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					An International Center for Soil Fertility
and Agricultural Development


Africa Division

Study of the
Domestic Rice Value Chains
in the Niger Basin of
Mali, Niger, and Nigeria,
West Africa




With Fast Track Funding from
the Common Fund for Commodities (CFC)



                                        September 10, 2008
                                                      Table of Contents


Abbreviations ........................................................................................................................................ 3

Introduction .......................................................................................................................................... 5

I. Mali ................................................................................................................................................. 13
    Background ...................................................................................................................................... 13
    Production ........................................................................................................................................ 13
    Processing ........................................................................................................................................ 20
    Markets............................................................................................................................................. 23
    Rice Value Chains in Mali ............................................................................................................... 26
    Actions to Improve Malian Rice Sector........................................................................................... 33

II. Niger ............................................................................................................................................... 35
    Overview.......................................................................................................................................... 35
    Production ........................................................................................................................................ 36
    Processing ........................................................................................................................................ 42
    Markets............................................................................................................................................. 44
    Actions to Improve Nigerien Rice Sector ........................................................................................ 51

III. Nigeria .......................................................................................................................................... 53
    Production ........................................................................................................................................ 53
    Processing ........................................................................................................................................ 57
    Markets............................................................................................................................................. 60
    Rice Value Chains in Nigeria........................................................................................................... 61

IV. Rice Privatization Efforts ........................................................................................................... 72
    Purpose............................................................................................................................................. 72
    Mali .................................................................................................................................................. 72
    Niger................................................................................................................................................. 75
    Nigeria.............................................................................................................................................. 78
    Conclusions...................................................................................................................................... 82

V. West Africa’s Regional Agricultural Policy and This Study ..................................................... 83

VI. Financial Statement ..................................................................................................................... 88

Appendix 1. AHA Perimeters in Niger ............................................................................................ 89

Appendix 2. Rice Irrigation Schemes Currently Not In Use In Nigeria ....................................... 91




                                                                                                                                                            2
                             Abbreviations

          English                               French

ADP       Agricultural Development Program

AFD                                             Agence Française de
                                                Développement (AFD)
AFMA                                            Atelier de Fabrication du Matétiel
                                                Agricole
AHA                                             Aménagements Hydro-agricoles

BCEAO                                           Banque Centrale des Etats de
                                                l'Afrique de l'Ouest
BDRN                                            Banque de Développement de la
                                                République du Niger
BNDA                                            Banque Nationale de
                                                Développement Agricole
CA                                              Centrale d’Aprovisionment

CAREC                                           Centre d’Appui au Réseau des
                                                Caisses d’Epargne et de Crédit
CMDT                                            Compagnie Malienne de
                                                Développement des Textiles
CNCA                                            Caisse Nationale de Crédit Agricole

CPS                                             Cellule de Planification et de
                                                Statistique (CPS)
DGAHA                                           Division Générale des
                                                Aménagements Hydro-Agricoles
DNSI                                            Direction nationale de la statistiques
                                                et de l'informatique (DNSI)
ENBC                                            Enquête sur le budget et la
                                                consommation des menages.
FEWSNET   Famine Early Warning Systems
          Network
FAS       Foreign Agricultural Service (of
          USDA)
FMAWR     Federal Ministry of Agriculture and
          Water Resources
FPDD      Fertilizer Procurement and
          Distribution Department
GDCM                                            Distributeur Cerelier du Mali

INSAH                                           Institut du Sahel




                                                                                     3
MARKETS   Maximizing Agricultural Revenue
          and Key Enterprises in Targeted
          Sites
MCC       Millennium Challenge Corporation

NACRDB    Nigerian Agricultural Credit and
          Rural Development Bank
NNSC      Nigerian National Supply Company

NWRMP     National Water Resources Master
          Plan
NERICA    New Rice for Africa

NGO       Non-governmental organization

NIGELEC                                       Société Nigérienne d'Electricité

NPK       Nitrogen-Phosphorus-Potassium

ON                                            l’Office du Niger

ONAHA                                         Office National des Aménagements
                                              Hydro-Agricole
OPVN                                          Office des Produits Vivriers du Niger

PAFRIZ                                        Project d’Appui a la Filière Riz

PTF       Presidential Task Force

R-Box     Rice-Box

RINI                                          Le Riz du Niger

SON       Standards Organization of Nigeria

SSN                                           Service Semencier National

UNCC                                          Union Nigérienne du Credit et de
                                              Cooperation
USAID     United States Agency for
          International Development
USDA      United States Department of
          Agriculture
VETEE     VETEE Rice




                                                                                 4
                              Introduction
World Overview, 2007-2008

Selected Headlines, Oryza.com, 13 March 2008

♦   “Philippines Considering Govt. To Govt. Deals To Secure Supplies”
♦   “Vietnam Rice Export Prices Steady At Higher Levels”
♦   “Thailand Rice Export Prices Higher On Steady Demand”
♦   “Global Rice Demand To Exceed Supplies”

This is not an easy time for countries which are net importers of rice.

As diversions of corn to the bio-fuels sector increase, as diversions of other basic grains into
traditional corn-based food and feed applications follow pace, as normal cyclical production
patterns conspire to translate lower yields into higher prices, as bidding for ever-shorter
stocks pushes prices into ever-higher ranges, pressures are building on rice-importing
nations. They are now being asked to meet domestic demand from sources which drain
foreign currency reserves less, and which mitigate price volatility across the entire value
chain. These two latter objectives have long been on the minds of policy makers, especially
in the developing world. The primary difference they face today is that the stakes are
increasing at an unaccustomed pace, and show no immediate signs of leveling off. Trends
over the past twenty years provide some background for this problem

Over the past 20 years, global rice consumption has increased at an annualized rate of 1.5%,
while global milled production has grown at only 1.4% (Table 1). At current levels of
production this means an annual shortfall (consumption minus production) of 2.7 million MT
per year. This has, in turn, led to a gradual decline in the volume of ending stocks, which,
during this 20-year period, declined by an average of 1.4% per year.

Table 1. World Rice: Supply and Demand (MT/Hectares, ‘000,000)
                 1986/1987    1991/1992    1996/97    2001/2002    2006/2007     Annualized
                                                                                Rate of Change
Harvest Area
(ha)               144.8        147.5       150.0       150.5        152.1          0.2%
Yield/ha            3.3          3.5         3.8         3.9          4.1           1.1%
Milled
Production         316.0        353.3       380.9       399.1         415           1.4%
Exports             12.9         14.4        18.9       27.9          28.9          4.1%
Domestic
Consumption        310.4        353.1       378.7        412         417.7          1.5%
Ending Stocks
                   103.3        126.8       120.6       136.4         77.7          -1.4%
USDA/FAS – Grain: World Markets and Trade, January 2007



                                                                                                 5
This rate of decline has increased dramatically over the past five years, as shown in the next
table (Table 2).

Table 2. World Rice: Supply and Demand (MT/Hectares, ‘000,000)
                     2002/       2003/       2004/      2005/        2006/           Annual
                     2003        2004        2005       2006         2007        Rate of Change
 harvest Area
 (ha)                145.8       148.1       150.4      152.2        152.1            1.1%
 Yield/ha             3.9         3.9         4.0        4.1          4.1             1.2%
 Milled
 Production          377.5       391.8       400.5      415.5        416.4            2.4%
 Exports              27.6        27.2        29.0       27.7         28.9            1.2%
 Domestic
 Consumption         407.4       412.9       407.7      413.2        417.7            0.6%
 Ending Stocks
                     106.5        85.4       78.1        80.4         77.7           -7.6%
USDA/FAS – Grain: World Markets and Trade, January 2007

Since 2002/2003, global stocks of rice have declined at an annualized rate of 7.6%. In
absolute terms, this means there are 28.8 million fewer metric tons in reserve around the
world today than there were just five years ago. Moreover, although the comparison between
1986/87 and 2006/2007 showed an average annual decline of 1.4% in global rice reserves,
the fact is that the actual trend lines were far less regular. From reserves of 103.3 million MT
in 1986/87, reserves rose over the next five years to reach 126.8 million MT in 1991/1992.
They then trended down over the next three years, reaching 117.8 million MT in 1994/1995,
before regaining their upward momentum for the next 6 years, finally attaining a record level
of 149.2 million MT in 2000/2001. Since then, however, stock levels have spiraled
downward in 5 of the past six years before reaching, at 77.7 million MT, a level of ending
stocks which is lower than any seen since 1983/84. Even there, the stock level of 69.3 million
MT in 1983/84 represented 2.8 months of global consumption, against the 2.2 months which
the 2006/2007 closing stock level represented of that year’s global consumption.

By far the largest rice producers are China and India (Table 3); do to their large domestic
markets, they are now, however, largest two exporters – Thailand and Vietnam are, with
India being third (Table 4). Over the past five years, exports have consistently represented
some 7% of global consumption. During this time, five countries, all located in Asia, have
made up 75% of the world’s volumes of exported rice. In recent weeks, responding to
dramatic increases in global rice quotations and the threat of shortages for their own domestic
consumers, several of these countries have moved to restrict the flow of their rice into export
channels. Vietnam has declared a ban on new rice sales until June of 2008. India has
announced a total ban on exports of non-basmati rice. China has moved to protect its
consumers by restricting exports. Thailand, the world’s largest rice exporter, has avoided any
official restrictions to date, but traders there are reportedly hoarding supplies in anticipation
of further price advances over the coming months. Indeed, the president of the Thai Rice
Exporters Association recently indicated that monthly Thai rice exports could fall by 20-30%
in the second quarter of 2008, as exporters work to build up their stocks.



                                                                                               6
Table 3. Principal World Rice Producers, Milled Production, (‘000,000 MT)
                 2002/       2003/          2004/          2005/      2006/      Share of       Annual
                 2003        2004           2005           2006       2007        World          Rate
   ORIGIN                                                                       Production        Of
                                                                                 2006/07        Change
    China         122.2      112.5          125.4          126.4      128.0       30.7%          1.2%
    India         71.8       88.5           83.1           91.0        91.0       21.9%          6.1%
  Indonesia        33.4       35.0          34.8           35.0        35.1        8.4%          1.2%
 Bangladesh        25.2       26.2           25.6           28.8       29.1        7.0%          3.7%
   Vietnam        21.5       22.1           22.7           22.0        22.5        5.4%          1.1%
   Thailand        17.2       18.0          17.4           18.2        18.2        4.4%          1.4%
 S-S Africa         7          7.3            7.8            8.7        8.7        2.1%          5.6%
    RoW           79.2       82.2           83.7           85.4        83.8       20.1%          1.4%
 World Total      377.5      391.8          400.5          415.5      416.4      100.0%          2.5%
USDA/FAS – Grain: World Markets and Trade, January 2007

Table 4. Principal World Rice Exporters, Milled Production (‘000,000 MT)
                 2002/       2003/          2004/          2005/      2006/      Share of
                 2003        2004           2005           2006       2007        World
   ORIGIN                                                                        Exports
                                                                                 2006/07
  Thailand        7.6        10.1            7.3           7.3         8.2        29.3%
  Vietnam         3.8        4.3             5.2           4.8         4.7        16.8%
   India          4.4        3.2             4.7           3.8         4.3        15.4%
  Pakistan         2          2               3             3          2.9        10.4%
   China          2.6        0.9             0.7           1.1          1          3.6%
   RoW            7.2        6.7             8.1           7.7         6.9        24.6%
 World Total      27.6       27.2            29            27.7        28        100.00%
USDA/FAS – Grain: World Markets and Trade, January 2007

While exports represent only 7% of global consumption, their importance varies considerably
from one region to another. As the following table shows (Table 5), Sub-Saharan Africa is, in
volume terms, the largest importing region in the world, with average annual imports in
excess of 7.4 million metric tons. In terms of import dependence the region derives 45.7% of
its rice consumption from imports, leaving it second only to the Middle East in that index.

Table 5. Principal World Rice Importers by Region, Milled Production (‘000,000 MT)
               2002/      2003/     2004/          2005/      2006/     Share of World   Share of Domestic
               2003       2004      2005           2006       2007         Imports         Consumption
MARKET                                                                     2006/07            2006/07
 S-S Africa      6.9       7.2        8.4           7.1         7.5         28.7%              45.7%
Middle East      4.0       4.5        4.5           4.6         4.4         16.8%              62.0%
  SE Asia        5.1       3.2        4.2           4.4         4.1         15.6%               4.4%
 East Asia       2.2       3.0        2.6           2.4         2.7         10.3%               1.8%
N. America      1.3       1.3        1.3           1.5         1.6           6.1%              31.1%
   RoW          6.1       6.1          6           5.8         5.9          22.5%              3.9%
World Total     25.6      25.3       27.0          25.8        26.2        100.0%               6.3%
USDA/FAS – Grain: World Markets and Trade, January 2007


                                                                                                      7
Of the individual rice importing countries, none has brought in a greater quantity over the
past five years than Nigeria. Nigeria’s share of global rice imports is matched only by the
Philippines, with both representing 5.6% of world trade in rice (Table 6). At 7.9 million
metric tons of rice imports over the past five years, Nigeria comes first past the post, leading
the Philippines by just over 20,000 MT per year during this period.

Table 6. Principal World Rice Importers by Country, Milled Production (‘000,000 MT)
                  2002/      2003/      2004/     2005/     2006/       Share of         Share of
                  2003       2004       2005      2006      2007         World            World
MARKET                                                                  Imports          Imports
                                                                        2006/07          2003-07
  Indonesia        2.75       0.65      0.50      0.54       1.90         6.6%             4.5%
 Philippines       1.30       1.10      1.89      1.79       1.80         6.3%             5.6%
   Nigeria         1.45       1.37       1.78      1.60      1.70         5.9%             5.6%
     Iran          0.90       0.95      0.98      1.25       1.20         4.2%             3.7%
    EU-27          1.04       1.18      1.06      1.08       1.10         3.8%             3.9%
    RoW           20.14      21.93      22.80     22.63     20.99        73.2%            76.8%
 World Total      27.58      27.18      29.01     28.89     28.69       100.0%           100.0%
USDA/FAS – Grain: World Markets and Trade, January 2007

A quick look at the supply/demand balance across the principal regions of the world provides
useful insights into the seriousness of the challenge which Sub-Saharan Africa’s rice sector
faces today (Table 7). Sub-Saharan Africa accounts for only 2% of global production, but
3.9% of global consumption. This imbalance is offset by imports, where the region represents
28.7% of the global trade in rice.


Table 7. World Rice: Supply and Demand by Region (MT, ‘000,000)
                       Milled        Imports      Domestic          Ending
    2006/07          Production                  Consumption        Stocks
   S-S Africa            8.7           7.5          16.4              1.7
   South Asia          130.9           0.9          125.4            10.8
    SE Asia            102.4           4.1          92.5             17.4
    East Asia          143.2           2.7          144.3            40.8
   N. America            6.3           1.6           4.9              1.1
      RoW               24.9          9.3           32.8              6.8
   World Total         416.4          26.1          416.3            78.6
USDA/FAS – Grain: World Markets and Trade, January 2007

At a time of stable world rice prices, unobstructed access to import needs, and profitable
prices for the alternative high-value crops which can be grown instead of rice on irrigated
lands, this balance might be a reasonable option for agricultural policy makers in Sub-
Saharan countries. Confronted by a combination of high price volatility, government-
imposed export restrictions in the principal rice-producing countries, and the staple role
which rice has come to occupy in many of the countries within the region, this inability to
meet a large portion of consumer demand with secure and affordable supplies of



                                                                                              8
domestic production threatens broad economic hardship in the best of cases, and a high
potential for civil unrest in the worst.

This Study

It was against this background that the value chain study with CFC funding was conducted in
Mali, Niger, and Nigeria. During the study, the world prices for rice role to unprecedented
heights, presenting opportunities to a portion of the rice growers (those who are not net
purchasers of rice) but grave difficulties to poor dependent on rice and governments,
particularly those in developing countries that are dependent on imports. This new situation
further emphasized the need to improve competitiveness of rice in these three countries since
without a sustainable increase in competitiveness these countries will fail to ensure that
maximum benefits of their rice sectors are made to the development of their economies.

Methodology followed

The work was conducted by national consultants (two each in Mali and Niger; four in
Nigeria) and one international consultant who coordinated the work. A similar methodology
was followed in all three countries: After a literature review on the topic of rice sector and
value chains, country-level stakeholder meetings brought together diverse rice sector
stakeholders to analyze constraints and possible solutions in the rice sector, and to discuss
the existing rice value chains in the country. These meetings typically involved 30-40
stakeholders representing the entire value chain, were often opened by a high-level
government representative and were attended by media, and, in addition to bringing
stakeholders together to contribute to the study, had the added goal of introducing this CFC-
funded assessment to them.

