Rice business in Nigeria is a very lucrative one to venture into and make a substantial amount of money regardless of your location, gender, and even capital.
Rice business is one of the fastest-moving businesses in Nigeria due to the high consumption of rice. The business can be started both on a small scale and a large scale.
Due to many Nigerians preferring foreign rice over locally made ones, you can make a lot of money from the business, as foreign rice is costly and hard to find in some parts of the country. Because of this, a lot of people want to venture into the business and make some cool cash.
However, you need to understand, and know in detail what the business entails before you can start a rice business in Nigeria. That is why we’ve curated this post to show you exactly how to start a rice business in Nigeria.
From the cost of starting and profitability to where and how to buy and sell, as well as the opportunities, you’ll discover everything you need to know to start a profitable rice business in Nigeria.
Without further ado, let’s get started!
Opportunities in Business
Rice business involves the sales of usually foreign rice in Nigeria, and it can be started in many ways including:
Rice Distribution Business
Rice distribution business simply means becoming a rice supplier. It involves the buying of bags of rice in bulk, then selling them in bags, half of a bag, and/or quarter to retailers and sometimes, final consumers.
This is the most popular way of starting a rice business in Nigeria. Becoming a rice distributor in Nigeria is very profitable, as you’ll be making massive profits per bag, although it requires huge capital to start.
Rice Retailing Business
Rice retailing business involves the buying of rice from distributors and reselling in small quantities (mudu & milk tin) to final consumers. You can also make a lot of money becoming a rice retailer in Nigeria, as there is always high demand by the final consumer.
Rice retailing business is a good source of daily income, and it can be started with little capital.
How Profitable is Rice Business in Nigeria?
One common question asked by people looking to go into especially the rice distribution business in Nigeria is – is rice business profitable in Nigeria?
Yes, the rice business is very profitable in Nigeria. This is because there is always a strong demand for rice, as it is one of the most consumed foods in Nigeria.
However, the profitability of this business depends on some factors including season, location, and price fluctuation. There are some times when rice is usually scarce in Nigeria, during this time, the price tends to inflate, resulting in higher profit margins.
As per location, since large quantities of foreign rice are usually available for cheap prices in the western part of the country, the cost of transporting them to other parts may be expensive, thereby affecting realizable profits.
Although, regardless of those factors, you’ll still make money as a rice distributor in Nigeria. The profit margin of rice could range from 10% to 50% depending on the current price, scarcity, and location.
How Much Does it Cost to Start a Rice Business in Nigeria
The capital needed to start a rice business depends on your approach, and how big or small you want to start. Location also determines how much to budget as a startup fund for a rice business in Nigeria.
To start a rice distribution business in Nigeria, you will need millions of Naira. This is because as a distributor you’ll need a lot of things to get started including a warehouse, and truck, as well as buying in larger quantities (at least 50 bags). While as a retailer, you can start with less than 50,000 Naira, as a bag is enough.
How to Start Rice Business in Nigeria
1. Decide on the Rice Business Idea to Start
Since there are lots of opportunities in the rice business, you’ll need to choose one to start with. Here, you’ll need to do some findings about the most profitable one, and the one that moves fast in your area.
If you live in a place where there is no rice distributor, it would be ideal to start a rice distribution business. Although, you also need to consider the cost of starting while picking a rice business idea.
2. Get to Understand the Business
After choosing the one to go with, you need to understand how the business works. This can be done by carrying out market research.
To get the best result, you’ll need to meet someone already in the business, and ask them about the business. Make some findings including how fast the business moves, how and where to source the best rice to sell, how and where to sell, the price range, the best season for the most profits, and so on.
Doing this, it would be easier to start and succeed as a rice distributor, and even retailer in Nigeria.
3. Arrange for a Startup Capital
You need to raise the capital to start a rice business in Nigeria. As a retailer, since you won’t need much money to start, you can source your capital from your personal savings.
However, as a rice distributor, you’ll need huge startup capital. You can source your funding from your personal savings if you have enough, seek financial assistance, or perhaps a loan from friends and family, or even a bank. You can also seek partnerships to start a rice distribution business in Nigeria.
4. Get a Store or Warehouse
After getting your capital in place, the first thing you want to invest in is a storage for your goods. Although rice hardly gets spoiled when stored properly, you must prepare a secure place to avoid theft.
As a retailer, you can start the rice business by renting a kiosk or a small shop. While as a distributor, since you’ll be dealing with a huge quantity, you’ll need a warehouse to start a rice business.
While looking for a store for your business, make sure you find a place where the business moves the most. For example, as a distributor, an open market would be ideal, while a busy street (e.g students’ area) would be great for retailers.
More so, since foods are prone to theft, it is advisable you go with a place with little to no criminal records, and also well secured by security agents.
5. Find a Supplier
Starting a Rice business, you will need somewhere to buy from at cheap prices to sell for the most profits. As a distributor, your supplier would be rice milling and packaging companies, or perhaps farmers if you’re looking to start a local rice business.
While as a retailer, distributors would be your supplier, and you can find them in any state and town across the country. If your market research (step 1 above) is well done, you would find out about the best suppliers for you.
6. Get Started and Start Selling
With everything from step one to five now in place, the next thing is to start selling. Before you can start getting sales, you’ll need to market your products.
As part of marketing, the first thing) to do is know your target audience. First, identify the type of people that buy what you’re selling. As a rice distributor, your target audience would be retailers.
You can find and walk from one retailer to the other marketing your business. To get the best result, you would need to make them a better offer than your competitors. These include but are not limited to:
Giving Free Samples
As a new distributor, to gain the trust of retailers, you would need to show them a sample of the type of rice you’re distributing. A lot of retailers seek this in order to confirm the quality of the goods, and if it is good for the current market conditions, before buying.
Offering discounts on massive purchases is another great way to market yourself as a rice supplier in Nigeria. You can give a certain percentage discount on every bag of rice purchased. That is, the more retailers or sub-distributors buy, the more discount they’ll get.
Offering Free Delivery
For a start, you can offer retailers free delivery to their shop or any destination of their choice. This will make them loyal, and later on, you can stop the free delivery, or offer it on big purchases.
Allow Payment on Delivery
Working with long-distance customers, you can offer a payment-on-delivery service to gain their trust. By doing this, they are more likely to buy from you than any other distributor.
Allow Credit Supply
When you get a few regular retailers with that large customer base, you can make a deal to supply them on credit and allow them to repay after sale. It is advisable you do this with long-term customers that are loyal to your business. That means you shouldn’t try this on your first sale, or with your first customers.
Rice Distribution Business – FAQs
Where can I buy rice at wholesale price in Nigeria?
You can buy rice at wholesale price in Nigeria, either from a rice mill, or mega suppliers.
How to invest in rice business in Nigeria?
You can invest in the rice business in Nigeria by cultivating a rice farm or becoming a distributor. As a distributor, you’ll need to buy from rice mills or mega suppliers and resell to retailers.
How to start a rice storage business in Nigeria?
Rice storage business in Nigeria simply means buying raw rice in bulk from farmers at harvest, storing for a while, and reselling when the price appreciates. To start, all you need to do is know when and where rice is cheap, then buy, store, and resell when they are costly.
The rice business in Nigeria is a very lucrative one to start both as a retailer and distributor. You can start both on a small scale and a large scale. And I believe with this post on how to start a rice business in Nigeria, you’ve gotten some helpful tips to get started!