Day 1, Session 2: Achieving Rice Competitiveness and Growth in Nigeria I
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Transcript of Day 1, Session 2: Achieving Rice Competitiveness and Growth in Nigeria I
Overview of the Rice Economy and Research Questions to Address Key Policy Challenges
NSSP National Conference 2012:
“Informing Nigeria’s Agricultural Transformation Agenda with Policy Analysis and Research Evidence”
Abuja, Nigeria – November 13-14, 2012
Kwabena Gyimah-Brempong, Paul Dorosh, Oluyemisi Kuku, Angga Pradesha, and Akeem Ajibola (IFPRI)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
ACHIEVING RICE COMPETITIVENESS AND
GROWTH IN NIGERIAPolicy and Research Questions
Kwabena Gyimah-Brempong
Page 2
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Background of the Rice Study
• Rice is a very important staple for most Nigerians and is becoming the most important food item in the process of rapid urbanization and income growth
• The Nigerian government has identified rice as one of the most important agricultural products for achieving agricultural transformation and food security in Nigeria
• IFPRI has been required by the government to provide research evidence and help the government identify priority policy areas in the rice development strategy
• The following four presentations are drawn from the preliminary research results of the “rice research team” of NSSP
Page 3
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Key Policy and Research Questions
• What is the potential to increase rice production (quantity and quality) in Nigeria? Does local rice have the potential to realize a higher growth rate in yield and production?
• What are the alternative strategies to effectively reduce imports and achieve self-sufficiency in rice production?
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
OVERVIEW OF THE RICE ECONOMY
Oluyemisi Kuku
Page 5
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Historical and socio-cultural context of rice consumption
• Indigenous rice species (local rice) have been grown in Nigeria for hundreds of years
• Local rice demanded for price, taste and specialized uses• Local rice is often not properly processed, includes foreign
matter (e.g stones)• Treated as an inferior good
• Imported rice preferred for higher quality and versatility:• cleanliness (non-broken and free from stones and other
debris)• swelling capacity• taste• grain shape (long grained)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Local rice in Northern Nigeria
• Local names include Galaware ,Dukusa,Yar Yarmidi, Yar Kera, Jamila, Zaira, Jar-Naira, Kwandalla, Yar Das or Yar Mubi
• Traditionally consumed as Tuwo Shinkafa : and the rice is boiled and pound into paste to prepare.
• Boiled rice and stew is also consumed, but Tuwo is a local favorite
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Local Rice in Southern Nigeria
• Local rice is primarily boiled and consumed with a tomato and pepper based sauce in Southern Nigeria. The varieties of rice differ, but mode of consumption is the same
• Special mention: Ofada rice (South West)
• Premium local rice
• Importance of branding and marketing
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Imported Rice across Nigeria
Jollof rice Fried rice
Origin : Sene Gambia Origin: chinese
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Imported Rice across Nigeria
Coconut rice Rice and stew
Origin: South east Asia –Thai/indian Origin: Local adaptation
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Rice has become one of the most important staples in Nigeria: Trends of milled rice production and imports, 1960-2012
Data source: USDA international database (2012)
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Milled Rice Production (tonnes)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Aggregate consumption of top six staples (million tons)
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Rice Maize Sorghum
Millet Cassava Yam
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INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Rice is a very important staple for most Nigerians
(Per capita staple consumption and their ranks)
• An average Nigerian household spent 6% of total income on rice consumption• In monetary term rice ranks No.1 among all staple items for both rural and urban
households.
Source: authors’ calculation according to NLSS 2011
Urban Rural
Commodity kg/pc Rank according to kg/pc kg/pc Rank according to
kg/pc
Rice 35.0 2 30.6 2
Maize 18.2 4 27.5 4
Sorghum 8.7 5 39.3 1
Millet 8.5 6 26.2 5
Cassava, processed 38.2 1 30.3 3
Yam 22.7 3 15.7 6
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Why the preference for imported rice?