The dates and locations of the stakeholder meetings were as follows:
• Mali: June 7-8, in Segou, with 26 participants.
• Niger: June 21, 2008, in Niamey, with 31 participants.
• Nigeria: June 11-12, 2007, in Mazembe Farm, outside of Minna, with 40 participants.

These stakeholder meetings were immediately followed by field studies that used semi-
structured interviews with rice producers, processors, traders, and consumers. Similar guides
for these interviews were followed in the three countries. The interviews took place over
several weeks, and targeted different rice growing regions and systems in these three
countries. Given the limited scope of this study, instead of a thorough quantitative
assessment, these field studies allowed a mere snapshot of rice production, processing, and
marketing in the different regions visited. Following regions were targeted in the field
studies:
• Mali: l’Office du Niger, Sikasso, Segou, Mopti, and Timbouctou and Gao rice production
   zones.
• Niger: Téra, Méhanna, Sansané Houssa, Daïbéri, Diambala, Say, Namaro, Namardé,
   Koutoukalé, and Gaya zones.
• Nigeria: Kwara, Niger, Nassarawa, Taraba, Ebonyi, Adamawa, Benue, Kebbi, Jigawa,
   Cross River and Anambra states.


                                                                                            9
The field studies resulted in relatively extensive (90-100 page) country reports which
describe the rice sector, production zones, and government policies in general, and then
focused on rice value chains in the country, presenting their differences and analyzing
constraints and opportunities for action. These reports are in English for Nigeria, in French
for Mali and Niger. These country reports were then presented at second stakeholder
meetings, again bringing together a large number of rice sector representatives, from
government to producers to private sector and research/extension. The second stakeholder
meetings were held as follows:

• Mali: August 23-24, in Segou, with 30 participants.
• Niger: August 15, 2008, in Niamey, with 39 participants.
• Nigeria: October 19, 2007, in Abuja, with 35 participants.

After these second stakeholder meetings, country studies were finalized. After additional
data collection, these country studies were summarized in this report.


Observations on data gathering and synthesis

The study had an ambitious objective to cover rice value chains in three countries. Two of
these countries – Mali and Nigeria – have complex, large rice sectors with relatively
abundant rice production coming from multiple production systems; regional, sub-regional,
location-specific, and producer-specific differences in input access and marketing
opportunities; and processing that is extremely decentralized among a vast number of actors,
both more and less formal ones. Rice sectors of all countries suffer from lack of good quality
quantitative data, both as regards to regional and sub-regional variations in yield and factors
affecting it; marketing channels; processing quality and factors affecting it; along with
consumer preferences. A gaping hole in the data available is that on imports and exports.
Among these three countries and in West Africa, almost all rice trade is informal, relying on
small or medium-sized traders moving across borders. There are no reliable statistics on rice
imports from Asia to Nigeria and in others, re-exports make estimations difficult. Without
such data, it is difficult to have a full overview of the rice production, processing, marketing,
and consumption in the country.

Finally, the vast diversity within any of the rice systems of these countries makes a general
assessment of their value chains extremely difficult. Yield variability among producers
practicing the same system is commonly at least four-fold, with consequent implications for
estimating costs and benefits, profits, and value addition. A decision was therefore made to
focus the summary report on brief scenarios of value chains, and discuss their implications.
This, while not ideal, seemed a logical choice, given the combination of diversity, variability,
and the relatively short periods of field research, and the need to produce a succinct report.




                                                                                              10
Way forward

These methodological challenges were, on the other hand, offset by clear and loud messages
from the field as regards to actions needed to improve rice sector in these countries in a
sustainable fashion. The increasing world prices of rice have rightly led to great interest in
increasing domestic production of rice worldwide in countries relying on imported rice,
including in West Africa. The field interviews and subsequent analyses highlighted the fact,
however, that sheer short-term emphasis on production will be insufficient to create a
competitive rice sector in these three countries. What is, instead, needed are efforts focusing
on alleviating the underlying causes of uncompetitive rice sectors through three actions.

First, actors along the rice value chain from input dealers to transporters and traders can be
assisted to manage their activities with greater efficiency through better access to finance.
Only with improved credit access will farmers be able to increase their access to irrigation
and other inputs. This is an issue of urgent importance throughout these three countries,
including among the Nigerien rice farmers producing rice along the silting Niger river, where
access to sufficient water is becoming increasingly difficult. Access to inputs in diverse
regions will be improved if input dealers have access to credit that will allow them to expand
businesses. Credit will also be needed for traders and transporters to better store and move
rice. Credit access is currently minimal or non-existent for rice farmers, processors, and
traders involved in the traditional production systems in these countries, who in fact form the
great majority of individuals involved in rice sectors in these countries; without credit, they
will not be able to move from these extensive, low-input systems and practices to more
intensive ones.

Credit will be particularly needed to initiate and support efforts to upgrade quality of rice,
another long-term bottleneck to a more competitive rice sector in these countries. Much of
the rice produced in West Africa can not compete with the quality of medium or even lower
quality Asian rice. Greater credit access will benefit efforts to improve quality at different
levels: It will allow farmers to access improved seed which will result in rice that matures
and dries evenly. Improved access to credit will allow those operating machines – whether
threshers or village mills – to upgrade threshers and facilitate transition from mills of simple,
Engelberg types that are prevalent in all three countries to ones that result in clean, polished
rice to ensure that the threshed and milled product will be attractive to a wider group of
consumers, also in urban regions. Traders and transporters will also benefit from improved
credit access to avoid losses in quality and quantity during storage and transport. In addition
to credit, technical assistance will be needed to support efforts to produce greater quality rice.

Improving rice quality will also need efforts at consumer level, and the third clear message
coming from the field work and analysis concerns the need to capture increasing shares of
rice markets through publicity that will emphasize to potential consumers the value and good
qualities of domestic rice, and efforts to create products from domestic rice that have clear,
positive brands. The likely impact of this effort is vast in Nigeria, with enormous potential
domestic markets, and a large absolute number of higher-end consumers who can be
targeted. Progress in this will likely be easiest among Malian consumers most of whom
already have a preference for domestic rice.



                                                                                               11
This summary report presents the results of this study by briefly describing the way in which
the rice sector functions in each country, and the rice value chain in the principal rice systems
of the country.




                                                                                              12
                                         I. Mali
                                       Background
                                The model for post-independence cereal production,
                                processing and marketing in Mali included government
                                subsidies for inputs, and the strong control of the state in
                                producer and consumer prices – resulting in low prices both
                                for the producer and the consumer. The state control was
                                greatest in those areas where state had led the development
                                of intensive rice production (l’Office du Niger). Over time,
                                this approach came to be viewed as sub-optimal in terms of
                                productivity and revenue generation at the farm level, and
                                unsustainable in terms of the state resources needed to
                                maintain the system in function. Since the early 1980’s,
                                under the Programme de Restructuration des Marchés
Céréliers, numerous reforms have been implemented in the Malian rice sector (and more
generally, the cereal sector), increasingly liberalizing rice production, marketing, and
imports, and thereby reducing the role of the state. These reforms have had numerous
positive impacts, including:

   •   Increased production and yields.
   •   Increased producer prices and linkage of producer prices to global market prices.
   •   Increased consumer prices.
   •   Greater competition within the sector due to an increased number of actors.
   •   Greater private investment.
   •   Increased number of actors in the value chain, including numerous traders and
       collectors, and the emergence of small village mills which today account for the great
       majority of rice milling in the country.


                                       Production
Production Trends

Rice production in Mali has expanded at a rate over 4% per annum over the past 40 years. In
the process, the average annual harvest of paddy rice has grown from 165,000 MT in the
mid-1960’s to almost 850,000 MT during the first five years of this decade. While rice
statistics for Mali are neither comprehensive nor entirely consistent over this time frame,
most indicators would lead one to believe that paddy production has increased five-fold
during this period. Overall, this growth appears to have been fueled more by increases in rice
production area than in yield per hectare. Growth in area under cultivation has averaged just
over 2% for the past 40 years, jumping to 3.4% over the past ten. Growth in productivity has
been much more gradual, with a 40-year average of 1.8%, declining over the past decade to
less than 1%. Recent growth (2001-2005) has been more modest, both in yield (0.43%) and


                                                                                           13
in production (0.21%). This growth rate in yields, while slowing, has nonetheless enabled
Mali to remain, at 2.03 MT/ha, comfortably above the average yield across the 17 countries
of West Africa, which stands at 1.62 MT/ha; this is despite the prevalence of traditional
systems with low yield levels.

What has been remarkable in Mali has been the rapid increase in yields in the irrigated areas
after the liberalization efforts that started in the 1980s. L’Office du Niger – Mali’s foremost
irrigated area established in the 1930s and in great decline by early 1980s – and other
irrigated areas have benefited from decreased state control and increased room for private
sector initiative with freeing up of input and output marketing and prices as well as
processing. Many of these areas are being rehabilitated or new areas are being added on, and
average yields in its these areas with full water control are now at 5 MT/ha due to adoption of
transplanting, relatively good management practices, and high input use.

While production has been increasing at a rate of some 4% per annum, domestic rice
consumption in Mali has been advancing at a faster pace (Table 8). Over the past four
decades, domestic rice consumption has increased almost eight-fold, growing at an average
rate of more than 5% per year. Over the most recent ten-year period, this growth in domestic
consumption has accelerated, and stands at over 7% per annum. While increases in domestic
production have met part of this incremental demand, much of this new consumption appears
to have been met by imported rice. Imports over the past ten years have grown by a
staggering 24% per annum. In the process, Mali’s rice self-reliance ratio has declined from
96% in the mid-1990’s, down to 81% ten years later. By comparison, West Africa as a whole
carried a self-reliance ratio of 58% during this same period. If only because of the historical
run-up in world rice prices in recent months, it is logical to assume that self-reliance will
begin to rise as exports price themselves out of the West African market. Still, these patterns
confirm that there is, in Mali, as in most of West Africa, significant domestic demand for rice
which is not being met by the production systems in place. While cheap imported rice may
have been a good supply alternative over the past fifteen years, recent events would seem to
indicate that cheap rice will not be an option anytime over the near-term. Mali must now
decide whether it will support the further expansion of domestic rice production, or develop
increased access to, and consumer support for, alternative cereal crops.




                                                                                            14
Table 8. Malian Rice: Supply and Demand
                                                  Period                           Annualized rates
                                                                                      of change
                        1960’s      1970’s       1980’s     1990’s    2001-2005     40 y     10 y
 Harvest Area (ha)      167,520     178,508      184,761   299,423     419,864     2.3%      3.4%
 Yield/ha                1.00        1.03         1.17       1.86        2.03      1.8%      0.9%
  Paddy Production      164,870     182,676     219,620   562,794     849,444    4.2%     4.2%
  (MT)
  Milled Production      87,493     102,806     116,111   324,447     552,138    4.7%     5.5%
  (MT)
  Imports                3,491       27,714      67,597    15,701     132,000    9.5%     23.7%
  (milled eq., MT)
  Dom. Consumption       90,984     130,520      183,708 340,148      684,138    5.2%     7.2%
  (milled eq., MT)
WARDA: 2007 Africa Rice Trends, except for Milled Production (Domestic Consumption less
Imports), 2001-2005 import volumes based on DNSI, CPS/MA figures, and 2001-2005 consumption
as derived from known production and import figures.


Production Systems

Rice is cultivated in Mali from the south to the north of the country, in systems that are
extremely diverse and comprise both traditional and modern. High yield and production
gains have taken mainly place in the large-scale irrigated systems of l’Office du Niger and du
Segou, located in the Segou region, where water control is full and where there is a high use
of inputs, including improved varieties (Table 9). Full water control is also achieved in the
small irrigated areas of Timbactou, Gao and Mopti, where yields and input use are also high,
there is some double cropping, and food security and revenue generation are particularly
important due to the aridity of the environment. Intermediary yield and production gains
have been achieved in areas with semi-intensive systems with partial water control. Areas
with limited production and yield gains, such as Koulikoro, Gao, Sikasso, and Kayes,
continue to rely on traditional rice cultivation systems. In most of the locations where
traditional systems are practiced, input access is poor and – even if accessible in regions such
as Sikasso – inputs available are often meant for other crops (in Sikasso, for potatoes and
cotton).

These four principal systems of paddy production operating in Mali are:

       1.   Deepwater, floating
       2.   Rain fed upland/ inland production
       3.    Irrigated, partial water control
       4.   Irrigated, full water control




                                                                                             15
Table 9. Mali Rice: Supply by System
                                     Area in       Share of       MT/ha   Production   % of
                                   production      area in rice              (MT)      National
                                    (‘000 ha)                                          Production
 Traditional - Deepwater             225,000          49%           1.0    225,000        24%
 Traditional – Upland/Valley         80,000           18%           2.0    160,000        17%
 Irrigation – Partial Control        60,000           13%          1.65    99,000         11%
 Irrigation – Full Control           90,000           20%           5.0    450,000        48%

 TOTAL                               455,000                       2.05    934,000
Source: Authors’ calculations based on multiple sources

Deep water floating rice

This traditional system is practiced in large areas in the Niger delta, and in the boucle du
Niger. The varieties used for this system are of the Glaberrima type, whose rapid growth
permits the plant to match the rises in the river, which may reach 5 cm per day. Sowing
begins with the rains, and then the floods occur and inundate the paddies. The water level
rises by several meters in some areas, and the rice develops so as to keep its leaves and stalk
above the water surface (hence the name of floating rice). Harvest under this system typically
takes place in pirogues. Inputs are seldom used. Yields for this system rarely exceed 1
MT/ha.

Continuum from inland valley systems to upland rice

These diverse systems are located in areas with a minimum rainfall of 1000 mm. Although
some 300,000 ha in Mali are believed to be apt for this production system, it is believed that
there are 80,000 ha currently in rice cultivation, mainly by women, in Segou, Sikassa and
Kayes. Yields are variable, from 0.2 to 2 t/ha, often as a function of input use. Planting takes
place with the first rains. In the inland valleys, it is followed by natural flooding after the
rains. The water level gradually decreases, and usually has disappeared by harvest time.
However, the water levels vary greatly by surface contour and by rainfall. In the non-
improved valleys, numerous traditional rice varieties are used. Upland production currently
relies both on traditional varieties and improved varieties; the new NERICA varieties are
being gradually adopted. Once harvested, this rice is typically parboiled before milling.

Irrigated rice with partial water control

In this system, the irrigation infrastructure is relatively simple, consisting typically of a main
canal from the river, a gate, and a protection dike. Water control is not complete, with
drainage not possible and water amounts dependent on the rains and river level. The area
under this cropping system, found mainly in Ségou and Mopti, and some areas in the North,
was about two thirds of the area in the full control system in the 2007-2008 cycle. Yields,
due to poorer control of water, are more variable, from 0.8 to 2.5 ha. Varieties used include
DM16, Kao Gwen, and the older improved varieties such as D52-37, as well as traditional
local varieties.



                                                                                               16
Irrigated rice with full water control

This is the cropping system which produces the largest share of rice production in Mali.
Irrigation control at field level is comprehensive, due to the use of dams or motorized pumps.
An important area for this rice production system is the Office du Niger division in Segou,
where water control is through dam and gravitation. Other areas in this system include the
small areas in the northern areas of Mopti, Timbuctou and Gao (where motor pumps are
used), Baguineda (in Koulikoro, with dam), Selingue (in Sikasso, with dam), and Manantali,
Kayes (with dam). For the 2007-2008 cropping season, 89,800 ha were reported for this
system. On average, double cropping is practiced on only 10-20% of these lands. In Office
du Niger, almost 90% of the rice production is of Gambiaka; it is also popular in the other
irrigated areas. Other varieties used include, among others, BG, Wat 310, and Wassa, and
Telimane, and Adnin. Crop management techniques include improved light insensitive
varieties with yield potential of 12 t/ha, transplanting, high fertilizer use (200-300 kg/ha of
urea, 100-150 kg/ha DAP) and weeding techniques. Even with a single-cropping rotation
system, yields are believed to average 5 MT/ha.


Input use and markets

Input access in Mali varies from location to another, from system to another, and from year
to year, and is thereby difficult to evaluate. In the unimproved traditional systems fertilizer
and other input use are negligible. In areas of full water control systems, input access and
use are quite developed but there are frequent problems in satisfying producer demand; the
extent of these problems varies from year to another and by the type of fertilizer.

Input access

There are essentially two types of ways to access inputs:
   • Individual farmers linking to input dealers: This arrangement is common particularly
       in villages where producer organizations are not considered credit-worthy by the
       banks. Their number and distribution is difficult to estimate.
   • Producer organizations (i.e., village associations, economic interest groups,
       cooperatives), in collaboration with micro finance organizations and banks. This
       form of access is the most common. Since 2001, each local Chamber of Agriculture
       has a commission whose function is to coordinate the demand, procurement, and
       thereafter monitoring and evaluation of the activity. These institutions have,
       however, not been able to make a clear positive impact on the situation. Generally
       the producer organization pools its demand and makes a credit request to the financial
       institution. The credit is delivered to the input supplier, who delivers the inputs to the
       producers. At harvest time, the producer association collects the funds from the
       producers and pays the bank.

