local Government Area of Kebbi State have relied on River Rima as the source of water for irrigating their rice farms during the dry season. The rice farmers in the Dan Kwalli community prefer dry-season farming over wet-season farming because it is easier to control soil moisture and avoid losses during the dry season compared to the rainy season, when rice fields are often flooded. 

The increasing socio-economic effects of climate change - including flooding during the rainy season - on rice farmers in Kebbi State also affect rice processors. Kebbi State is home to numerous small- and large-scale rice processors whose operations depend on the availability of rice paddy (unprocessed rice with husk) from farmers. One of such processors is Sajo Rice Mill, situated in Birnin Kebbi, the capital city of Kebbi State. 

Scarcity of Quality Rice Paddy 

Before GIZ's intervention, Sajo Rice Mill sourced approximately 15,000 metric tonnes (equivalent to 300,000 50kg bags) of rice paddy per year from the open market in and around Birnin Kebbi, without any formal agreement with farmers. Companies like Sajo Rice Mill incurred high logistical costs in sourcing rice paddy, adding to their overall production costs and undermining their ability to compete with leading millers within and outside the state. 

The uncertainty of rice production during the rainy season and the scarcity of rice paddy during the dry season restricted Sajo Rice Mill to operating only one production line for more than four years, until the intervention of the MOVE Project (Market-Oriented Value Chain for Jobs and Growth in the ECOWAS Region). MOVE, a project implemented by GIZ with co-funding from the German Government and the Gates Foundation, has a mandate to strengthen the rice value chain and achieve rice sufficiency in Nigeria. The project recognized that rice sufficiency could not be achieved without increased rice production and the availability of rice paddy for processors like Sajo Rice Mill. 

To boost rice production and processing, the MOVE Project identified Sajo Rice Mill as its key private sector partner. MOVE also encouraged Sajo Rice Mill to mobilise the farmers it would work with. The beneficiary selection process led to the emergence of the Dan Kwalli Rice Farmers Cooperative Association as the cooperative that benefited from MOVE's intervention in Kebbi State. Since rice production, especially during the dry season, requires both modern agronomy skills and substantial capital investment in inputs for optimal productivity, only farmers who can afford and effectively apply quality inputs - certified improved rice seedlings, irrigation techniques, fertilizer, herbicides, and insecticides - at the right time and in the right quantities achieve bumper harvests, while others count their losses. 

Most rice farmers in the Dan Kwalli community understood these dynamics to the extent that they had clustered themselves into 15 groups of 10 members each to form the Dan Kwalli Rice Farmers Cooperative Association. The Cooperative, which has been in existence since 2016, made it easier for them to work collaboratively to channel water from River Rima to their farms. However, despite having collectively installed water pipes from River Rima to their farms, the farmers and members of the Dan Kwalli Rice Farmers Cooperative Association lacked the funds to procure sufficient fertilizer, seeds, and agrochemicals to operate on a commercial scale. They also did not have a ready-made market for the rice paddy they produced. Most of them sold their paddy in the open market and could not attract large-scale rice millers who favour long-grain rice paddy from improved seed varieties. 

"We were facing a lot of challenges in getting the inputs needed to carry out our farming activities, which led to low yield per hectare. Also, rice production is all about timing, and previously we lacked access to these inputs (like fertilizers, pesticides, and seedlings) in good time, which led to crop failure and low yield," says Isiyaka Isah, Dan Kwalli Cooperative Secretary. 

GIZ–MOVE Intervention 

The MOVE Project partnered with Sajo Rice Mill and the Kebbi State Agricultural and Rural Development Authority (KARDA), which served as the consortium partner to both Sajo Rice Mill and the project. As part of its role, KARDA facilitated the step-down training on contract farming for farmers' cooperatives and supported the negotiation, execution, and implementation of contract farming agreements between Sajo Rice Mill and the participating farmers' cooperatives. Under the agreement, Sajo Rice Mill would provide an input loan (in cash) to the Dan Kwalli Cooperative to procure and distribute certified Farrow 44 seedlings (long-grain seedlings preferred by processors), bags of fertilizer and urea, herbicides, and insecticides to its members. In turn, the farmers would repay Sajo Rice Mill with rice paddy equivalent to the loan amount. Each member of the Dan Kwalli Cooperative received 4 bags of NPK fertilizer, 2 bags of urea fertilizer, 4 litres of herbicides, 2 litres of pesticides, and 30kg of certified Farrow 44 rice seeds per hectare, and agreed to repay with bags of rice paddy depending on the current market cost of paddy at harvest. 