• Urbanization (50 percent of Nigerians now live in urban centers)• Urban lifestyles encourage easy to prepare foods such
as rice• More sedentary lifestyles are opposed to the heavier
starchy foods• Rural dwellers – mostly on the farm, need heavy
sustenance (bird food). • Urban dwellers are more exposed, less dogmatic about
food, more likely to adopt foreign recipes that utilize imported (parboiled rice)
Domestic and Imported Rice are not Perfect Substitutes
Page 15
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140
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220Enugu Agric/Long Grain Enugu ImportedEnugu Local Enugu Import Parity w Tariff
Na
ira
/Kg
Per capita rice consumption (kg/pc) Income elasticity of demand for rice
Local Rice Imported Rice Local Rice Imported Rice
Urban Rural Urban Rural Urban Rural Urban RuralNational average 10.9 21.4 24.1 9.1 0.20 0.64 0.53 1.03
Source: authors’ calculation using NLSS 2011
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
The high import tariff policy seems unlikely to be enforced
• Officially reported imports are much lower than the number estimated from exporting countries’ reports• Using exporting countries’ data, Nigeria imported 2.1 mn tons of rice in 2010 • Aggregated from household consumption data of NLSS 2011, imported rice is 2.3
mn tons• Nigeria reported imports were 711K tons, equivalent to 35% of world rice exports to
Nigeria• Most rice imported by Benin reported to Nigeria
• In 2010 Benin imported 600K ton of rice and exported 550K to Nigeria• Unreported cross-border trade was about another 150K ton smuggled into Nigeria
• Local sources say that around 8,000 bags of rice are smuggled into the country every day through waterways between Nigeria and Benin (Oryza, 2012):
• (8000 bags x 50 kgs/bag = 400tons/day = 146,000 tons/year)
• The high tariffs may encourage under-reported imports to avoid tariff payment
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Nigeria Rice Import Data and World Export Data, 2006-2010
Source: COMTRADE data.
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Nigeria Imports Exports to Nigeria
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Conclusions and policy implications
• In order to meet the ATA goals of rice self sufficiency, consumers must be persuaded to consume locally produced rice
• Locally produced rice must compete favorably on attributes with foreign rice.• High quality must be achieved and maintained
• Import substitution is taking place in other sectors:• Fashion• Entertainment
• Proper branding and marketing is key for acceptance to take place
Growth Potential for the Domestic Rice Economy
NSSP National Conference 2012:
“Informing Nigeria’s Agricultural Transformation Agenda with Policy Analysis and Research Evidence”
Abuja, Nigeria – November 13-14, 2012
Hiroyuki Takeshima, Michael Johnson, Jawoo Koo, Tewodaj Mogues, Akeem Ajibola (IFPRI)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Research Questions and Methodologies
Research questions• What is the potential to increase rice production
and improve rice quality in Nigeria?• Does local rice have the potential to realize
higher yield growth?
Methodologies• Bio-physical production potential• Rice producer typology• Optimal rice processing sector development
Page 20
Rice Production Potential: A suitability assessment
Page 21
Area (1000 ha) Output (1000 ton)
Category High suitability
area
Medium suitability
area
High suitability
area
Medium suitability
area
Rainfed rice 68 843 96 1,162
Irrigated rice 3 103 11 403
Other crops 1,231 1,231
No crops 2,871 24,617
Highly suitable and rice is grown
Highly suitable and other crops are grown but rice is not grown
Highly suitable but no crops are grown
Medium suitability and rice is grown
Medium suitability but no crops are grown
Source: IFPRI Spatial Production Allocation Model (SPAM), Global Irrigation Map (University of Frankfurt), Various literature
Low suitability
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
An assessment of biophysical potential for rice production: Assumptions in the crop simulation model
Page 22
Inputs Baseline
Simulation scenarios
1: Seeds share of Improved varieties
2: Seeds+fertilizer Improved varieties Fertilizer
3 All three Improved varieties Fertilizer Irrigation
SeedsShare of improved seeds
Rainfed- 50% Improved (IR-8 type), 50% Traditional
Irrigated- 100% Improved
Rainfed- 100% improved varieties in high suitability area- 75% improved varieties in medium suitability area- 50% improved (unchanged) in low suitability areaIrrigated- 100% Improved
Fertilizer (Nitrogen in kg/ha)
Rainfed North Rainfed Southimproved: 56 kg/ha improved: 8 kg/hatraditional: 0 traditional: 0
Irrigated North: 64 kg/ha South: 95 kg/ha
Rainfed North Rainfed Southimproved: 56 kg/ha improved: 40 kg/ha
Irrigated North: 128 kg/ha South: 150 kg/ha
IrrigationShare of irrigation area
10% (Assuming some of the irrigated area is not fully developed irrigation system)
21%(By substituting irrigation area for all other crops to rice)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Biophysical potential: Irrigation expansion in the crop simulation model
Page 23
High Medium Low
Baseline (1000 ha)
Total rice area 71 946 573
Rainfed rice area 68 843 520
Irrigated rice area 3 103 53
Irrigation scenario (1000 ha)
Total rice area 71 955 662
Rainfed rice area 67 818 447
Irrigated rice area 4 137 215
Areas of rainfed and irrigated rice in baseline and “irrigation” scenario
Irrigated rice area assumed to expand to the areas others crops are grown and currently irrigated (information obtained from Global Irrigation Map, University of Frankfurt).