Banque Nationale de Développement Agricole (BNDA) is the principal source of input credit
in Mali and works directly with producers and decentralized agricultural credit services and
between 2001 and 2005 it gave credit worth 5884 million FCFA in the l’Office du Niger.


                                                                                              17
Microfinance organizations, such as Centre d’Appui au Réseau des Caisses d’Epargne et de
Crédit (CAREC), are also active. Typical interest rates at banks are 14-16%, and at micro-
finance institutions, 20-25%. They are considered relatively high by the producers.
Producers’ nonpayment has at times made banks reluctant to give credit, and thereby has
decreased farmer access to inputs and reduced yields. In addition to financing producer
organizations, BNDA also finances suppliers.

The common way to access inputs includes the following steps:
   • The producer organization pools the needs of its members and negotiates the price
      with the input supplier to determine credit need.
   • The bank is thereafter notified of the credit demand, after a technical service agency
      has assured of advice.
   • After negotiations, a contract is signed between the bank and the producer
      organization. The input supplier delivers the inputs, and sends a bill directly to the
      bank for payment.
   • The producer organization pays the credit after harvest at a pre-determined date.

Input distribution and sale

In Mali, there are large input suppliers or wholesalers, as well as dealers who receive their
supplies from those above, and sell to farmers either directly or through producer
organizations. Although the main rice production centers, such as Segou region, have
sufficient number of input dealers, in many areas such as Gao and Timbactou, there are few
dealers, which increases the price and decreases availability.

Fertilizer recommendations have been well established in Mali for nitrogen (urea is
commonly used) and phosphorus (DAP is commonly used); for potassium, no overall need
has been established for the different Malian rice cropping systems. Based on fertilizer
needs derived from current fertilizer recommendations and area in cultivation, our
estimations indicate that 80-90% of the urea and phosphate fertilizer needs are satisfied in
Office du Niger; in Office Riz Mopti, 86-96%, and in Office Riz Ségou, 100%. In all of
Office du Niger, 10 wholesalers and 42 dealers are present. In general, dealers are poorly
organized, and lack business skills necessary for improving their trade. The total volume
traded in l’Office du Niger between 2002 and 2005 was 12-13 000 t of urea, 4-7000 t of DAP
and 1-7 00 t of NPK (Table 10).

Table 10. Quantities of fertilizer purchased by producers in l’Office du Niger (t).

 Year     Urea        DAP       Sugube-Sugube (NPK)
 2002     12762       4186      7306
 2003     12312       7152      1032
 2004     12866       2165      5664
 2005     12943       3722      2451

Reports of l’Office du Niger.




                                                                                          18
The current seed system does not satisfy the demand of seeds by the farmers. Foundation
seed is distributed through the “Service Semencier National (SSN) and “l’Insititut de
l”Economie Rurale” to Producer Organizations specializing in production of certified seed.
Between 1994 and 2004, SSN annual seed production varied between 114 and 294 tons, with
a peak of 349 tons in 2002. This does not match the demand, with deficit explained by lack
of organization in the sector, and the closing of seed production units in Niégué and Molodo,
which totaled 120 ha and had the capacity to produce 600 tons of seed. In rainfed systems,
the introduction of NERICA varieties and other improved varieties has made a significant
impact on production. The NERICA varieties are currently being diffused through a
WARDA-implemented project “Appui à l”initiative Africaine du Riz” funded by the African
Development Bank.

Finally, recent decades have seen an increase in mechanization in Malian rice farming. Still
only about a third of farms are estimated to have machinery. Small equipment is particularly
common in l’Office du Niger and Compagnie Malienne de Développement des Textiles
(CMDT) areas. These include small cultivators, motorized pumps (currently, over 3500 are
used in l’Office du Niger), and threshers. In the Niger delta, Timbactou, and Gao, post-
harvest equipment such as threshers are also common. Local manufacturing of equipment
has been lately promoted, and is especially common in l’Office du Niger.


Constraints in Production

This study reviewed constraints in Malian rice production through both the field surveys –
through interviews with producers and their associations – and through a literature review.
These demonstrate a general consensus emerging of factors limiting production in the Malian
rice systems. These include:

Poor access and availability, and high cost of inputs

This constraint varies by system and region. Although in general, farmers in l’Office du
Niger enjoy a relatively good access to inputs in general, their price is high and they may not
be available at appropriate times. For most farmers in the traditional systems, however,
inputs are either not available or out of reach financially. Greater emphasis on generating
agro-input dealer networks and in advising farmer organizations in input procurement – as
done by IFDC with Faso Jigi – will lead to better access and availability, and lower price of
inputs. Interviews with producers also brought up another bottleneck with fertilizer: their
often poor quality. Finally, oligopolistic conditions in the import and supply of fertilizer
cause high margins and tight supply.

Limited access to finance and high interest rates

Credit access is better for the irrigated zones, but this is also partly dependent on the credit
repayment rates – some producer associations have lost their ability to access credit due to
non-payment. Credit access is generally very poor for farmers in traditional systems
interested in intensifying their production systems.



                                                                                             19
Limited use of machinery

In irrigated systems, machinery is increasingly available, but the traditional and semi-
intensive systems rely almost entirely on hand labor. Local blacksmiths in the irrigated areas
have been key to transforming the rice production there; in addition, for mechanization to
happen more widely, credit access needs to be improved.

Access to land and decreasing farm size

In the most intensive systems, farm sizes are decreasing due to population growth; this issue
was pointed out by many producers as a constraint in the field survey. At the same time, the
most productive systems have great barriers for entry due to high costs and limited amount of
land available, again emphasizing the need for improved credit systems.

Pests and diseases, including weeds

Those interviewed saw pests and diseases as an important factor causing the slowing down of
yield gains in the irrigated systems. This issue was brought up by producers not only in the
intensive, but also traditional systems.

Soil fertility

Producers interviewed also saw poor soil fertility as a factor limiting rice yields in Mali; this
is presumably caused by insufficient replacement of nutrients due to low or no fertilizer
additions.

Problems with water

Interviewees brought up numerous issues with water, from poor drainage (mentioned
particularly in l’Office du Ségou and Mopti) to insufficiency of water (in Sikasso/Koulikoro).
Good water control is imperative to high yields. In intensive systems, producer organizations
are now responsible for maintaining the tertiary canals, but have been slow to accept this
responsibility.


                                          Processing
Types of processing

Currently, almost all rice processing in Mali is done at village level, a remarkable
transformation from the pre-liberalization times when large-scale mills were important. The
2000 village mills have undoubtedly generated employment, and have allowed the farmer the
possibility to maintain control over his/her rice, to capture margins previously reserved for
processors, and to receive the important byproducts used for livestock feeding. Very




                                                                                              20
commonly, the producer maintains control of his/her product throughout the milling, by
paying a fee for it and selling rice after milling.

There are exceptions to this. A part of the rice produced in l’Office du Niger is milled in the
industrial mill in Ségou and the producers sell the paddy directly to the mill. The producers
may also pay in kind to their associations for the services provided, such as threshing or
water. At times particularly the stationary small mill owners purchase the paddy directly
from the producers. Finally, where rice processing involves parboiling, the producers sell the
paddy usually either directly or through collectors to individual women or women’s
associations.

There are three types of rice processing in Mali:

Hand pounding

A study on the 1999-2000 rice season demonstrated that about a third of the rice produced in
Mali was still pounded by the traditional hand method. Since this time, however, hand
pounding has further decreased due to the increased number of village mills. This method
results n relatively poor yield and quality, with a high percentage of broken rice and husk
residue. This milling method is mainly done on rice that is used for subsistence consumption
and in areas where rice parboiling is common – Mopti and Sikasso. Some is also sold at local
markets. The pounding and consequent trading is usually done by women.

Milling

The emergence of village mills in Mali starting in the 1980s, after the liberalization of the
sector, has transformed rice milling in the country. In the past, large-scale industrial mills
played an important role, but currently only one mill is operating; even this last remaining
mill is operating at only a small fraction of its installed capacity. There are currently
estimated to be 2,000 village mill units in Mali, out of which 700 are in l’Office du Niger.
Milling is most commonly done for a fee and mills are either operated by private businesses
or cooperatives.

Most village mills are of a simple and mobile Engelberg type that utilizes diesel or petrol.
Although cheap (starting at 1.5 million FCFA), they commonly result in low yield and
mediocre quality as they do not separate the bran and husk from the milled rice. Positive
aspects include the fact that since the mill comes to the village, it is easy for the farmer to
take the milling byproducts home to feed livestock. The fees are quite low, at 11 FCFA/kg.

Other mills, using electricity or a large motor, are immobile but result in a greater yield (65-
70%) and better rice quality. These types are more expensive (totaling 3-4 million FCFA; up
to 8 million when equipped with polisher and sorter) and also require that paddy be
transported to the milling site, and that by-products be transported back to the farm. Milling
costs, at about 14 FCFA/kg, are somewhat more than with the simple Engelberg types.




                                                                                             21
Finally, there is currently only one functioning industrial rice mill in Mali, Grand
Distributeur Cerelier du Mali (GDCM) in Segou. It processes 10,000 t of rice in a year, far
below its capacity of 70 t per day. The milling yield is high, 67%, and the processed rice is
polished, graded, sized, and cleaned. The rice is purchased by traders trading in Bamako,
Mauritania, and Niger.

Milling after parboiling

Parboiling is a common practice in almost all rice-growing areas of Mali, but it is only done
in areas with irrigated rice where water control is partial, in deepwater rice, and in inland
valleys; i.e., in the semi-intensive and traditional systems. As mentioned, it is commonly
preceded by hand pounding as a de-hulling method. Those interviewed in this study
emphasized the distinct flavor and reduction of milling losses as advantages of parboiling.
Parboiling is done by individual women or women’s associations, with amount of processing
varying by the group.

Two methods are employed:
 • The paddy is soaked for 48 hours before heating, then drained and dried. The complete
    process takes three days, and consumes more resources (labor and firewood) but results
    in a better tasting rice.
 • The paddy is placed in hot water for 24 hours. This process, practiced in the Dioro areas
    of the l’Office Riz du Segou takes only one day and reportedly gives a better visual
    quality of the rice.

The interviews conducted with associations and individuals involved in small-scale rice
processing, whether milling or parboiling, as a part of this study point to numerous
constraints operating at the level of rice processing. Most commonly, those operating village
mills felt they lacked access to credit to improve their businesses. Lack of appropriate
equipment was also considered an important constraint as well as lack of paddy at certain
times of the year. (The latter constraint impacts these small-scale processors much less than
the industrial mills, as most of the small-scale millers can mill different grains in their
machines.) Millers and processors also pointed to poor quality of paddy that they received
and – partly associated with this – limited area and means for drying this paddy. Finally,
several millers complained of the poor quality of the machines causing frequent breakages,
and the poor availability of good quality spare parts. Finally, erratic electricity supply was
also mentioned as a constraint by those involved in milling.


Problem of rice quality

The introduction of village milling has led to considerable variability in the quality of the
milled product in the market, causing problems for merchants and consumers alike; in
general, the quality of rice has deteriorated.

The quality of milled rice is the result of a chain of factors that are all inter-connected,
moving from farm through to market. The planting of mixed varieties in the same fields and


                                                                                           22
other poor management practices cause uneven maturity, and variable moisture content of the
grain. The bulk storage of the rice at roadside significantly compounds the problems of
cleanliness and selection. Likewise, paddy rice should be dry in order to limit the percentage
of brokens, for which reason the rice should be held off the market for a sufficient time to
permit drying. At the same time, many growers are forced to liquidate their harvests quickly
(in the absence of access to conventional credit) in order to meet their financial obligations.
As described above, field interviews with processors point to the importance of the poor
quality of the paddy received from farmers (particularly in the absence of drying facilities) as
one important factor impacting final quality. Any improvement in the quality of rice at farm
gate would thus require a series of interventions at different levels (production, storage,
processing, transportation) to improve the entire farm-to-market chain.

Most of the mills currently utilized are crude, resulting in poor quality rice even with good
quality paddy. The better mills are out of reach for many processors, especially due to poor
access to credit, and these simple units that are mobile have the advantage of bringing milling
close to farmers, and thereby allowing farmer access to by-products with little additional
cost. At the same time, if economic incentives through market opportunities are clearly
there, additional cleaning of rice can be made attractive to processors.

And here lies the problem: the purchasing power of a large part of the Malian consumer
remains extremely limited and for them, price is an important consideration. For those with
greater resources, higher quality can translate into higher prices, and a strong preference for
Malian rice will likely further support such investments. Better rice currently fetches
approximately a 10% premium price. The majority of Malian consumers are, of course, very
limited in their financial resources and have to look for the cheapest option normally.

Moreover, although the developments in the Malian rice sector in the past 25 years have
introduced numerous smallholders and other actors into the rice economy, the large number
of actors makes it harder to implement changes needed to increase quality. For example,
there are an estimated 2000 village mills in Mali. Progress in quality improvement with such
a large number is likely to be slower than working with only a few large-scale mills.
However, with the establishment of the right types of support (e.g., technical assistance and
credit access) and incentives (slightly higher price), a significant number of these small mills
are likely to implement efforts to increase quality.

While recent global market conditions have converted the phrase “cheap imported rice” into
an oxymoron, the fact remains that the double-barreled challenge of better quality
(particularly at the point of milling) and moderate cost increase remains the primary
marketing constraint which the Malian rice processing sector faces in its efforts to supplant
the share of market currently served by imported product.


                                          Markets
Market disposition of rice varies by rice production system. Whereas 70% of the production
is estimated to be sold into consumer channels in l’Office du Niger, a large percentage of


                                                                                             23
farmers practicing the traditional systems of deepwater and upland rice sell no rice most
years.

Rice is normally traded as follows:

   •   Producer sale: Producers or their associations sell most commonly to collectors who
       either come to villages to buy or are located in the town. Collectors are either
       independent or are financed by wholesalers for their purchases. These collectors at
       times give loans to farmers which they pay at harvest time in rice. At times, farmers
       sell their rice directly to wholesalers.
   •   Collectors-wholesaler sale: This transaction takes place in large produce markets or
       at times in the villages. The bigger produce markets are found in the large irrigated
       areas, and are frequented both by producers from numerous villages and by
       collectors. At times, an intermediary wholesaler who works with smaller quantities is
       a first step.
   •   Wholesaler-retailer transaction: Wholesalers store their produce in the larger
       commercial centers, typically regional capitals, for purchase by the retailers.

As described below in the value chain analysis, margins at each level of these marketing
transactions appear to be relatively low, indicating competition among a large number of
actors in the marketing chain.

What is remarkable about Malian rice consumers – in comparison to many other nationalities
in West Africa – is that a majority of them prefer local rice over the imported rice, due to its
preferred taste. The most popular of the domestic rice is the Gambiaka variety, which is the
dominant variety produced in the full-control irrigated areas (as mentioned, about 90% of
L’Office du Niger is in this variety).

As was described in the production section of this chapter, domestic consumption of rice
stands in the range of 650,000-700,000 MT of milled rice per year. At its current population
level, this translates into 55-60 kg per capita. And although rice is only the third consumed
cereal in the country – after millet and sorghum – it is the most consumed one in cities and in
the North. Its special significance in food security is caused by the relative buffer of irrigated
rice against rainfall fluctuations – common in Mali – and the fact that its prices are relatively
more stable than those of sorghum and millet.

With a population growth rate estimated at 2.7%, and a rice consumption growth rate of
7.2%, it appears clear that rice consumption is growing at nearly three times the rate of
population. If current trends continue, it would appear that rice consumption in Mali would
reach 88 kg/capita by the year 2015. While it is unlikely that present rates of import growth
will be sustainable in the face of world prices, the fact remains that demand for rice in Mali is
on the rise, and represents a distinct opportunity for Malian rice growers, processors, and
traders. Regional markets provide another opportunity.




                                                                                               24
There are currently exports of Malian rice to at least Mauritania, Burkina Faso, and Guinea.
Export quantities are uncertain; one report estimated a total quantity of 20,000 tons, with
acknowledged uncertainty.

In order for Malians to avail themselves of opportunities in rice either for domestic or
regional markets, however, increased production will not, by itself, be enough. Although the
preference for Gambiaka rice from the ON areas is generally recognized as a consumer
favorite for Malian rice, the fact remains that the cleanliness and freedom from impurities
evident in imported rice in Mali or elsewhere, irrespective of the percentage of brokens, is in
sharp contrast with the delivery condition of most local Malian rice.

