An Analysis of the Paddy/Rice Value Chains in Sri Lanka (original) (raw)
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This paper examines whether the structure of the paddy / rice market in Sri Lanka is competitive and efficient particularly by undertaking two tracer surveys. From these surveys it was revealed that the profit margins accruing to almost all the players involved in the paddy/rice value chains of both Nadu and Samba varieties are not excessive when compared with the average bank lending rate of 15 percent. The results of the tracer surveys also show that both the Nadu and Samba paddy/ rice value chains are economically efficient. There are concerns however, about the poor quality of rice milled by most small and medium scale traditional rice mills in the country. It was also disclosed that there is no hard and fast evidence to prove the allegation that the rice millers and wholesalers exploit both the rice producers and consumers by using oligopsonic oligopolistic practices in both the producer and consumer markets such as 'cornering of the market' Key Words: paddy/rice value chain, profit margins of paddy/tice, market structure, Sri Lanka
Analysis of Rice Value Chains - A Study of Bihar and Karnataka States in India
SSRN Electronic Journal, 2017
The present investigation was aimed for analyzing comparative value chain addition of rice production and marketing in Bihar and Karnataka States, based on primary data having 300 stakeholders selected using random sampling method from two purposively selected districts East Champaran and Davangere of Bihar and Karnataka, respectively, duly categorized into paddy growers, paddy wholesalers, millers, rice wholesalers, rice retailers and consumers. Farmers were the first value adding actors, and earned on an average of the gross return Rs 44,641.8/ha (East Champaran) and Rs 1, 32,117.26/ha (Davangere) by cultivating paddy. They added value of Rs 115.71 per quintal by drying, Rs 86.77 per quintal by selling in markets and Rs 127.27 per quintal by storing (speculation) of produce to sell in future in case of East Champaran district and in case of Davangere district. Paddy wholesalers, the second important key players, and added value of average Rs 65.8 per quintal and Rs 75.67 per quintal in case of both districts under study, respectively. Rice millers were important value adder in rice value chain and added value in three stages purchasing and milling of paddy and selling of rice. The value addition by rice millers estimated about 81.21 per cent and 26.55 per cent, and 60.63 per cent and 32.95 per cent by marketing and milling in East Champaran and Davangere district, respectively. Rice wholesalers were the fourth actor in value chain, value addition by them was about 10.69 per cent and 11.05 per cent in both districts, respectively. The profit earned from rice was Rs 2.38 per kg (East Champaran) and Rs 3.11 per kg (Davangere). Rice retailers, the final value chain actor received less value addition and the profit earned was estimated to be Rs 2.57 per kg and Rs 3.62 per kg in both the districts under study.
Profitability of Actors in the Value Chain of Commercial Rice
This qualitative study explored the value chain of commercial rice in Nueva Vizcaya, Philippines. It presented the value chain map of commercial rice highlighting the profitability of each actor involved in the value chain, namely paddy rice farmers, primary traders, millers, retailers, and final traders (wholesalers and retailers). The findings revealed that the miller contributes the highest value-added cost to commercial rice production, accounting for approximately 40.39% of the total, followed closely by the farmers at 39.22%. The primary trader represented 10.93%, while the wholesaler and retailer contributed 6.72% and 2.07% respectively. Analysis of the percentage of profit to cost showed that farmers earned the highest percentage at 32.36%, followed by the retailer at 8.48%, the primary trader at 5.11%, the miller at 2.32%, and the wholesaler at 1.68%. However, when considering the operating cycle of each actor, it became apparent that the primary trader emerged as the highest-earning actor due to their shorter operating cycle compared to other actors in the value chain. Hence, venturing into paddy rice production, trading, milling, and wholesaling of commercial rice in Nueva Vizcaya is profitable, given the wide market demand for rice as a staple food. There is a viable opportunity to enhance profitability among the various actors in the value chain, particularly for farmers, by leveraging appropriate government support programs, specifically by maximizing the utilization of initiatives provided under the Rice Tariffication Law.