Under “irrigation” scenario, most expansion in irrigated area occurs in the medium and low suitability areas
Source: IFPRI Spatial Production Allocation Model (SPAM), Global Irrigation Map (University of Frankfurt), Various literature
33% 306%
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Biophysical potential: Crop simulation yield results
Rice yields under different technology inputs
High suitability
Medium suitability
Low suitability
Current Area (1000 ha) 71 946 573
Yield (mt/ha)
Baseline, Rainfed 1.3 1.4 1.2
Seed Simulation, Rainfed 2.1 1.7 1.2
Seeds + Fertilizer Simulation, Rainfed 2.3 1.9 1.2
Seeds + Fertilizer Simulation, Irrigated 5.8 5.6 4.4
Page 24
Source: Crop simulation model results
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Biophysical potential: Crop simulation output resultsHigh
suitabilityMedium
suitabilityLow
suitabilityTotal
Current rice area (1000 ha) 71 946 573 1,590
Output (million ton)
Baseline (current) 0.11 1.57 0.77 2.45
Seeds + Fertilizer Simulation 0.15 1.84 0.77 2.76
Seeds + Fertilizer Simulation 0.18 2.25 0.88 3.31
Seeds + Fertilizer + Irrigation Expansion
0.19 2.37 1.41 3.97
Page 25
Source: Crop simulation model results
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Growth potential at farmer level: A rice producer typology
• Can Nigerian farmers take advantage of biophysical rice potential?• A rice producer typology developed to assess farm level potential • Typology based on behavioral characteristics and resource
constraints
Page 26
Farm Behaviors Natural resources and others
Crop patternsInput use intensity (fertilizer, other
agro-chemicals, seed purchase)Production scale (farm size, sales)IrrigationMechanization (tractor / animal
traction) Market orientation
Rainfall variationSoil typesProximity to rivers / damsPopulation density / access to townHousehold characteristicsAssetsNon-farm income earning activitiesWage rates
Variables used for typology analysis
Source: Authors
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
4 major types of rice producers identified
Page 27
22
66
7
5
Market oriented (78%)
Mechanized producers
Intensive small-scale irrigators
Other producers
Subsistence
(%)Shares of different types of rice producers, total rice producers = 100
Source: Authors’ analysis based on LSMS 2010
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Competitive rice producers
Page 28
Intensive small-scale irrigators Mechanized producers
• Operate on typically 1 acre of plots• Use labor and modern inputs
intensively• Mostly located within canal irrigation
systems rclose to dams in the North / North Central zones (e.g.: Gbako LGA in Niger state and Kebbe LGA in Sokoto state)
• Higher farmgate rice price• Low wage rate• Some mechanized land preparation• Totally 68,000 producers• Produced 89,000 tons of rice, of which
more than 50% sold to the market in 2010 rainy season
• Use tractor for land preparation• Use modern inputs intensively• Some with irrigation• Typically found in Donga, Lau LGA
(Taraba state), and Patigi LGA (Kwara state)
• Totally 51,000 producers• Produced 108,000 tons of rice
Source: Authors’ analysis based on LSMS 2010.