The local rice consumed in Mali is of very diverse quality – from the extremely broken rice
with a great deal of impurities such as small stones, bran, and flour – to a clean, polished rice.
Typically, even the most high quality rice that fetches the highest price still contains
relatively large share of broken grains, and could therefore be considered equivalent to RM-
40; even with the broken rice, the local preference is for the domestic rice.

As described in AFD Document du Travail (September, 2005), the market for imported rice
in Mali can be thought of as operating on three different entry points:
    1. Top-grade whole grain rice, irrespective of origin, which appeals to the narrow band
       of high-income consumers (probably less than 3% of total imported tonnage)
    2. 15%-25% broken rice, which – according to importers – represents the dominant
       share of rice imports. This category has constituted the most important direct
       competitor to the ON rice production, and would represent the first import-served
       sector for domestic production to penetrate or to re-conquer. This market segment is
       estimated to represent 70-80% of total import sales.
    3. “Broken” rice, a loosely-defined category covering rice of mediocre quality targeted
       to the poorest of consumers. This category also includes “aromatic brokens”, which
       are very much sought after in certain regions of Mali, i.e., Kayes and Sikasso. Prices
       for this latter grade approach those of the 15%-25% broken. While it is believed that
       the demand for general “broken” rice could be met by ON production, this aromatic
       component would be difficult to regain, given its specificity. This third general
       category, with all its sub-components, is estimated to represent 15%-20% of total
       import volume.

For Malian rice to be competitive with rice imports or in the sub-region in the long run (not
just in the current period of artificially high prices) the domestically produced rice has to
address its content of impurities (making it necessary to need to clean and wash the rice) and
its higher price, in comparison to imported rice. The problem with higher prices has probably
found a natural solution for the foreseeable future due to world market developments. In the
long run, costs have to be brought down, mainly by increasing productivity.

The problem of impurities, on the other hand, will not be resolved until the processing link in
the rice value chain has been adjusted to create better incentives (in the form of higher prices
for good quality rice production) and stricter tolerances for rice which is dirty, or which is
inter-mixed with stones, bran or flour. This has to be done by ensuring that the right



                                                                                               25
conditions are there to make the changes – i.e., access to credit and sufficient technical
support for farmers and processors.


                               Rice Value Chains in Mali
In December of 2007, the Sahel Institute (INSAH) published a study of the Malian rice
economy which had been organized by WARDA. In the study there were two separate
schedules of costs and revenues for rice production in Mali, utilizing each of the four
principal production systems practiced in the country. Both schedules reflected rice
operations in the same regions, based on “better-case” and worse-case” examples of the rice
value chain in the country. While the variances between these two schedules include both
yields and sales prices, they also reflect the extent to which farmers can vary their
investments in production costs according to the external conditions under which they
operate. These two schedules, represented below (Tables 11-12), serve as the basis for the
cost components of the value chain analyses in this report. While the yields observed in this
particular survey are significantly higher than those which have been adopted for analytical
purposes in this report, the field surveys and other research as a part of this value chain study
indicate the costs per hectare for production and local milling appear to be sufficiently
credible (for 2007) to merit adoption here.




                                                                                              26
   Better-Case Scenario and Worse-Case Scenarios

   Table 11. Better Case Scenario
Concept                    Production System
                         Irrigation, Irrigation,   Irrigation,    Irrigation,Irrigation,     Traditional,    Floating,
                         Full        Full          Full Control   Partial    Partial         Upland/         Sikasso
                         Control     Control       Tomboucto      Control,   Control,        Valley,
                         Segou       Mopti         u              Mopti      Tomboucto       Sikasso
                                                                             u
Average Yield                 6,000       8,000          6,000         3,000         3,500          3,000         3,500
(kg/ha)
Sales Price, Paddy              125         125            150           125          150             100          150
(Fcfa/kg)
Sales Price, Milled             225
(fcfa/kg)
Labor (Fcfa/ha)            177,500      241,800        337,900      157,750       105,750        152,600      150,000
Inputs (fcfa/ha)           137,700      156,180        103,300       68,000        65,250        106,800      100,000
Irrigation Fees             65,300      134,000         75,000       13,600
(fcfa/ha)
Cultural Costs              15,000        6,450         35,000        24,750       75,000           7,250        10,000
(fcfa/ha)
Amortization (fcfa/ha)       6,000       28,750              0        6,000             0          6,250        6,000
Transportation                   0            0         20,000            0        16,000              0            0
Total Costs, paddy         401,500      567,180        571,200      270,100       262,000        272,900      266,000
(fcfa)
Warehousing (fcfa)          12,500       10,000
Transportation (fcfa)       17,300            -                                                                      -
Milling (fcfa)              35,500            -                                                                      -
Post-harvest Costs          65,300       10,000               0             0           0               0            0
(fcfa)
Total Costs, milled        466,800      577,180        571,200      270,100       262,000        272,900      266,000
(fcfa)
Sale of Paddy, gross              0 1,000,000          900,000      375,000       525,000        300,000      525,000
(fcfa)
Sale of milled rice        693,000             0              0             0           0               0            0
(fcfa)
Sale of by-products         17,750             0              0             0           0               0            0
(fcfa)
Total Margin               243,950      422,820        328,800      104,900       263,000         27,100      259,000
(fcfa/ha)
Unit Cost, paddy                 67           72            95            90           75              91           76
(fcfa/kg)
Unit Margin, paddy               41           53            55            35           75               9           74
(fcfa/kg)
    INSAH (12-2007)




                                                                                                            27
 Table 12. Worse-Case Scenario

Concept               Production System
                    Irrigation, Irrigation,   Irrigation,    Irrigation,Irrigation,     Traditional,    Floating,
                    Full        Full          Full Control   Partial    Partial         Upland/         Sikasso
                    Control     Control       Tomboucto      Control,   Control,        Valley,
                    Segou       Mopti         u              Mopti      Tomboucto       Sikasso
                                                                        u
Average Yield            3,000       4,000          2,000           700         1,500            500           750
(kg/ha)
Sales Price, Paddy         100           94           150            94          150             100           150
(Fcfa/kg)
Sales Price, Milled          0            0              0             0           0               0             0
(fcfa/kg)
Labor (Fcfa/ha)        169,000     242,400        239,800        75,000       77,750        149,700      143,000
Inputs (fcfa/ha)        88,900      68,120         46,300        19,200       31,500         50,500       47,000
Irrigation Fees         65,300     134,000         75,000         6,800            0              0            0
(fcfa/ha)
Cultural Costs               0            0        17,500              0      25,000               0             0
(fcfa/ha)
Amortization                 0            0              0             0           0               0             0
(fcfa/ha)
Transportation               0           0              0            0         5,000              0            0
Total Costs, paddy     323,200     444,520        378,600      101,000       139,250        200,200      190,000
(fcfa)
Warehousing (fcfa)           0            0              0             0           0               0             0
Transportation (fcfa)    8,900            0              0             0           0               0             0
Milling (fcfa)          17,500            0              0             0           0               0             0
Post-harvest Costs      26,400            0              0             0           0               0             0
(fcfa)
Total Costs, milled    349,600     444,520        378,600      101,000       139,250        200,200      190,000
(fcfa)
Sale of Paddy ,              0     376,000        300,000        65,800      225,000         50,000      112,500
gross (fcfa)
Sale of milled rice    277,200            0              0             0           0               0             0
(fcfa)
Sale of by-products      8,750            0              0             0           0               0             0
(fcfa)
Total Margin           -63,650     -68,520        -78,600       -35,200       85,750       -150,200         -77,500
(fcfa/ha)
Unit Cost, paddy           108         111            189           144           93             400           253
(fcfa/kg)
Unit Margin, paddy         -21          -17            -39           -50          57            -300          -103
(fcfa/kg)
          INSAH (12-2007)




                                                                                                       28
By taking the average of the cost components for each of these two cases, it is possible to
develop a mid-line scenario which should provide a reliable set of average costs. By then
applying the generally accepted productivity levels for each of the three production systems,
as they appear in the schedule on page three of this report, we can then derive the depiction
of the value chains under each of the four major production systems in common practice in
Mali (Table 13). To simplify comparisons across (and within) systems, the Segou, Full
Control case has been converted from sale as milled product to sale as rough rice, as is the
case with the other six data sets. These costs were compared to those derived from the field
study portion of this value chain study.

Table 13. Cost Assumptions, Value Chain Analysis

        Variable                                 Irrigation,  Irrigation, Traditional
                                                 Full Control Partial     (Combined)
                                                              Control,
        Average Yield (kg/ha)                          4,833      2,175        1,938
        Sales Price, Paddy (Fcfa/kg)                     124        130          100
        Sales Price, Milled (fcfa/kg)                                 0
        Labor (Fcfa/ha)                              234,733    104,063      148,825
        Inputs (fcfa/ha)                             100,083     45,988        76,075
        Irrigation Fees (fcfa/ha)                     91,433      5,100             0
        Cultural Costs (fcfa/ha)                      12,325     31,188         4,313
        Amortization (fcfa/ha)                         5,792      1,500         3,062
        Transportation                                 3,333      5,250             0
        Total Costs, paddy (fcfa)                    447,700    193,089      232,275
        Sale of Paddy , gross (fcfa)                 599,292    282,750       193,800
        Total Margin (fcfa/ha)                       151,592     89,661      (38,475)
        Unit Cost, paddy (fcfa/kg)                        93         89           120
        Unit Margin, paddy (fcfa/kg)                      31         41          (20)
       INSAH (12-2007)


Value Chain Analysis for Irrigation, Full Control, System

In this system, the extension and water control are provided by the parastatal (Office du
Niger) or through business development services and NGOs (in areas with motor pumps). In
Office du Niger, a seasonal water fee is paid by producer; the producer also is expected to
maintain the tertiary channels. In systems with motor pump, there is a lower fee to mainly
maintain the pumps only. Extension is provided by the parastatals for a fee. Inputs are
provided by agro-dealers, with access to inputs greatest in Office du Niger. Credit is
commonly through producer cooperatives in this system, or through individual access in
those areas where producers are not well organized or where cooperatives no longer are able
to access credit due to non-payment. Yields and also revenues are relatively high and
possibilities of double-cropping allow farmers additional income not only from rice, but also
from vegetables. Farmers have several mechanized options for milling and they can sell their


                                                                                          29
produce either individually or in cooperatives. This group of producers produces the
majority of the Malian rice and on average, is most likely to compete in higher-end rice
markets – they are the most likely ones to produce quality rice of preferred varieties.

The cost assumptions for this system are as indicated in the preceding paragraphs. Seed is of
the improved variety (principally of the Gambiaka variety). Fertilizer and crop protection
applications are uniform and in keeping with recommendations. Productivity for this system
is assumed to be 5.0 MT/ha. At this level of costs and productivity, this system generates
positive margins, on average, of FCFA 172,300 per hectare, or FCFA 34.46/kg of rough rice
produced. This margin is 34% of cost of goods sold. Returns are predicated on only one cycle
per year, which is reportedly the case for 90% of the 90,000 hectares under this type of
cultivation.


       Labor           Inputs       Irrigation Cultural       Amortization           Transport
       CFAor            CFA           CFA       Costs          CFA                   CFA
   323a234,733bor       100,083        91,433    CFA            5,792                3,333
         CFA                                     12,325
        234 733




                                                 @ 5.0 MT/Ha

                          Cost of production/Ha : CFA 447,700 / CFA 88.54kg
                              Cost of production/Ha : N67,200 / (N 16.80/kg)
                              Total selling value/Ha: N 47,520 / (N CFA 124.00/kg
                          Total selling value/Ha: CFA 620,000 /44.00/kg)
                          Net profit/kg
                              Net profit/kg     :     (N 19,680) / (N CFA 34.46/kg
                                                    : CFA 172,300 / 27.20/kg)

                              Price variations (N/kg)
                          Price Variations (FCFA/kg)
                              Farm gate = 44.00
                              Processing = ??= 124.00
                          Farm Gate
                          Processing
                              Trade           =
                                           = ?? 175.00 (Milled)
                              Wholesale = ?? 240.00
                          Wholesale           =
                          Retail
                              Retail          = 275.00
                                           = ??



If the grower elects to retain ownership over his crop through the processing stage, his
margins improve. His cost for milling will range from FCFA 11.00-14.00/kg, at which point
he will be able to sell the milled product to collectors/wholesalers for FCFA 175.00/kg,
thereby capturing an additional margin of FCFA 37.00/kg (in effect doubling his net margin).
Estimated gross margins for collectors and retailers stand at FCFA 65.00/kg and FCFA
35.00/kg, although costs (including transportation, handling, and shrinkage) must be
deducted from these gross margins.


Value Chain Analysis for Irrigation, Partial Control, System

This group of farmers is diverse. Producers pay for water control but they are not involved in
the maintenance of the irrigation system. The organization of producers and input and credit


                                                                                                 30
access are intermediate, and technical advice is less common. These systems often also
include parboiling, and milling options include both small mills and pounding. In this
diverse group of producers some are able to produce good quality rice competitively, others
are producing under conditions that are similar to the traditional rice systems below.

Costs under this system are significantly less than the full control scenario, for several
reasons. Higher costs under the full control system reflect its more intensive approach to
production, involving re-plants, as well as higher application rates for fertilizers and crop
protection materials. The partial control system also relies on less expensive planting
materials, including a mix of older hybrid varieties and traditional local varieties. Finally, the
fees charged by administrators for the full control system do not apply to the partial control
system. In sum, then, costs for the partial control system amount to only 43% of those
incurred under the full control system. Yields, not surprisingly, are also considerably lower
under this partial control system, in part due to its reliance on rainfall to initiate the flood
cycle, in part to its lower application rates of inputs, and the lower productivity seed which it
typically employs. Yields here are assumed to be 1.65 MT/Ha, one-third of those achieved
under the full control model. Returns under this model, while positive, are considerably
lower than the previous case. A 57% reduction in costs is more than offset by a 67%
reduction in yield, leading to an 88% decline in gross margin.


       Labor            Inputs       Irrigation   Cultural     Amortization          Transport
       CFAor             CFA           CFA         Costs        CFA                  CFA
   323a104,063or         45,988          5,100      CFA          1,500               5,250
         CFA                                        31,188
        234 733



                                                  @ 1.65 MT/Ha

                               Cost of production/Ha : N67,200 / (N CFA 117.02/kg
                           Cost of production/Ha : CFA 193,089 / 16.80/kg)
                               Total selling value/Ha: N 47,520 / (N CFA 130.00/kg
                           Total selling value/Ha: CFA 214,000 /44.00/kg)
                           Net profit/kg
                               Net profit/kg     :     (N 19,680) / / CFA 12.98/kg
                                                     : CFA 20,911(N 27.20/kg)

                               Price variations (N/kg)
                               Farm gate = 44.00
                           Price Variations (FCFA/kg)
                               Processing = ??= 130.00
                           Farm Gate
                               Trade
                           Processing       = ?? 175.00 (Milled)
                                               =
                               Wholesale = ?? 240.00
                           Wholesale           =
                               Retail
                           Retail           = ??
                                               = 275.00



If the grower elects to retain ownership over his crop through the processing stage, his
margins improve. His cost for milling will range from FCFA 11.00-14.00/kg, at which point
he will be able to sell the milled product to collectors/wholesalers for FCFA 175.00/kg,
thereby capturing an additional margin of FCFA 37.00/kg (in effect quadrupling his net
margin). Estimated gross margins for collectors and retailers stand at FCFA 65.00/kg and
FCFA 35.00/kg, although costs (including transportation, handling, and shrinkage) must be
deducted from these gross margins.


                                                                                                 31
Value Chain Analysis for Traditional Systems

In these systems, farmer access to inputs, credit, and technical advice is poor or typically
none; farmers are commonly not organized in rice associations; and much of the rice is
parboiled before milling. In comparison to other systems, pounding is more important, but
milling is also done with small mobile units. This group of farmers are the least competitive
and have the lowest possibility of producing good quality rice; in addition, their traditional
varieties are likely not able to compete for higher prices. Most of this rice is currently for
home consumption.

In terms of both labor and inputs, these systems can be considered as intermediate to the two
irrigated systems, residing well below the full control system, but slightly higher than the
partial control system. Increased input costs are believed to be due primarily to the increasing
adoption of hybrid seed, including NERICA varieties. Yields under this system are generally
described as highly variable ranging from 0.8-2.0 MT/ha. For purposes of this analysis, we
have settled closer to the 2.0 MT/Ha figure. Even at this higher end of the productivity range,
this system shows a loss of FCFA (38,475)/ha, or FCFA (20.00)/kg. Since this system is
believed to occupy more than 300,000 hectares of rice production area in the country, it is not
plausible that this system would generate billions in FCFA losses, while growers in these
systems remained in the business of producing rice. Labor costs, which comprise 64% of the
total cost figure, almost certainly represent imputed labor costs generated by the disponent
owners of the property, rather than a cash outlay. The fact remains, however, that this system
should be considered mainly a subsistence activity, as opposed to the commercial cash
generation activity conducted in the irrigated perimeters.