An Economic Analysis of Paddy Value Chain in Thanjavur District of Tamil Nadu
Economic Affairs, 2020
In view of the economic importance of value addition the present study was taken up in Thanjavur district of Tamil Nadu, India to estimate value chain of paddy. The aim of the study is to identify the existing value chain and create new chain in the study area. Random sampling technique was used to select 60 farmers. The result showed that, the recovery of main and by product during rice milling was 60 per cent of rice, 10 per cent of broken rice, 15 per cent of rice bran, 10 per cent of husk and 5 per cent waste from one tonne of paddy. In value chain for rice production, the share in value addition was 26.42 per cent for rice millers, 0.16 per cent Rice bran crude oil, 0.09 per cent for Rice bran refined oil, 0.05 per cent for traders, 6.41 per cent rice retailers and 0.04 per cent for rice bran refined oil retailers. In value chain for flaked rice industry, the share in value addition was 14.71, 0.28, 0.08, 0.09, 8.04 and 0.08 per cent for Flaked Rice Industry, Rice Bran Crude Oil, Rice Bran Refined Oil, traders, flaked rice retailers and rice bran refined oil retailers in channel respectively. Finally the study concluded that, the value addition in the existing value chain was ` 5096 which can be increased to ` 9530 through proposed model. Highlights m The long marketing channel which includes more intermediaries and less value addition at farmer level results in low profit to the farmers. Developing a good value chain for rice which will benefit all the stake holders in rice value chain is the need of present hour.
Applied economics & business, 2020
A better understanding of the paddy marketing channels paves the way to explore the dynamics of the rice economy in mixed marketing conditions. Thus, paddy/rice industry in Sri Lanka has now become a serious concern with all its multi-faceted implications. This study examines the influencing factors for the choice of marketing channels by the paddy farmers as well as the links to the public and private marketing channels in Sri Lanka. A sample of 345 farmers were selected using multi-stage random sampling from DS divisions in Ampara, Anuradhapura, Polonnaruwa and Batticaloa districts. A pre-tested structured questionnaire and focus group discussions were conducted to collect primary data. Binary logistic regression was deployed for the data analysis. Results revealed that the average paddy land cultivated in the Maha season in Anuradhapura, Ampara, Polonnaruwa and Batticaloa was 3.41 ac., 3.50 ac., 3.09 ac., and 4.80 ac. respectively. Nearly 52% of the farmers sold their paddy to the Paddy Marketing Board (PMB) showing the popularity of the Government Paddy Purchasing Programme (GPPP) in major producing areas. Analysis further indicated that, low land extent (p<0.1), availability of paddy storage facility (p<0.1), distance to PMB centers (p<0.1), distance to private collectors (p<0.05) and quantity of wet paddy sold (p<0.1) were the criteria which had significant impact over choice of paddy marketing channels. Positive significant coefficient of 'Distance to PMB center' reflects that, even if a selected farmer is residing far from the PMB center, he or she is more inclined to select GPPP. PMB centers offer more price premium than in the open market and in some cases, this was more than Rs.10.00/kg. "Quantity of wet paddy sold" is the variable which indicates a negative and significant impact on selecting GPPP. If a particular farmer tends to sell higher quantity of paddy as 'wet paddy', he or she is less likely to select GPPP. Farmers who, did not possess safe storage facilities, had difficulties in finding a suitable place to dry paddy, had high labour requirement to reach 14% moisture content in the final produce and the farmers who faced immediate cash needs were more inclined towards private buyers. There are more opportunities for small-scale farmers who produce limited surplus of paddy in government paddy purchasing channel. More time and cost involved, ineffective buying process, strict quality checks, lack of sufficient storage facilities, delaying of the commencement of purchasing and lack of drying facilities are the major problems faced by the farmers when selling paddy to the PMB centers. The major problem highlighted by the farmers regarding selling paddy to private sector is inability to receive a fair price.
Assessing the market power of millers and wholesalers in the Bangladesh rice sector
Purpose -Because of the increasing differential between farm and retail prices, the study proposes to investigate the extent of market power in the rice value chain of Bangladesh using advanced econometric techniques. Design/methodology/approach -Using a Stochastic Frontier Estimation approach on cross-sectional data, the study examines the price spread along the rice value chain to determine whether millers and wholesalers exercise market power. Findings -Empirical results reveal that, on average, rice millers and wholesalers charge 33 and 29% above the marginal cost, respectively. This study confirms the non-competitive behavior of the rice market with wholesalers and millers wielding substantial market power Research limitations/implications -A limitation of the study is that it does not include the retailers who also play a major role in the Bangladesh rice value chain. This is left for future study. Originality/value -This study combines primary and secondary data collected on the Bangladesh rice sector to examine the market power of two major players along the value chain, millers and wholesalers, using an advanced econometrics approach.