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Small commercial rice farmers in Ghana: Lessons learnt
Kpong Irrigation Scheme• Small-scale: 1 ha per farm (2000 farm households in
total)• High yield: 5.5 tons/ha (dry paddy)• Profitable varieties: Aromatic (ex. Jasmine rice)• Intensity farming – 70% with 2 season rice• Mechanization and fertilizer:
• Power tillers for land preparation – 100%• Combine harvesters – 60%• Fertilizer –500 kg / ha
• Easy access to certified seed• Sufficient crop husbandry knowledge• Qualified extension staff in the area• High labor use despite high wages• Private sectors provide credit, milling, trading, canal
maintenance
=> A similar study in Nigeria is planed in next year
Page 29
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Assessing growth potential: Key messages
• Nigeria has huge biophysical potential in rice production• Competitive farmers are at the forefront for achieving
growth potential• Competitive production to be scaled up through:
• Intensive irrigated rice production (double season)• Intensive use of fertilizer and improved varieties• Mechanization to overcome labor constraints
• However, number of more competitive rice producers is currently small and increasing their number is a key to increase supply response at the farmer level
Page 30
Improving competiveness along value chain
Page 31
Consumption shares Domestic Market
Trade (milled)
Milling
Parboiling
Trade (Paddy)
Production
Small scale (for service)
Medium-scale (service and for market)
Large-scale (industrial for market)
Imported Rice
Source: Authors, data on consumption shares are from the Nigeria LSMS 2011 and other from the literature.
Importers
Imported Rice (45%)
Domestic Rice (55%)
Own Consumption
Smallholder famers
40% 60% 22%
14%
Estate farms
Village & Clustered barboilers
Industrial Millers
Smallholder out-grower schemes (Nucleus Farm)
Rural Rice Paddy traders
63%
Rural Markets
Urban Markets
Wholesale Traders (domestic and imported)
Rural Markets
Urban Markets
Village & Clustered Millers (small and medium) 80% 20%
Comparing rice value chains between Nigeria and Thailand, 2009
Page 32
Pro
du
cti
on
Co
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Re
tail
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Po
ten
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alit
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rem
ium
Imp
ort
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riff
(3
2%
)
Fre
igh
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Pro
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Co
sts
Local rice Imports of Thai rice
0
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$/m
t
• Production cost in Nigeria is 39% of total value chain and is 1.7 times higher than in Thailand
• Wholesale and retail margins in Nigeria are 27% and 18% of total value chain, respectively, and wholesale margins are 100% higher than in Thailand
• The key to improve local rice’s competitiveness is to lower production and market costs through yield growth and market efficiency
• Quality premium can be 20% of total value chain. This is an important source of increased competiveness (local rice considered an inferior good, except for a few niches - e.g. Ofada rice).
Source: For Nigeria, MARKETS Study (2010) and Maneechansook (2011) for Thailand
Lessons from India
• During Green Revolution period, number of small-medium rice mills expanded with growth in yields and expansion in rice areas
• It took more than two decades for India to become a net exporter
Page 33
Evolution of Small-Medium Rice Mills, Yields and Net Exports in India
Sources: For India, Harris-White, 2005 and for Nigeria, Lancon et al. 2002
1965 1970 1975 1987 1995 2001-2
-1
0
1
2
3
4
5
6Net Exports (million tons)
Yield (Tons/ha)
No. of Mills per 1000 ha of rice area
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Rice Value Chains: Key messages
• High production cost and high market margins are major constraints along rice value chain
• Improving technology in milling sector is also important for increasing competitiveness• Medium size millers can play an important role when
they can get access to better technology• Small-medium millers often have larger multiplier effects
in the rural economy• Developing modern and large scale milling industry
requires significantly increasing high quality rice production• High quality local varieties are comparable to the imported
rice and more profitable for farmers
Page 34