       Labor            Inputs     Irrigation              Amortization         Transport
       CFAor             CFA         CFA                      CFA               CFA
   323a148,825           76,075                               3,062
         CFA
        234 733



                                                @ 1.94 MT/Ha

                        Cost of production/Ha : CFA 232,275 / CFA 120.00/kg
                        Total selling value/Ha: CFA 193,800 / CFA 100.00/kg
                        Net profit/kg        :  CFA (38,475) / CFA (20.00)/kg


                        Price Variations (FCFA/kg)
                        Farm Gate          = 100.00
                        Parboilers         = 225.00




A large majority of this traditional production is believed to remain in the vicinity of the plot
where it is grown, either in the form of auto-consumption, or for cash or barter transactions in
the nearby villages. Likewise, the vast majority of this product is sold to the local women


                                                                                              32
who parboil this rice prior to having it milled, then re-sell it on their local markets. While
parboiler cash margins of FCFA 125/kg appear generous by comparison with other actors
across the other systems practiced in Mali, the fact remains that the steps involved in their
value-addition process are cumbersome and inefficient, and involve the transformation losses
associated with the conversion from parboiled/rough to parboiled/milled.


                      Actions to Improve Malian Rice Sector
Despite the obvious advances which have been made in the Malian rice economy over the
past three decades, analysts and commentators point to several challenges facing the Malian
rice production sector today. Foremost is the challenge of meeting the steady growth in
national rice consumption; as we have seen earlier, annual milled consumption growth, at
some 50,000 MT/year, exceeds annual milled production growth, at 30,000 MT/year, by
20,000 MT per year. Second would come the challenge of regaining market share in those
parts of the Malian market which have been captured by imported rice. The third objective,
which would not be addressed until the first two objectives have been met, would be to
expand production to the point where Malian rice could participate actively in the sub-
regional export trade.

Productivity increases would be a critical factor in achieving each of these three objectives.
In terms of import replacement, Malian imports now stand in the range of 125,000-150,000
MT of milled rice per year, equivalent to approximately 200,000 MT of rough rice
production. While this 25% increase in current production appears daunting, there are several
measures which suggest themselves in moving to this level of production:

   1. More intensive utilization of irrigated perimeters: There are 90,000 hectares of
      rice production area under full water control. The average production on this surface
      area is estimated at 5MT/ha, representing 450,000 MT of paddy per year. Of the total
      production area of 90,000 ha, only 10% is estimated to engage in double cropping;
      conversely, 81,000 ha produce only one rice crop per year. The production potential
      of this harvest area, at 3 MT/ha for the second harvest, amounts to 243,000 MT of
      incremental production. Only 68,000 hectares of this full-control production area
      would be need to double-crop in order to generate enough incremental production to
      reach the import-replacement volume of 203,000 MT/ha.
   2. Increase of irrigation perimeters: The government of Mali has established
      irrigation as one of its priority vehicles for rural investment and development. It
      published a National Strategy for Irrigation Development in 1999, and commissioned
      a study of the Office du Niger pursuant to development of a five-year master
      development plan, including the addition of 60,000 incremental hectares under
      complete water control by 2020. Numerous donors are currently funding to increase
      irrigation.
   3. Increase productivity of the traditional systems: Food security and poverty
      alleviation impacts will be greatest if the productivity of traditional systems can be
      increased. Given the fact that these systems are dispersed, diverse, and engage a
      large number of producers, this will not be easy but increased input use, particularly



                                                                                           33
       of improved varieties and fertilizer, and good management practices will surely lead
       to results.

While further production increases are important, greater competitiveness of Malian rice will
not be achieved without addressing some of the fundamental ways in which Malian input and
output markets work. In particular, future work will have to focus on the following:

   1. Improve farmer access to inputs, particularly fertilizer: Most Malian rice farmers
      outside of the irrigated areas do not have access to fertilizer.. In general, much of the
      fertilizer supply chain is poorly organized, leading to high prices and sub-optimal
      availability both in terms of quality and volume. Long-term implications of this, in
      terms of decreasing soil fertility, are already being seen. Particularly fertilizer
      procurement practices are poor, leading to unavailability at critical times and high
      price. Producer organizations need to be coached to enable them to become smart
      purchasers of inputs, and agro-input dealer networks need to be increased. Agro-
      dealers need to be trained to supply inputs to farmers in a professional manner.
      Without greater access to inputs, Malian rice producers will not be able to sustainably
      increase their productivity and therefore competitiveness.

   2. Increase access to credit: The importance of better access to credit affects all actors
      in the Malian rice sector, from input suppliers (including those of machinery) and
      dealers to producers, millers, parboilers, and traders. Farmer access to inputs can
      only be increased through better credit availability. The great jump in quality needed
      to be competitive vis-à-vis good quality imported rice cannot be made without better
      milling equipment. Traders and producer organizations lack warehouses. Smart
      arrangements are needed to ensure that the amounts, terms and rates will be
      reasonable, and that repayments rates will be high.

   3. Improve on rice quality, and capitalize on good quality rice products through
      niche markets at national and regional levels: L’Office du Niger has a good basis
      for improving rice quality, with relatively good rice management practices at the farm
      level, almost sole reliance on a single variety, and increasing availability of better
      quality rice mills. The preference by most Malians for locally-produced Gambiaka
      variety offers good basis for efforts to publicize it and develop brands based on it.
      These can be linked to higher-end Malian and regional markets by developing
      specific products geared towards a higher-end market.




                                                                                            34
                                         II. Niger

                                          Overview
Rice production in Niger constitutes only a small portion of total cereal production in the
country. The dominant cereal cultivation is millet, which represents some 82% of total cereal
production. Next comes sorghum, which makes up an additional 14%, followed by rice at
only 3%. Despite its generally minor role in the Niger cereals production portfolio, however,
rice occupies a far more important role

           • In the zones where it is produced, and in urban areas,
           • During times of the year when millet and sorghum become scarce and
             therefore expensive, and
           • As a support crop for agro-pastoral production in the areas where it is grown.

                                                      Geographically, rice in Niger is
                                                      produced primarily in the southern
                                                      irrigated cash crop zone (along the
                                                      borders with Nigeria and Benin), in the
                                                      Komadougou River and Lake Chad
                                                      cash crop zone to the southeast of the
                                                      country, and – above all – in the Niger
                                                      River irrigated rice zone at the far
                                                      western end of the country. As
                                                      described in the 2005 FEWSNET Niger
                                                      Livelihood Profiles, this latter zone is
                                                      defined by a population mainly
                                                      dependent on rice cultivation, most of
                                                      whom also cultivate fields of millet or
sorghum on neighboring rain fed land. Livestock is just a minor activity in this area and
farmers instead like to invest in rice. The poor prefer rice as it is less dependent on rainfall,
but financial profits are often reduced by the time inputs are paid and part is consumed at
home. Many of the poor also work on other people’s rice paddies.

In rice production areas, rice serves both as a source of subsistence and as a source of
liquidity. Poorer farmers tend to try to retain such grains they have and sell their cash crops
instead, which in many cases consist of cowpeas which they have intercropped with their
staples. However, in most zones poorer households do often sell some part of their often
meager cereal harvest because they have pressing credit repayments and social obligations to
honor. Rice is partly consumed, partly sold by its growers, but its value on the market means
that poorer growers tend to have to sell it in favor of buying the cheaper staples, and of
repaying the credit on inputs, whether fertilizers or pesticides.




                                                                                              35
It is during late-season rises in the basic millet and sorghum prices that rice plays a buffering
role, increasing in importance until the new crop millet and sorghum become available. For
example, millet prices range from 20-89 percent higher in pre-harvest period
(August/September) as compared to harvest period (October), with an average intra-seasonal
price difference of 44 percent.

With a fodder production of some 10 MT/cycle/hectare, rice production constitutes an
important source of feed for animal production in Niger and, according to the Nigerien
Federation of Rice Producers, rice straw serves as the principal feed source along the Niger
River Basin. Bran which comes as a by-product of rice processing also provides a nutritional
complement which is much appreciated by livestock producers. Cattle feed lots and draft
animal production, in turn, represent important secondary sources of revenues for many rice
producers.


                                         Production
Production figures

Reliable statistics for rice production and consumption in Niger are scarce, which leads to
considerable variances across estimates of production and consumption figures. Recent
studies have employed annual production estimates ranging from 45,000MT to 83,000MT of
rough rice per year. Based on a review of the different sources, and interviews with industry
actors in Niger, this analysis has settled on a figure of 73,000MT as the average annual
domestic production of paddy rice over the recent past, derived from all production systems
practiced within the country. With respect to rice imports, the average volume imported from
2001 through 2006 is reported to stand in the range of 175,000MT of milled rice per year;
i.e., over four time the volume produced (Table 14). Part of this rice is imported by private
enterprises, partly by donor-affiliated projects for the purposes of either direct food aid or
monetization. Of this total imported volume, however, some is likely to be re-exported to
Nigeria and other neighboring countries (see discussion on Markets, below). The estimation
for exports from Niger is about 100,000 MT, but there is no firm data on what portion of this
is from the domestically produced rice, and what portion from imported rice.




                                                                                              36
Table 14. Nigerien Rice: Supply and Demand (MT ‘000)

                                                  Period                               Annualized rate
                                                                                          of change
                        1960’s     1970’s     1980’s       1990’s     2001-2005        40 y      10 y
Harvest Area (ha)
                        11,359     19,380     21,853       22,307       24,272         1.9%       0.8%
Yield/ha                 1.83       1.62       2.60         2.93         3.07          1.3%       0.5%
Paddy Production
                        22,145     30,547     56,847       63,209       73,480         3.0%       1.5%
Milled
Production              13,213     18,226     33,917       37,713       43,841         3.0%       1.5%
Imports (Milled
Eq.)                    1,091       9,183     36,091       45,068       175,000       13.5%      14.5%
Exports                  700         327        0          17,255       104,296       13.3%      19.7%
Domestic
Consumption
(Milled Eq.)            13,604     27,082     70,008       65,526       114,545        5.5%       5.7%
WARDA: 2007 Africa Rice Trends, except for Milled Production (60% of paddy production) and Re-Exports
(Milled Production + Milled Imports – Domestic Consumption), and for adjustments in the domestic
consumption calculations based on other research reports

As with production statistics, consumption estimates also vary considerably from one source
to another. Recent studies range from a low of 3.5 kg/capita (WARDA, 2007) to a high of 24
kg/capita (Moussa, 2004), leaving this analysis with the task of settling on a logical
intermediate figure. Wishing to err on the side of caution, we find ourselves settling on a
figure of 9 kg/capita, or 114,500 MT of milled rice consumed by the Niger market annually.
As discussed later, this average figure varies considerably, with little or almost no rice
consumed in many parts of Niger, and greater consumption rates in urban and rice-
production areas.

As this exhibit illustrates, there has been relatively little change in harvest area, yields or
paddy production over the past 10 years. Imports, however, have exploded during this same
period. This, in turn, has likely fueled increases both in re-exports and in domestic
consumption. With the recent doubling of world rice prices, it is unlikely that these import-
driven levels of domestic consumption and exports to neighboring countries will be
sustainable without major advances in domestic production.

Production systems

There are three principal systems of paddy production operating in the Niger River basin:

    1. Traditional systems in inland valleys and by the river
    2. Private, Irrigated
    3. AHA, Irrigated




                                                                                                    37
Again, there are large differences in the estimates for area and production for these three
systems, and in the following an attempt has been made to synthesize from different sources
and arrive at best estimations (Table 15).

Table 15. Nigerien Rice: Supply by System
 System                   Area in    Share of nat’l   MT/ha   Production    Production
                        Production   rice area                   (MT)       (% of total)
                         (‘000 ha)
 Traditional, rainfed       13.9          57%          1.1      15,000           20%
 Irrigated, AHA             8.5          35%           6.0      51,000          70%
 Irrigated, Private          1.9          8%           4.0       7,500           10%
 TOTAL                      24.3         100%          3.0      73,500          100%

Traditional rice is grown either in deepwater or flood retreat or in inland valleys conditions.
Low water levels in Niger, partly due to silting, are endangering this cultivation system and
providing a further incentive for producers to move towards a system utilizing water pumps.
The traditional rice cultivation is estimated to take place over 13,900 ha of surface in Niger,
accounting for 57% of the total land area in rice price production. Productivity is typically
low in these production systems, due to their vulnerability to unpredictable rainfall patterns,
compounded by their use of low-quality seed, and either irregular or no application of
fertilizers and crop protection products. A large part of these producers have little or no
access to technical assistance. Because of the low productivity of these traditional systems,
yields from this 57% of total hectarage generate a maximum 20% of the country’s annual
rice production, averaging no more than 1.1 MT/ha.

The private irrigation component of Niger’s rice production is made up of small-holdings
which are individually exploited, usually with the support of small pumps drawing from
surface or underground water sources. These farms typically produce one crop of rice per
year, normally during the rainy season, and then turn their productive efforts to the
cultivation of vegetables and other cash crops during the dry season. We estimate that areas
that grow rice in these systems amount to about 1900 ha. Productivity is generally good
under this system, with yields meeting the world average of 4MT/ha. This is the system in
which, according to our field interviews, producer interest is greatest and which is fastest
growing in area, as the traditional systems are quickly waning due to lack of sufficient water
in the Niger river (in the floating/flood retreat rice) or due to unreliability of rainfall (in the
inland valleys). The pumps enable also the cultivation of other crops that often may be more
lucrative than rice, such as onion, tomatoes and fruits.

The exploitations which belong to the large irrigation districts, generally operating as
cooperatives under the direction of the Office National des Aménagements Hydro-Agricole
(ONAHA), derive their water from the major water-pumping operations which border the
Niger River. These areas normally have two crops of rice each year, with an average yield of
3.0-4.0MT/ha per cycle. Although this segment of the country’s rice production grid
occupies only 13,363 ha (but currently only 8500 ha is in rice), it generates the great majority
(approximately 70%) of total domestic production. Moreover, it forms the basis for much of
the commercially-traded domestic rice economy.



                                                                                                38
Past and current management of AHA areas

The great majority of the rice produced in Niger comes from the AHA areas. These areas,
detailed in the tables in Appendix 1, have in the past 20 years undergone significant changes
in the role of the government in the provision of services related to production and
processing. They, as well as the current context for AHA areas, are described below.

Irrigation

The government was instrumental in the development of the irrigation masterworks (AHA)
in the 1960’s, which continue to serve as the wellspring for the majority of the rice produced
in the country. Large investments were made at that time to develop the 8,500 ha currently in
rice production, with the objective of permitting the production of two cycles or rice per year.
Infrastructure included a number of pumping stations available for year-round operation, a
network of irrigation canals and drainage channels, and a system to protect productive land
from inundation by the rivers and canals during the rainy season. The majority of the
pumping stations are equipped with submersible electric pumps which are powered by
electricity from the central grid. The water distribution system is comprised of concrete-lined
primary and secondary canals, connecting to un-lined tertiary canals.

Overall management of the infrastructure is entrusted to ONAHA, although there has been a
progressive devolution of this responsibility to the cooperatives which organize the
individual smallholders who produce rice within the AHA perimeters. These AHA producers
are organized into cooperatives which are responsible for the management and upkeep of
their respective irrigation perimeters, and which look after the full range of costs of operation
and maintenance, based on charges levied against each user-member of the cooperative.
While production remains in the hands of the members of the cooperatives as disponent
beneficiaries, true ownership of the infrastructure installations remains in the hands of the
government.

Input provision

The Centrale d’Aprovisionment (CA) was originally established by the government in 1978
to handle the contributions received from foreign donor agencies. It has historically played a
dominant role in the sale and distribution of seed, fertilizer, crop protection products, and
machinery (pumps, tractors, and mills). These functions have likewise undergone a
progressive devolution into the hands of private importer/distributors.

Over the past five years, CA has not been involved in the distribution of seed, and has
accounted for only 54% of fertilizer volumes. This fertilizer is sold at a fixed, below market
prices, with only transport price varying by location sold. It has not been sufficient for
national markets, and private dealers also sell fertilizers, at higher prices. Various donor-
funded projects are also involved in fertilizer sales.

Currently certified seed is being produced by a cooperative that is devoted for the purpose,
Coopérative Saddia ava, but financial difficulties, rising from unpaid bills by other



                                                                                              39
cooperatives, have caused seed-producing farmers to reduce adherence to production norms,
reducing quality of the seed produced. CPPs are currently privately provided, with
AGRIMEX, a particularly large company, supplying AHA and small private producers.

