Golden Delta Rice Business Plan — Why the Mill Is the Business

The arithmetic of integration: with paddy prices halved, the margin has moved from the field to the mill — and what the mill demands in return.

Why the Mill Is the Business

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3.1 The arithmetic of integration
3.2 What the mill requires in return
3.3 What the mill does not solve

3.1 The arithmetic of integration

This is the most important section in the plan. In the current Nigerian market a farm that grows paddy and sells it raw is exposed to a price that halved within a year. A business that grows paddy and mills it captures a materially larger and more stable value.

Figure 5. Value per tonne of paddy, sold raw against milled.

Value per tonne of paddy	Amount (₦)	Basis
Sold raw as paddy	350 800	Reported 2026 market price
Milled rice	570 400	62% recovery at ₦920 per kg ex-mill
Rice bran	14 800	8% yield, sold to feed millers
Husk	4 400	20% yield, briquettes and litter
Gross value if milled	589 600
Less milling cost	(55 600)	Parboiling, power, labour, packaging
Net value if milled	534 000
Uplift over selling paddy	183 200	52.2% more than the raw price

Expressed at the scale of the whole business: the farm’s own 1 000 tonnes of paddy would sell raw for ₦350 800 000. Milled, together with purchased paddy, the same operation generates ₦955 152 000 of revenue at Year 1 prices.

3.2 What the mill requires in return

▪ Capital. The milling line is ₦172 000 000, or 25 per cent of capital expenditure. It is the single largest item.

▪ Throughput. A mill earns nothing when idle. The farm alone fills 38 per cent of capacity; the outgrower scheme takes it to 62 per cent.

▪ Quality discipline. Milling recovery, broken-grain percentage and moisture control determine whether the output sells at a premium or a discount. A three-point fall in recovery costs ₦55 364 374 of Year 3 EBITDA, which is roughly half as much again as a twenty per cent rise in the bought-in paddy price.

▪ Working capital. Paddy is bought at harvest, in a short window, in cash. Rice is sold across the following months. The gap must be funded.

Figure 6. Paddy throughput against mill capacity across the ramp.

	Year 1	Year 2	Year 3	Year 4	Year 5
Own farm paddy, t	516	799	1 000	1 030	1 050
Outgrower paddy purchased, t	217	434	620	744	868
Total paddy processed, t	733	1 233	1 620	1 774	1 918
Mill capacity, t a year	2 600	2 600	2 600	2 600	2 600
Mill utilisation	28%	47%	62%	68%	74%
Milled rice at 62% recovery, t	454	764	1 004	1 100	1 189

3.3 What the mill does not solve

Exposure	Does the mill help?	Why
Paddy price falls	Yes, substantially	The farm loses margin on 1 000 t but the mill gains it on 620 t of purchased paddy. The two partially offset
Milled rice price falls	No	The mill sells rice. A 10% fall in the ex-mill price removes ₦114 669 334 of Year 3 EBITDA — the largest single sensitivity
Yield disappoints	Only partly	Less own paddy means more must be bought at market price, so cost rises as volume falls. The mill cushions but does not correct it
Fertiliser cost rises	No	An input to the farm, not the mill. At 24.5% of production cost it is the largest single farm line
Smuggled rice undercuts the market	No	It depresses the price of the finished product the mill sells. There is no internal mitigation
Mill under-utilisation	No — it is the mill’s own risk	At 38% utilisation the ₦172 000 000 line does not earn its capital. This is why the outgrower scheme exists

Integration is a hedge against one specific exposure — the paddy price — and it is a very good hedge against that one. It is not a general defence. The largest sensitivity in the whole model is the milled rice price, and the mill increases that exposure rather than reducing it, because milling converts a business selling one commodity into a business selling a different and more valuable one. That is the trade the plan makes deliberately: more exposure to a higher-value price, less exposure to a lower-value one.

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