MOVE also trained the management staff of Sajo Rice Mill and KARDA extension workers on the Sustainable Rice Platform (SRP), Farmers' Business School (FBS) modules, contract farming, and Rice Advice Lite. In collaboration with KARDA, the extension workers stepped down the training organized by MOVE to about 3,000 farmers, building their capacity in good rice production practices and record keeping, while facilitating a contract agreement and partnership between Dan Kwalli Cooperative rice farmers and Sajo Rice Mill.  

Bumper Harvest for Cooperative Farmers 

The contract agreement was signed in 2022, but the first offtake of rice paddy by Sajo Rice Mill did not take place until the dry season of 2023. During harvest, Sajo Rice Mill aggregated 10-12 bags per hectare from each member of the Cooperative, based on the terms of the contract signed by the farmers. According to the secretary of the Dan Kwalli Cooperative, each member was left with approximately 50 bags, estimated at ₦2,350,000 (€1,425 in March 2025), assuming a bag is sold for ₦47,000 (the cost of a bag of rice paddy in 2025) at the open market. The leadership of the Dan Kwalli Rice Farmers Cooperative Association and KARDA ensured that each farmer paid back the loan through monitoring and through the heads of the 15 clusters. The members were at liberty to decide what to do with the remaining paddy. 

"After harvest, farmers pay back with paddy rice, which amounts to the total lot package issued to them per hectare. After repayment, a farmer can decide to store the remainder, consume it in his household, or sell it to Sajo Rice Mill or any other mill, because the agreement only covers the number of bags indicated in the contract with Sajo Rice Mill," said Isiyaka Isah. 

Through the MOVE Project, the German Government and the Gates Foundation have supported Sajo Rice Mill to secure a regular supply of paddy from farmers throughout the year for four consecutive dry seasons (2023-2026), leading to the addition of a new production line with increased production capacity from 3 metric tonnes per hour (60 50kg bags of rice) to 6 metric tonnes per hour (120 50kg bags of rice). Sajo Rice Mill has now signed agreements with a total of 600 farmers from the Dan Kwalli Cooperative and three other clusters in Birnin Kebbi. 

"Before GIZ's intervention, we used to buy our rice paddy from the open market. Contract farming enables us to get very good paddy as and when due. Now we provide employment - we currently have about 100 staff working with us here - and we sell our rice within the community at an affordable rate," says Mohammed Na'allah Lawal, General Manager, Sajo Farms and Rice Mill. 

Thanks to the support of the MOVE Project, Dan Kwalli Cooperative farmers now have access to input credit to produce rice paddy on a commercial scale, and a ready-made market to sell their paddy at market price, eliminating the activity of grain traders who would otherwise have profited from the farmers' lack of a ready market. Additionally, the Cooperative members and other farmers with agreements with Sajo Rice Mill have mastered the art of good agronomy, which has led to increased yield from 3.6–4.0 metric tonnes to 6.3–7.0 metric tonnes per hectare, with adequate income to feed their families, pay their children's school fees, and attend to their family needs. The regular offtake of rice paddy by Sajo Rice Mill has strengthened the Dan Kwalli Rice Farmers Cooperative Association. The monthly levy and paddy rice contributed by each member to the association have been used to build a cooperative warehouse for storing paddy to prevent post-harvest losses and support members who would like to wait for the price of paddy to appreciate. 

This story of Sajo Rice Mill and the Dan Kwalli Rice Farmers Cooperative Association is just one of the sustainable private sector engagement strategies deployed by the German Government, the Gates Foundation, and GIZ to create employment and contribute to the transformation of agri-food systems in Nigeria, the ECOWAS region, and other parts of the world. 

More about the MOVE project: https://www.move-giz.org/

Author: Ayodele Adesanmi, Communications Advisor TAFS, GIZ Nigeria