Finally, Atelier de Fabrication du Matétiel Agricole (AFMA) is also involved in the
production, assembling (from imported parts) and sale of machinery and equipment to
producers and processors of rice; AFMA is allowed to import equipment and parts without
duties, giving it an advantage over others.

Processing

Le Riz du Niger (RINI) was founded in 1967, with 30% state ownership, and operated until
1984 as a monopsony purchaser and processor of all rice produced within the AHA
perimeters. It also collaborated with ONAHA and Société Nigérienne d'Electricité
(NIGELEC) to insure that amounts owed by rice cooperatives to these two institutions were
repaid. It is the only industrial-level rice processor operating in the country, with a combined
capacity at its three plants for 25,000 MT of rough rice per year. Since 1990, however, its
share of AHA production has steadily declined, reaching levels of only 4,000 MT per year at
the turn of the century. Not surprisingly, this underutilization of installed capacity led RINI
to declare bankruptcy in 2002, and to be placed on the list of state companies to be
privatized. Since 2003, however, RINI has resumed operations as designated processor for
the government-owned Office des Produits Vivriers du Niger (OPVN), which is charged with
managing the national cereal reserves. OPVN has, over the past several years, provided RINI
with 7,000-8,000 MT of raw material each year, at CFA 28/kg. This has provided RINI with
sufficient cash flow to remain in operation.

Sales/Distribution

Up until 1984, OPVN was the monopoly importer of rice into Niger. From 1983 until 2003,
its role was limited to management and distribution of rice stocks which entered Niger as
food aid. Since 2003, as indicated above, OPVN has assumed RINI’s former role as
exclusive client for all AHA production. OPVN’s lack of extensive distribution expertise, its
resulting inability to accommodate all AHA volumes, coupled with its reluctance to follow
regional prices upwards in setting its strike price with the cooperatives, has led to more and
more of the AHA volume passing directly into the hands of private buyers, whether for
national markets or for export as rough rice to Nigeria and other neighboring countries.

If the government of Niger appears less engaged in the issues relating to rice production and
import independence, this probably stems from the modest role which rice plays both in the
country’s production and consumption patterns. At the same time, the government may also
be continuing in the direction toward privatization which first emerged in Niger in 1983, and
which has continued at differing rates ever since.




                                                                                             40
Need for increased productivity

Yields in AHA have decreased in the recent 15 years, presumably as a response to pests and
diseases and decreasing soil fertility. There are, however, several areas of intervention which
appear to be indicated:

Increase in irrigated area

Of 24,000 hectares currently in rice production, only 10, 400 hectares are being cultivated
under irrigation. This 43% of rice area generates 80% of the country’s total production, and
earns attractive margins for the farmers who work this crop. Of this total of 10,400 hectares,
only 8,500 belong to the ONAHA system. The following table shows the summary
population of the ONAHA perimeters in the country (Table 16; a more detailed depiction
appears as Appendix I). If these13,400 hectares were all applied to the production of two
cycles of rice per year, this would represent an increase of 4,900 hectares. At current
production levels of 6 MT/ha/year in the ONAHA network, this would increase domestic rice
production by 29,400 MT of paddy (17,640 MT of milled rice), and reduce Niger’s import
dependency from today’s 62% to 46% of domestic consumption. By increasing yields per
cycle from their current 3 MT to 4 MT, as are sustained in most irrigated sectors in West
Africa, across the 13,400 ONAHA hectares, the incremental production generated by this 1
MT/cycle would increase domestic production by 26,800 MT of paddy (16,080 MT of milled
equivalents), improving self-reliance another 14% up to a total of 76%. At this level, Niger
would be more comparable with the self-reliance ratios of its neighbors in Mali (81%) and
Nigeria (75%).

Table 16. Irrigated districts in Niger.

 Irrigated district (Service Regional de)         Area       Number       Number of
                                                             of farmers   cooperatives
 Niamey                                           3894       9765         20
 Tillaberi                                        4469       10579        16
 Gaya                                             51806      1524         9
 Konni 1                                          4187       5846         12
 Diffa                                            295        781          4
 Total                                            13363      28495        61


Use high-yielding varieties, together with good management practices

There are improved varieties, such as those of NERICA (New Rice for Africa), developed by
WARDA, Gambiaka (developed in Mali), Chiannung Sen Yu 30 (Chinese origin) which are
well adapted to the particular conditions of Niger, and which boast yields in excess of
7.5MT/ha/year. Widespread use of these varieties within the country’s irrigated perimeters
would permit a 25% increase in production on the hectarage in production today, and would
reduce the number of additional irrigated hectares which would be needed in order to achieve
self-sufficiency.


                                                                                            41
Although it is estimated that the AHA producers use about one fifth (4000 t) of the current
national fertilizer consumption (20,000 t), it is difficult to know how much of this fertilizer is
applied in AHA rice production. Some producers overestimate their fertilizer needs to allow
them to produce outside of AHA or sell the subsidized fertilizer. At the same time,
cooperatives in the area estimate that they can only satisfy 10% of their fertilizer needs, due
to poor access to finance.

There are indications that soil fertility in the AHA areas has decreased, and that current
fertilizer recommendations do not take into account deficiencies in micronutrients,
particularly S and Zn.


                                          Processing
Rice processing was, for many years, divided between village-level millers and parboilers, on
the one hand, and RINI (Riz du Niger), the country’s largest industrial-scale rice processor.
RINI was established by the government in 1967 as a partially state-owned enterprise. RINI
enjoyed exclusive right to transform rice grown on the AHA perimeters, until its hold was
relaxed under various governmental liberalization initiatives through the late 1980’s. Since
that time, RINI struggled unsuccessfully to maintain efficient levels of operation at its three
processing plants, before finally being declared bankrupt in 2002, and placed on the list of
privatization prospects by the government.

Over the past twelve years, three smaller private processors (mini-rizeries) entered into
operation:

   • The Ibrahim Beidou plant in Gaya, begun in 1996, with a total capacity of 1,300 MT
     per year
   • Société SSL in Niamey, founded in 1997, with a capacity of 2,400 MT per year, and
   • SOTRAGRI in Kollo opened in 2002, with a capacity of 2,400 per year.

These three operations, with an aggregate capacity of 6,100 MT of rough rice per year, are
dwarfed by the 25,000 MT capacity of RINI. In terms of volume received from the AHA
producers, however, capacity utilization is comparable, as shown in the following table in the
CIRAD report of 2002 which depicts the process and trade in rice from AHA areas.




                                                                                               42
                                     Producers
                                     AHA= 60000 t
 Home consumption
 = 27 700t
                                         11100t




                                                               12 500t
                             Collectors = 23600t                                 Cooperatives =18 400t
                   2800t


                             22800                800t                   2400t




               Village mills= 25600t                Mini-rizerie =                    RINI = 3500t
                                                    3200t

Figure 1. Processing and trading of rice in AHA areas. Source: CIRAD, 2002.

As the table shows, 46% of the 60,000 MT produced on the AHA areas is consumed by the
AHA producers themselves. Another 31% is handed over the cooperatives which administer
the AHA, which the cooperatives hand over in turn to collectors, to RINI and to the mini-
rizeries. The collectors then turn to the village mills and the mini-rizeries for their processing
needs. From this flow diagram, we can deduce that, of the 54% of AHA production which
was processed, the mini-rizeries accounted for 10%, RINI for another 11%, and the village
mills the overwhelming majority, remaining 80%. As described above, since 2003, RINI
has been the designated processor for the government-owned Office des Produits Vivriers du
Niger (OPVN), which is charged with managing the national cereal reserves. OPVN has,
over the past several years, provided RINI with 7,000-8,000 MT of raw material each year, at
CFA 28/kg. This has provided RINI with sufficient cash flow to remain in operation, and
increased its share vis-à-vis ‘mini-rizeries’. However, quality control is a problem for both
mini-rizeries and RINI, as their equipment is reportedly too antiquated to meet the demands
of the urban consumers and export markets.

Finally, although no such breakdown exists for the 30% of domestic production which comes
from non-AHA sources, almost all of this production remains in or near the villages where it
is produced. It is therefore processed either by hand pounding (particularly the traditional
systems) and village mills.

Therefore most of the Nigerien rice is processed with village mills. The village mills are not
equipped to generate a product which can compete with imported rice processed in facilities
with integrated quality control systems, and which can be relied upon to generate consistent
supplies of rice which is white, free from impurities, a limited percentage of broken rice.
Most commonly, the low-quality and simplicity of these village mills results in low milling


                                                                                                 43
percentages, at around 50%, and in poor quality rice that is broken and mixed with bran and
pebbles.

Often, parboiling is associated with processing. Our field study indicates that about 1500
women are involved in parboiling. They purchase paddy directly from farmers, parboil it,
mill it and then sell either to wholesalers, to local markets, or to Nigerian traders. Most of
these women process small quantities, two to four bags per week. Interviews with these
parboilers during the field study suggest that they are constrained by limited funds available
to purchase sufficient quantities of paddy, unavailability of paddy at times, and inefficient
techniques of parboiling.


                                         Markets

Consumption of rice

Unlike its role in most of West Africa, where rice consumption has evolved into a staple
commodity of broad-based consumption, rice in Niger plays a much smaller role in national
production and consumption patterns. Indeed, it represents only 2.5% of the country’s cereal
production, far behind the status enjoyed by sorghum and millet. In addition, rice
consumption is thought to be much more of an urban phenomenon. In a country where 80%
of the population still lives in rural areas, this would help to explain the low per capita
consumption of 9 kg/capita, compared to WARDA indications of 70 kg/capita in Senegal,
Guinea and Cote d’Ivoire, and a West Africa-wide average of 18 kg/capita. Indeed, there is
only one other country in West Africa – Chad, at 7.3 kg/capita – where per capita
consumption is believed to be in the single digits. What little rice is consumed in the rural
areas of Niger is thought to come from the 15,000 MT of traditional production grown in the
nearby area, and perhaps transformed by pounding or by village mills. The bulk of urban
consumption, on the other hand, is drawn either from the rice produced domestically at the
ONAHA areas or by private irrigation producers, and some of it transformed by one of the
industrial mills (RINI or one of the three “mini-rizeries”), or imported in milled form. It is
estimated that two-thirds of this urban consumption is supplied by imported product, with
only one-third coming from domestic production.

Descriptions of the Niger market reveal two distinct channels of distribution within the
country. The rural population, which constitutes 80% of the country’s consumption base,
exhibits very low average levels of rice consumption, with consumption more concentrated
in locations that are in vicinity of rice growing areas. What little they do consume is
generally drawn from nearby production grown under one of the three traditional systems,
then parboiled by local artisans and milled by hand pounding or in small village mills. The
urban population, on the other hand, demonstrates relatively higher levels of consumption,
accounting for the disappearance of most of the domestically-grown irrigated rice and
imported rice (some of both is exported to Nigeria and other neighboring countries).
Although there are no reliable statistical tabulations regarding urban rice consumption
patterns in Niger, it is universally agreed that the over-riding determinant of for the great



                                                                                           44
majority of consumers is price – not surprising in a country where 63% of the population
lives below the poverty level.

The following table exhibit represents an update to a 1993 ENBC survey, based on 2001-
2005 data for population, which tries to relate income and location (rural vs. urban) and
domestic rice consumption (Table 17). According to this exhibit, 58% of national
consumption is accounted for by the 20% of the population which lives in cities. Caution is
needed, however, as the figures merely extrapolate from consumption patterns of the early
1990s which may have likely changed somewhat.

Table 17. Estimated rice consumption by population category.
Status     % of          % of         Population     Consumption/          Consumption
           population consumption                    Capita
Rural          50%           11%      6,500,000          2.4 kg            12,600
poor
Rural                        31%
non-poor       30%                    3,900,000          11.7 kg           35,509
Urban          13%           26%      1,700,000           23 kg            29,782
poor
Urban                        32%
non-poor       7%                     910,000            52.7 kg           36,654
Total         100%          100%      13,000,000         8.8 kg            114,545 MT
Based on 2001-2005 data: 80% rural, 20% urban, and 63% poor, 37% non-poor

Far from expressing a preference of one origin or another, consumers in the cities are often
not aware of the availability of domestic rice in their markets. As a 2004 study funded by the
Projet d’Appui a la Filière Riz (PAFRIZ) put it, “Niger is undergoing a progressive evolution
from a millet/sorghum civilization to a rice civilization. There is no long-standing tradition of
rice usage, given that the product’s introduction into the country was quite recent. Outside of
residents of production zones and transplants from such zones now living in towns, the first
exposure for the majority of consumers comes in the form of imported rice.”

The same PAFRIZ study cited in the preceding paragraph also provides a summary profile of
the attitudes of the two urban consumption categories with respect to domestic rice:

  • “Faithful Buyers”: These consumers are prepared to travel away from Niamey to seek
    out local rice. These are generally men, 50 years old on average, white-collar workers
    with a good level of education. They explain their attachment to local rice in terms of its
    good taste, its freshness, and its nutritional characteristics. At the same time, they
    complain about local rice due to its limited availability in Niamey, frequent absence
    from normal rice distribution centers, impurities (dirt and pebbles), and its high levels of
    brokens
  • “Non-Buyers”: Large families, in which those surveyed have never purchased local rice
    and are not aware of its existence. For these consumers, good rice has no particular
    origin. What matters is that it absorbs as much water as possible, thereby feeding more
    people, and that it is cheap.


                                                                                              45
Yet more evidence of the scarcity of domestically-produced rice in the urban markets of
Niger can be found in the management of the local purchase requirement which the law
stipulates. Officially, the government requires that, for every metric ton of foreign rice which
they import into Niger, importers are required to purchase 100 kg of domestic rice. The
government reduced this requirement from 10% domestic content to 3% domestic content, in
light of the very limited supplies of domestic rice available. Even this 3% rule has now been
suspended, and importers are allowed to import with no countervailing local purchase
requirement.

Rice imports

It is reported that the majority of rice imports originate from Pakistan, China, India and
Thailand, although there is no statistical breakdown of volumes by country of origin. In any
event, the two oligopolistic importers of rice operating in Niger do not negotiate directly with
the exporting countries, but rather with international traders,

The table below shows the volumes and values of official rice imports into Niger from 2001
through 2006 (Table 18).

Table 18. Volume and value of rice imports into Niger.
   Year         Volume                 Value
   2001         161607t        28 993 000 000 FCFA
   2002         262745t        35 366 290 691 FCFA
   2003         149000t        20 587 000 000 FCFA
   2004         198044t        31 656 000 000 FCFA
   2005         260835t        34 685 000 000 FCFA

The importers contend that, in order to deal direct with exporters in the countries of origin,
buyers must be in position to import 2-3 vessels at a time. This minimum order quantity
forces Nigerien importers to deal through intermediaries.

Two importers of rice dominate the market in Niger, and may be thought of as constituting
an oligopoly. One imported 60,000 MT of rice in 2007, and claims to have already brought in
40,000 MT through the month of April of this calendar year.

With respect to distribution margins for imported rice, it should be noted that parboiled Thai
rice is rarely seen on the Niger market. The most commercially available imported format is
the 25% broken, irrespective of origin. Some of this is re-exported to neighboring countries,
primarily to Nigeria. Contrary to reports which indicate an import price of FCFA 160/kg,
importers report that this grade, at FCFA 310-320/kg, is comparable in cost to the 5%
brokens grade (Table 19).




                                                                                             46
Table 19. Cost components of imports from Tema.
Cost Components                    Value/MT                 Margins
                                    (FCFA)               (% of Dlvd Cost)
CIF, Tema                            216465                   83.3%
Customs & Loading                     3000                     1.2%
Transportation                        40000                   15.4%
Discharge                              300                      .1%
Duty                               suspended                      -
Delivered Cost, Niamey               259765                  100.0%
Selling Price                        300000                   15.5%


Our estimated breakdown of margins by level of intermediation is as follows (Table 20).

Table 20. Sales prices and margins at different levels for imported rice.
Levels             Sales Price/kg         Margin/kg
Importer                   300f                      40f
Wholesaler                 320f                      20f
Retailer                   350                       30f


Rice exports

The exports of imported and locally produced rice are estimated at about 100,000 T (Table
21) but as mentioned, there is not data on the share of re-exports and export of domestic rice.
Our field research indicates than in the Gaya alone, there are 20 large traders who trade
domestic rice with Nigerians, typically paying very high fees for these unofficial exports.
For example, typical fees on the road from Gay to Kamba in the Nigerian side are estimated
at 30,000 CFA for 100 bags of paddy; at times, additional 200,000-400,000 CFA has to be
paid. These Nigerien traders also go to Savalou, Benin, located over 600 km from Gaya. At
the same time, Nigerian traders come to Gaya, Kollo and Tillabéri to purchase paddy and
bring it to Nigeria for processing.




