Agricultural Trade Policy, Domestic Market Integration, and Smallholder Welfare in Nigeria: A Partial Equilibrium Analysis of Rice Tariff Reforms

Trade policy instruments including tariffs, levies, and import bans have been deployed repeatedly by Nigerian governments to influence domestic rice market conditions and incentivise local production. The welfare effects of these interventions for smallholder rice producers and net-buyer household consumers involve complex trade-offs that require rigorous partial and general equilibrium modelling to assess. This study conducted a comprehensive partial equilibrium analysis of rice tariff reforms and their effects on domestic market integration and smallholder welfare in Nigeria using a structural model of the rice market calibrated with quarterly price, production, and trade data spanning 2010 to 2024. Johansen cointegration and error correction models were estimated to characterise domestic market integration responses to trade regime changes. Smallholder welfare effects were simulated across a distribution of household types defined by net production position, farm size, and regional market access. Results showed that the 2019 border closure generated short-term producer welfare gains equivalent to N38,000 per tonne in producing states but imposed significant consumer welfare losses disproportionately concentrated in southern urban households. Domestic market integration improved temporarily but deteriorated following distribution infrastructure bottlenecks. The study makes an original empirical contribution to Nigerian rice trade policy analysis, filling a gap in the welfare distributional analysis of import restriction episodes. Trade policy recommendations emphasise complementary domestic supply-side investments. Keywords: rice trade policy, domestic market integration, smallholder welfare, partial equilibrium, tariff reform.