Developing competitive rice value chains
CABI eBooks, 2013
In a number of African countries, major advances were made in rice competitiveness some years ago through liberalization of rice marketing and milling. This led to the introduction of small rice hullers, which were able to process rice relatively inexpensively compared with larger mills, often owned by the state. There were also substantial savings in the cost of transporting paddy and the value for animal feed of the hulling by-products. However, with rice prices having risen on world markets and with advances in milling technology, it is time to revisit this question. The imported rice with which domestic production competes is of a quality standard not met by most small hullers, resulting in price discounts and lost profits. Evidence from Rwanda and a few other countries suggests that milling technology currently exists that allows for upgrading of quality without necessarily losing the advantages of operating on a relatively small scale. Better milling should take care of the problems of impurities, lack of uniformity, and high percentage of broken grains. Complementary investment in storage should also ensure that adequate supplies of local rice are available year round. This will not necessarily solve problems of taste, storability, cooking time, water absorption and other characteristics that are not apparent to the eye. Further testing will be required to determine the extent to which price discounts on local rice are due to these factors or to consumer prejudice.
Rice Value Chain Analysis: Rice Seed Production as a Profitable Agribusiness in Nueva Ecija
This study explored the rice value chain (RVC) in Nueva Ecija, value additions, found restrictions, and offered to upgrade solutions to improve the competitiveness of the rice industry and specific segments in the RVC using the value chain analysis (VCA) methodology. Farmers, paddy dealers, millers, wholesalers, wholesaler-retailers, and retailers in Nueva Ecija provided primary data. Workshops with stakeholders were also held to validate preliminary findings and identify upgrading strategies. The RVC begins with the provision of inputs for paddy production and concludes with the consumption of milled rice. The RVC is dominated by a traditional multi-layered supply chain with interconnected chain actors consisting of competing farmers, paddy traders, millers, and rice traders in each segment and, frequently, with the involvement of brokers in both paddy aggregation and rice distribution, thereby increasing marketing cost. The major constraints identified in the RVC included high production and marketing costs of paddy and rice due to low yield, high labor and material inputs, and a lack of critical infrastructure and market facilities (e.g., modern mills, dryers, cheap transport, and energy), resulting in high domestic paddy and rice prices and low competitiveness of the entire rice VC. To improve competitiveness, the rice industry should focus on developing and promoting yield-increasing, postharvest loss-reducing, and cost-cutting technologies, as well as those that improve overall RVC efficiency, such as investments in enabling infrastructure and facilities for transport, handling, storage, drying, and milling.
Value Chain Analysis of Local Rice (Oryza glaberrima) Production in Ebonyi State, Nigeria
Agricultural Society of Nigeria, 2021
This study examined local rice production and value addition in Ebonyi State, Nigeria. Data were purposedly collected from Ishiagu and Abakiliki from 144 rice value chain actors. It was found that wholesalers enjoy the largest share of the marketing margin, where at cross boundary markets, the wholesalers' profit goes as higher as N76.0/kg as compared to N39.5/ kg, received by local farmers, showing unequal distribution of benefits among the local rice value chain actors, where reward to traders is extremely higher than that of producers. The profitability analysis shows a net return of N4, 085 with a BCR of 1.14:1, meaning that local rice production is viable and profitable in the area. Two separate multiple regression analysis, using the double-log regression as the lead equation for the producers (farmers) gave R2 of 0.923 and F-Ratio of 51.031, being an indication that 92.3% of the variation in the rice output was explained by the explanatory variables, while 7.70% was accounted-for due to error term (ei) and un-captured variables. For the secondary value chain actors (transporters, millers, wholesalers and retailers), the exponential function gave R2 of 0.782 and F-Ratio of 38.104, being an indication that 78.2% of the variation in the rice output was explained by the explanatory variables (socio-economic characteristics) while 21.8% was accounted-for due to stochastic error term (ei) and uncaptured variables. The study recommended improvement of effectiveness cooperative membership to attract finance for rice production, inputs and value addition, purchase of machines for processing and packaging, transportation and marketing. Furthermore, lack of adequate agricultural infrastructure and market information systems was observed to be critical areas of policy concerns. Policies for microcredit institutions on provision of credits to local rice farmers are also recommended to improve rice productivity by capacitating smallholder farmers to use modern agricultural machinery.