                                                                                            47
                             Rice Value Chains in Niger

AHA Producers (Irrigated, Full Inputs)

Production on the major irrigation perimeters generates 70% of Niger’s national rice
production, and constitutes an even higher percentage – up to 83% according to some
estimates – of the domestic rice which is traded commercially either in the urban centers or
for export. The following illustration describes the costs incurred in a 105-ha AHA
employing the full range of recommended inputs and agricultural practices (Table 21).

Table 21. Costs in AHA with recommended practices.
Concept                   Unit      Unit Cost           Quantity     Total        Cost
                                                                     Cost         Per
                                                                                  Hectare
Charges
Nursery
Labor                       0,25ha         5000         420            2100000          20000
Leveling                    0,25ha         6000         420            2520000          24000
Seed Purchase               Kg               120       6300             756000           7200
Planting                    Ha/day         1000         105             105000           1000
Fertilizer (NPK)            Kg               240        840             201600           1920
Transport of fertilizer                      200        105             210000           2000
Crop Protection             Service        4000         105             420000           4000
Irrigation                  Cycles         1000         630             630000           6000
Transplanting               0,25ha         1000         420             420000           4000
Transport of transplants    Trip             750        210             157500           1500
Cultural Practices
Replanting                  0,25ha         6000         420            2520000          24000
1st Weeding                 0,25ha         6000         420            2520000          24000
2nd Weeding                 0,25ha         6000         420            2520000          24000
NPK                         50kg Sack    13500          420            5670000          54000
Urea                        50kg Sack    13500          420            5670000          54000
Bird Control                Hrs/day        1000        2100            2100000          20000
Harvest                     Ha           30000          105            3150000          30000
Threshing                   Sack             750       8400            6300000          60000
Bag                         Empty Bag        300       8400            2520000          24000
Bagging Labor               75kg Bag          15       8400             126000           1200
Transport of the Harvest    Kg               100       8400             840000           8000
Warehousing Costs           Days              25     15750              393750           3750
Assessments 1               0,25 ha      30000          420           12600000         120000
Interest Expense                            0,02                       1360800          12960
TOTAL CHARGES FOR 8400 BAGS OF ROUGH RICE = 630 TONNES =               55810650         531530
88,588/KG WITH A YIELD OF 6 MT/HA




                                                                                         48
It includes provisions for interest expense and the assessment levied by the cooperative for
provision of electricity, water, maintenance of irrigation works, and membership fees. Hence,
it can be considered somewhat over-stated in relation to the actual costs of operation incurred
by the average AHA grower. In summary, then, this value chain may be depicted as follows:



Labor       Seed        Others              Labor       Input Materials    Threshing     Bagging     Transport        Storage
 CFA        CFA          CFA                                                 CFA          CFA          CFA             CFA
20,000      7,200       44,420              N 2,600        N 9,600          60,000       25,200        8,000           3,750



Nursery   Re-Planting   Weeding          Fertilizing  Bird Control Harvest         Assessment      Interest       Marketing
 CFA        CFA          CFA               CFA            CFA       CFA               CFA           CFA             CFA
71,620     24,000       48,000                           20,000
                                          108,000 1.06 MT.Ha (Actual yield)
                                                                   30,000           120,000        12,960          96,950
                                                @

                                                       @ 6.0 MT/Ha

                                     Cost of production/Ha : N67,200 / (N (CFA 88.59/kg)
                                 Cost of production/Ha : CFA 531,530 / 16.80/kg)
                                     Total selling value/Ha: N 47,520 / / 44.00/kg)
                                 Total selling value/Ha: CFA792,000(N(CFA 132.00/kg)
                                 Net profit/kg
                                     Net profit/kg         : 260,470 (N 27.20/kg)
                                                       : CFA(N 19,680)//(CFA 43.41/kg)

                                 Price variations (CFA/kg)
                                     Price variations (N/kg)
                                     Farm = = 44.00
                                 Farm gategate 132.00
                                     Processing = ??
                                 Processing = 244.00
                                     Trade       = ??
                                 Wholesale = 280.00
                                              = = ??
                                     Wholesale 310.00
                                 Retail
                                     Retail      = ??




Under this system, the producer earns a 49% margin on the sale of his product, generating a
return of CFA 260,470 per hectare, or CFA 43.41/kg of paddy rice produced.


Private Producers (Irrigated, Selective Inputs)

The cost assumptions for this system are different from those of the AHA case, despite the
fact that both systems are irrigated. Based on interviews with producers and researchers,
costs per production cycle are somewhat less for seed, and significantly less for fertilizer
(presumably due to lesser application rates). Moreover, there is no charge for cooperative
assessments, since the private irrigated operations are generally free-standing and
independent. Although the annual productivity for this system appears to be lower, this is due
to the fact that AHA growers are assumed to produce two crops of rice per year, while
private growers typically produce one cycle of rice during the rainy season, then follow up
with a crop of vegetable or fruit crops during the dry season. The benefit of this counter-
seasonal produce production is not shown in this value depiction. Still, taking this difference
in crop rotation into account, this system actually generates a higher yield per cycle that is
realized on the AHA perimeters. Under this system, the producer can look forward to a 62%



                                                                                                                 49
over his costs, yielding a favorable return of CFA 201,691 per hectare, or CFA 42.41/kg of
paddy rice produced.


                                                        I



 Seed      Transport   Crop Pro.    Fertilizing    Laborl                     Irrigation        Packaging
 CFA         CFA         CFA          CFA           CFA                          CFA              CFA
20,000      5,600       32,000                    168,000
                                     25,333 1.06 MT.Ha                          61,043           14,333
                                           @                 (Actual yield)

                                                   @ 4.0 MT/Ha

                                Cost of production/Ha : N67,200 / (N (CFA 81.57/kg)
                            Cost of production/Ha : CFA 326,309 / 16.80/kg)
                                Total selling value/Ha: N 528,000 / 44.00/kg)
                            Total selling value/Ha: CFA47,520 / (N (CFA 132.00/kg)
                            Net profit/kg
                                Net profit/kg         : 201,691 (N 27.20/kg)
                                                  : CFA(N 19,680)//(CFA 43.41/kg)

                            Price variations (CFA/kg)
                                Price variations (N/kg)
                                Farm = = 44.00
                            Farm gategate 132.00
                                Processing = ??
                            Processing = 244.00
                                Trade       = ??
                            Wholesale = 280.00
                                         = = ??
                                Wholesale 310.00
                            Retail
                                Retail      = ??


Traditional Rain Fed Production (Floating, Swamp or Upland)

In passing from irrigated to non-irrigated systems, we pass from rigorous use of agricultural
inputs (fertilizer, crop protection products) to an essentially manual system of cultivation.
While there are differences which can be observed in the cost structures of each of these
three systems, they are all characterized by total costs, and yields, which are significantly less
than either of the two irrigated systems described above.

                                                        I



 Seed      Transport   Crop Pro.    Fertilizing     Labor                     Irrigation        Packaging
 CFA         CFA         CFA          CFA           CFA                          CFA              CFA
25,000      2,333                         @ 1.06   119,083
                                                   MT.Ha     (Actual yield)                       5,833


                                          @ 1.1 MT/Ha

                            Cost of production/Ha : CFA 152,249 / (CFA 138.40/kg)
                                Cost of production/Ha : N67,200 / (N 16.80/kg)
                                Total selling value/Ha: N 145,200 / 44.00/kg)
                            Total selling value/Ha: CFA47,520 / (N (CFA 132.00/kg)
                            Net profit/kg
                                Net profit/kg     : (CFA 7,049) / (CFA -6.40/kg)
                                                      : (N 19,680) / (N 27.20/kg)

                            Price variations (CFA/kg)
                                Price variations (N/kg)
                                Farm = = 44.00
                            Farm gategate 132.00
                                Processing = ??
                            Processing = 244.00
                                Trade       = ??
                            Wholesale = 280.00
                                         = = ??
                                Wholesale 310.00
                            Retail
                                Retail      = ??

                                                                                               50
It is, of course, implausible that growers would remain in the business of producing rice,
even where much of it is destined for auto-consumption, where the production does not
provide a positive return. It is much more logical to assume that the costs here are over-
stated, either in the area of seed, or under the heading of labor. In either case, a marginal
reduction in either area would yield a sufficient difference in cost to push the overall
operation into the black. More significant, for the purposes of this analysis, is the fact that
margins for traditional production are close to break-even levels, and yields for this style of
production are only one fourth to one third that of the irrigated alternatives. If one of the
objectives of this report is to identify those value chains whose development would decrease
import dependency while increasing grower incomes, the traditional rice production systems
do not appear to hold much promise.


                      Actions to Improve Nigerien Rice Sector
At the present time, of course, there is a great deal of turbulence in the rice market due to the
dramatic shifts in the global market. A metric ton of 25% brokens purchased at € 330 one day
can easily cost € 480 one week later. With such price volatility, margins are no longer
guaranteed, and importers are careful not to squeeze distribution channels more than
necessary. At the same time, the government is on the alert to avoid any social unrest due to
rampant price increases, and often responds to such situations with an interventionist
approach to control the prices of staples. This prospect further heightens the conservative
approach which importers must adopt in times of such dramatic price movements.

Under current world market conditions, the availability of imported rice at any cost, much
less at the cost to which urban Nigerien consumers have become accustomed, is in question.
Fortunately, the attachment between Niger’s consumers and their rice products is far weaker
than that of the numerous countries (including Philippines, Bangladesh, Cote d’Ivoire and
Haiti) where civil unrest has developed ion response to recent spikes in key commodity
prices. Rice does not yet represent a key commodity in Niger, and it is difficult to imagine
shortages of imported (or domestic) rice leading to popular disturbances. At the same time,
the higher prices which the market will presumably be prepared to bear for the smaller
supplies of rice which will now be available to domestic consumers should represent an
incentive and an opportunity for Niger’s rice growers and processors. Higher prices could
lead private irrigated growers to alter their rotation plans, and put in a second cycle of rice
during the dry season in place of their customary vegetable crops. Higher prices could lead
all growers to re-consider their adherence to best practices in inputs use, especially as
concerns high-yield seed varieties and recommended fertilizer applications.

At the same time, yields need to be increased through greater use of improved seeds,
fertilizers and crop protection products. It is widely argued that this under-utilization of
high-quality inputs stems less from the irrigated producer’s conviction as to their benefits,
than to his inability to gain sufficient credit with his suppliers to permit him to re-pay the
costs out of the proceeds from sale of the crop. Credit programs could readily be designed to
address this limitation, provided public and private lending institutions were provided with
adequate incentives to undertake the risks inherent in agricultural lending.


                                                                                              51
In order to be successful in filling, on a sustainable basis, the void left by import scarcity,
growers and processors will need to provide consumers with a quality of product which they
find acceptable, and a continuity of product which converts consumer purchases of domestic
rice from an experiment into a habit. To accomplish this, growers and processors should
consider the introduction of packaging which is easily recognizable, and as distinct as
possible from the packaging utilized for imported rice. An elementary program of branding
and brand identification would be a logical next step. In order for branding to be successful,
however, it is essential that the branded product meet consumer expectations with regard to
cleanliness, uniformity and freedom from adulteration. Keeping this quality promise has been
a long-standing problem for domestic producers and processors alike. Current market
conditions provide both parties with a unique opportunity to make modest investments in
quality improvement and brand identification which will yield considerable dividends once
normal competitive conditions return.

Therefore, Nigerien rice sector will better fulfill the needs of its consumers, and thereby
reduce imports in the face of increasing demand, through implementation of the following
actions:

  • Ensure that quality inputs are available for rice producers: This should be done by
    extending the network of input dealers and simultaneously ensuring that farmers have
    access to information on good management practices, as well as markets for their rice,
    to ensure that higher productivity will result to the benefit of the producer.
  • Improve credit access to all actors of the value chain: This includes credit for input
    suppliers, input credit for farmers, credit for processors to improve equipment and
    invest in stores, and credit for traders to store their produce. An important focus for
    input credit for farmers will be for motorpumps to ensure a successful transition from
    the traditional system to a small-scale irrigated system, particularly given the
    increasingly uncertain rainfall and lowering water levels in the Niger river.
  • Improve rice quality, and educate Nigerien consumers about the benefits and
    strengths of domestic rice: Nigeriens are becoming rice consumers but unlike their
    neighbors to the West, they are not yet conscious of the value of domestic rice. This
    information campaign has to go hand-in-hand with efforts to ensure that local rice is of
    good quality and therefore competitive vis-à-vis the imported one.




                                                                                            52
III. Nigeria

                                          Production
Past trends in production

In its Presidential Initiative on Increased Rice Production, Processing and Export,
inaugurated in 2002, the Federal Government of Nigeria declared its intention to become
self-sufficient in rice production by 2005, and to become a net exporter of rice by 2007.
This goal was to be accomplished by increasing paddy production to 10.3 million metric
tons by 2005, and to 15.5 million metric tons by 2007. In the process, 3 million hectares of
land were to be put into rice cultivation. Although land given over to paddy production
reached – indeed, exceeded –the 3 million ha mark, the resulting production fell well short
of projections (Table 22). As to imports, they averaged just under 1.6 million metric tons
during the five-year period from 2003 through 2007, an increase of 14% over the previous
five-year average.

Table 22. Nigerian Rice: Imports and Consumption
                               2003      2004    2005     2006   2007      Annualized
                                                                           Rate of Growth
 Imports (MT, ‘000)            1448      1369    1777     1600   1700      7.3%
 Consumption (MT, ‘000)        3750      4000    4250     4350   4450      4.4%
 Import Dependency             39%       34%     42%      37%    38%
USDA/FAS – Grain: World Markets and Trade, January 2007

                                                     Indeed, rice production in Nigeria has
                                                     been unable to keep up either with
                                                     increases in harvest area, or with
                                                     increases in consumption, over the past
                                                     forty years, and particularly so over the
                                                     past ten. Indeed, the dramatic increases
                                                     in production area from 1995 up to
                                                     2004 have been largely offset by no-
                                                     less-dramatic declines in yields, which
                                                     have declined from an average of 2.1
                                                     MT/ha in the mid-1980’s, down to 0.96
                                                     MT/ha in 2004 (Table 23). The average
                                                     yield of 0.96 MT/ha stands not only
                                                     54% below peak yields of the 1980’s; it
is only 23% of world average yield of 4.1 MT/ha which prevails today. It is this relentless
decline in unit productivity which appears to have undermined any of the programs or goals
which have been set over the past decade in Nigeria with regard to rice production policy.




                                                                                            53
Table 23. Nigerian Rice: Supply by System, 2004
% of Total ha                  Area in           Share of Natl.     Yield       Production     Production
                         Production (‘000 ha)    Rice Area (%)      (MT/ha)     (‘000 MT)      (% of total)

Lowland, Rain-Fed              1740.88               47%             1.08         1877.3           53%
Upland, Rain-fed                1111.2               30%             0.54          602.1            17%
Irrigated                       629.68               17%             1.46          920.9            26%
Deepwater, Floating              185.2                5%             0.57          106.3             3%
Mangrove                         37.04                1%             0.96           35.4            1%
TOTAL                            3704               100%             0.96           3542           100%
 Authors’ calculations, based on WARDA: Africa Rice Trends, 2007 Brief, modified as to Total Production
and Yields
At the current average yield of 0.96 MT/ha, Nigeria would need to devote an additional 2.6
million hectares of harvest area to achieve self-sufficiency. If, on the other hand, current
productivity could be raised to the world average of 4.1 MT/ha, the resulting production
within Nigeria would increase to 15.2 million metric tons of rough rice, equivalent to 10.2
million metric tons of milled rice, which would provide Nigeria with enough milled rice to
feed its own domestic consumption needs, and to meet virtually all of the import needs of the
remainder of Sub-Saharan Africa (Table 24). On a more practical level, if Nigeria could
achieve the world average yield of 4.1 MT/ha on the 630,000-ha irrigated segment of its
production, rice production would increase by 1.7 (rough rice) or 1.1 (milled rice) million
metric tons. At this level of productivity, 214,000 additional ha of irrigated production would
be enough to achieve self-sufficiency.

Table 24. Nigerian Rice: Supply and Demand
                                                    Time Period                   Annualized Rate of
                                                                                       Change
                                1960’s     1970’s    1980’s       1990’s    2004 40 Years 10 Years
Harvest Area (‘000 ha)          206.6      310.4     849.6        1838.8   3704.0  7.5%      7.25%

Yield (ha)                        1.26      1.69      2.08         1.7        0.96     -0.7%        -5.6%
Paddy Production (MT
‘000)                            264.1     533.2     1758.1       3111.7   3542.0       6.7%         1.3%
Milled
Production (MT ‘000)             137.2     262.5      934.4       1789.6   2370.8       7.4%         2.8%
Imports (Milled Eq., MT
‘000)                             1.2      205.9      390.5       471.2       803.6    17.7%         5.5%
Domestic Consumption
(Milled Eq., ‘000 MT)            138.4     468.4     1324.9       2260.8   3174.4       8.2%         3.4%
WARDA: Africa Rice Trends, 2007 Brief


Reasons for low and declining productivity

Reliable crop statistics are difficult to come by in Nigeria, and material variances exist from
one source to another in terms of most agricultural parameters (as should be evident in the



                                                                                                     54
import figures given by WARDA and USDA in the tables above) But most sources seem to
converge on declining yields as a determining variable in Nigeria’s inability to grow its way
out of import dependence. While sound statistical data may be lacking, however, there is
certainly no lack of reports, studies, symposia and conferences on the topic of rice production
in Nigeria. Most have addressed this issue of low productivity, generating, in the process, a
long list of possible contributing factors, discussed in the following.

Use of recycled and poor quality seed

Farmers’ use of improved seeds is still limited. Farmers may purchase seeds only once every
so many years and presently only about 10 percent of rice farmers are estimated to use
improved seeds (across crops, 12% of need for improved varieties of seed are met). Annual
certified seed production is estimated at only 5,000 MT, with 50% of this coming from the
private sector seed companies and the other 50% from the Government of Nigeria and
community-based seed producers. A few private seed companies source their foundation
seeds from the National Seed Service or Research Centers; in the case of rice, this is from
WARDA. Only one company produces its own foundation seed. Direct government
interventions in the purchase and distribution of seed, coupled with weak regulatory
oversight, explain the low private sector involvement in seed production and trade. In a
recent survey, 60% of the seed was found to be below national quality standards and only 4%
was certified by the national seed service. Most commonly, farmers reserve some of their
harvests for subsequent plantings. To improve this aspect of rice production, the seed sector
in Nigeria needs increased attention.

Low use of fertilizer

Average fertilizer use in Nigeria is low, at 8 kg/ha. It has greatly declined, from over 1.5
million tons used in the early 1990’s to 500,000 tons in 2007. Much of the fertilizer that is
used does not arrive in time and hardly reaches the rural poor farmer. At present, federal and
state governments subsidize and distribute more than two thirds of the fertilizer that is sold in
the country, much of it benefiting large farms and government officials, or is moved across
the border to neighboring countries. The rest is supplied by the private sector. The recent
elections stimulated more promises of subsidies and support to the rural electorate. Although
the Federal Ministry of Agriculture is currently distributing subsidized fertilizer, it has
recently committed to fully withdrawing from subsidies starting 2009, and making the funds
that will become available to improve input-related performance of the agricultural sector.

The Federal Government’s tenders for fertilizer (250,000 and 500,000 tons of fertilizer in
years 2005 and 2006, respectively) are only about 4 and 8 percent, respectively, of the
estimated requirement of 6 million tones of fertilizer for Nigeria’s agricultural needs. It
subsidizes this fertilizer by 25 percent and distributes this same quantity mostly through State
indents. It could also sell directly to end users at the same 25 percent subsidy. State
Governments also procure fertilizers from functional fertilizer blending plants to supplement
federal allocations. Some states in addition import fertilizers directly. The states apply deeper
subsides in addition to the Federal subsidy. As a result, the fertilizer market is neither




                                                                                              55
regulated nor uniform. Fertilizers can cost less than N1,500 per bag of 50 kg in some states
and up to N2, 500 per bag in others and between N2700 – N4,500 in the open market.

The private sector used to import fertilizers. Not much of this happens now mainly due to the
uncertainty in the fertilizer pricing system. It is expected that the fertilizer supply constraint
will be partly alleviated with the production of urea in the country which is expected to start
at the end of 2008. The different levels of subsidies distort the markets and many
entrepreneurs who ventured into fertilizer imports got their fingers burnt. There is a need to
review and re-structure the fertilizer market in Nigeria, as the pricing regime is presently
chaotic to say the least.
Currently, over 75% of the fertilizer sold in Nigeria is either urea or NPK 15-15-15. A recent
study by the USAID MARKETS Project showed that many production areas in the north are
oversupplying P and undersupplying K. The project has therefore advocated an update to
fertilizer recommendations and has proposed the potential of soil test kits as a tool to ensure
that the types and quantities of fertilizer required are adhered to. Finally, fertilizer quality is a
major issue in the country, as there is no regulatory mechanism currently in place to ensure
truth-in-labeling to assure that farmers get what they pay for.

Limited amount of irrigated land in rice

The irrigation potential in different regions of Nigeria’s Niger River Basin, as identified in
the National Water Resources Master Plan (NWRMP), is presented in Table 25.

Table 25. Irrigation potential in different regions of Nigeria’s Niger River Basin.
 Region                                         Irrigation potential (ha)
                     In public schemes                        In fadama                  Total
 Niger North              146590                               299000                   445590
 Niger Central            183140                                34000                   217140
 Upper Benue              435430                               320000                   755430
 Lower Benue               61230                               140000                   201230
 Niger South               59120                                   0                     59120
 Total                    885510                               793000                  1,678,510
   Source: National Water Resources Master Plan (NWRMP).

Many analysts agree that a major constraint in realizing self-sufficiency in rice production
and produce for export is lack of functional irrigation. Currently rain-fed upland and lowland
rice account for about 77 percent of the total production and are cropped between May and
October in the South and between June to October in the North. Rain-fed rice production
allows for only one planting per year and increases the farmer’s risk as he is dependent on
unpredictable rainfall patterns. It is imperative that irrigated rice cultivation should play a
critical role in Nigeria’s rice production systems in order to achieve the nation’s objective as
stated in the Presidential Initiative on the rice sector.

Nigeria has already undertaken an impressive array of irrigation projects. Most,
unfortunately, have been abandoned, failed to realize their full potential, and/or are in need of
rehabilitation. An inventory of these existing and abandoned irrigation schemes throughout
the country was undertaken prior to the preparation of the Blue Print for the Presidential


                                                                                                   56
Initiative on Increased Rice Production Processing and Export. A total of 99 abandoned
irrigation schemes (details of which are attached in Appendix 2), located in 26 states, require
rehabilitation of areas totaling 47,300 ha. This rehabilitation would release 47,300 ha of
irrigable land for immediate cultivation under improved water management. Assuming that
commercial rice production under full-control irrigation should easily support yields of 4.1
MT/ha, such yields on the existing 630,000 irrigated hectares in production, along with these
incremental 47,300 ha, would provide Nigeria with additional rough rice production of 1.8
million metric tons, or 70% of the additional production required for self-sufficiency.

Lack of good agricultural practices

Presently most extension and advisory services are in the public domain. Many assessments
of the Nigerian rice sector concur that an important factor contributing to low rice yields in
Nigeria is the lack of funding to the ADPs who are responsible for delivering these services.
This has created a situation where extension providers do not have funds to visit with farmers
in their fields. Private extension organizations are beginning to emerge and demonstrate how
quickly yields can be increased with sufficient inputs and good agricultural practices.

Some of these private extension efforts are already ongoing. IFDC has trained 450 input
dealers in pilot sites to serve as private sector extension service providers (PSES) and is
currently assisting the government to develop a voucher scheme involving technical support
to farmers. USAID-Nigeria MARKETS is also promoting private sector led extension
delivery services in targeted states for different commodities. USAID Nigeria MARKETS is
partnering with OLAM in this program and provides the private extension outfit that delivers
extension services to farmers which includes agronomists, technicians and monitoring and
evaluation specialists. Since the program’s inception in 2005, 1000 out-growers cultivated
1000 ha with improved seeds and necessary agricultural inputs. In 2006 another 3000
additional ha were added by new entrants. In 2007 a total of 6,000 ha are being cultivated by
5700 farmers. Farmers under the program are getting average yields of 3.2-3.5 tones of
paddy per ha. It is hoped that soon farmers will be getting yields of up to 5-6 tones of paddy
per ha. By 2007 OLAM has a total of 300 ha of demonstrations plots in 7 Local Government
Areas with improved technologies and appropriate husbandry practices. The key elements of
this project are providing agricultural inputs when due, and market outlets for farmers
produce. Farmers are empowered through credit in kind which they pay back with produce.


                                          Processing
Due to consumer preferences in Nigeria, rice processing almost always includes both
parboiling and milling. These two operations can be done either by the same person or
enterprise, or by two different enterprises. Most commonly, paddy is first parboiled either by
producers or specialized parboilers (normally women), after which millers process the
parboiled paddy on a fee basis for producers, traders, or consumers.

A through assessment published by WARDA in 2003 on Nigeria’s processing sector showed
that there were no operational industrial rice mills in the country, and therefore rice milling in


                                                                                               57
Nigeria is ‘a cottage industry’. Nevertheless, there was significant variability in the size of
the mills surveyed, and the researchers concluded that about 30% of the mills have capacity
below 150 kg/hr, 58% that of 150-300 kg/hr, and 12% that of 300-500 kg/hr. (There were
some larger mills, up to 5000 kg/hr, in the study, but they were overrepresented.). The
smaller the mill, the higher was their capacity utilization, but differences in these three
categories were relatively small (51-62%). Most of the mills were of the Engelberg types of
various sizes, with only less than 25% using a higher technology.

The rice processed on an annual basis was the largest, at 61% of all rice, for the medium-
sized mills (150-300 kg/hr), with the larger mills processing 23%, and the smallest 16% of all
rice. The distribution between these sizes varied by state, and was often related to current
rice production systems (areas with traditional systems and low productivity had smaller
mills), historical factors, or consumption patterns. The study also confirmed the seasonality
of milling activities, with almost half of the volume being milled during the last three months
of the year. Many of the miller-traders (41%) were able to store their rice, but those who
milled were dependent on customers. Finally, it was noted that smaller millers often
processed other products in addition to rice.

The field surveys conducted in preparation for this report revealed that some of the top rice
producing states do not have mills to add value to their rice output, while the existing ones in
other states are grossly underutilized. The study pointed to Lafia, Makurdi, Abakaliki as the
biggest rice milling centres. Next to these are pockets of milling activities at Oturkpo,
Katsina – Alla, Vandekia and Ogoja.

Rice quality and standardization are not yet well developed in Nigeria because rice
processing and milling are still primarily conducted at the cottage level. Although the
Standards Organization of Nigeria (SON) is statutorily responsible for preparing the
standards relating to products and for the certification of industrial products, the quality of
rice milled and processed is not regulated based on standards. The result of this lapse is that
Nigerian rice is less competitive in the international and urban elite markets. The low quality
rating and lack of competitiveness of locally milled rice is mainly attributed to sand and
stone contamination, to poor parboiling techniques, and to broken grains. These quality
defects lead in turn to off- odors, lack of uniformity and poor acceptance by the consumer.

The survey also revealed some factors contributing to the features of the Nigerian rice
processing. At the cottage level, the women who are usually involved in processing
(parboiling rice) and the millers show a preference for the old varieties of rice (FARO
8/MAS 204). Overall, the long grain and white varieties which are considered to have a
longer post-cooking shelf-life are also generally preferred. The cost of processing represents
an increasing share of the production cost for local rice. Of this cost, parboiling makes up
75% of the processing cost, with milling contributing 17% and other operations accounting
for the remaining 8%. This has obvious implication for cost effectiveness since there are very
few integrated large milling plants that can handle the parboiling process in the country.
Even these plants have often failed due to problems of operating efficiently for such reasons
as low capacity utilization and idleness during off – peak season. The lack of working capital
also militates against the possibilities of procuring the rolling stocks of paddy from the



                                                                                             58
producers to keep the machines working. Thus profitability is imperiled as large plants
operate only at peak season while the cottage processors operate all year round.

The key problems facing the millers include lack of homogeneity arising from assembling
rice stocks from different producers; mixture of many varieties in batch processing; inclusion
of pebbles, stones, sand and other contaminants, as well as damage to grains. All these arise
because the market for paddy is unregulated, and there is no quality control to mitigate the
wasteage involved in procurement.

The cost of transporting unprocessed rice affects profitability in the latter portion of the value
chain. The field survey revealed that Adamawa State produces very large quantities of rice
but does not have the installed milling capacity to process its production. Therefore paddy
from the State is transported to Abakaliki, Ebonyi State for custom processing at a very high
cost. There is need to explore the opportunity of a Public-Private-Partnership to locate, or
perhaps even re-locate, mills to locations where there are critical masses of rice producers,
linked to a consumer market so as to improve profitability. This requires active
commercialization of proto-type small to medium scale milling machines. For now there is
an information gap regarding the availability of locally fabricated machines nationwide.

Secondly, the high cost of parboiling rice – representing 65%-75% of total processing costs -
- is due to the energy required, even where fuel wood is utilized. There is a need to adopt
energy-efficient parboiling technologies. Improved harvest, post-harvest and processing
technologies offer potential for further cost reductions. Indeed improved harvest and
threshing technologies have potential for important labor savings and quality improvement.

Thirdly, the market price instability for finished rice often results in loss of profits to those
women who, as front-line processors, bear the risk of holding the grains procured from the
farm gate for parboiling, until they are presented to the open market after milling. These
women should be empowered to enhance their performance in this economic function. It is
important that the large millers begin to invest in large storage facilities to stockpile both
paddy and grains, in order to obviate the problems arising from large unutilized capacities in
the mills during off-peak season and from market price instability.

Fourthly, there is a need for infrastructure in the main production areas such as storage
facilities, bore holes (and other clean water sources), good roads for evacuation of paddy or
even the rice at the point of processing.

Finally, processing for value-added must take into account the full recovery of all rice by-
products as most of them easily find use in the production of other goods. This way
profitability is further enhanced. For example, rice bran is a valuable commodity for
livestock feed, domestic fuel and organic manure. The oil from bran is used for cooking, soap
making, and anti-corrosive and rust resistant oils. The rice straw is used in the manufacture
of straw board, thatching, making hats and mats as well as fodder for cattle.

Processing and packaging are critical performance areas. Cleanliness, varietal acceptance,
uniformity, ease of preparation, packaging and branding will all emerge as important points



                                                                                               59
of differentiation for competing millers. This will require a very different set of skills, and
probably a different set of actors and facilities as well, to succeed in competing with, and
eventually marginalizing, imported rice.


                                          Markets
Rice is an important food crop whose popularity and consumption have been on a steady
increase. During the last three decades rice has increasingly become a staple food in most
Nigerian homes. Most of the rice consumed in Nigeria is parboiled rice. In rural areas of the
North, locally grown rice is also consumed without parboiling. Currently about 5.4 million
tones of processed rice are consumed in Nigeria out of which only 3.8 million metric tones
are produced locally. Before 1999, locally produced rice stood at about 1.7 million metric
tones. Although the majority of rice producers in Nigeria are smallholder farmers their
motivation in production is nevertheless more market-oriented than subsistence. This
explains the high aggregate domestic output that comes from the system.

In both urban and rural areas, rice is the first choice food and it is consumed more on a daily
basis than other types of food. It accounts for more than 20% of all meals consumed per
week by a typical household. There are three levels of clientele in the rice market – rural
poor, urban poor and urban elite. A fourth category – export buyers – may become relevant if
government programs are successful, but it is not meaningful today.

   1. The rural poor have no clear differentiated demand. They consume the rice in
      different forms: as boiled, fried and porridge. All the available varieties of rice are
      well-suited for utilization in these forms.
   2. The urban poor have preferences as to the characteristics of the rice they consume,
      especially in terms of the organoleptic properties of the rice such as whether the
      grains are broken or not, the level of contaminants, and such things as color of grains
      or post-processing odors. This group would easily acknowledge that the local rice is
      tastier than the imported rice. In essence there is still a market for local rice which is
      mainly due to price differences, which attracts low-income consumers who cannot
      afford to purchase imported rice on a regular basis.
   3. For the urban elite, the rigors involved in further cleaning processed rice before
      consumption are unacceptable, since the imported rice comes as “ready-to-cook”. The
      major determinants of the consumer preference favoring more expensive imported
      rice are the appearance, the cleanliness and the homogeneity of the imported rice. It is
      among these urban elites that consumer preferences in terms of quality of rice begin.

As described above, a range of factors combine to affect the quality of rice, ranging from the
genetic make-up of the crop variety and the husbandry practices adopted, to the post-harvest
and processing activities. Rice quality and standardization are not yet well-developed in
Nigeria because rice processing and milling is predominantly concentrated at the cottage
level. Improved technologies are available which are already being passed on to the Nigerian
smallholders who produce most of the rice in the country.




                                                                                             60
Interestingly, in the above-mentioned WARDA study on processing, most of the millers
considered that it was the processing technology, cleanliness, or parboiling that affected the
final quality of the milled rice, and very few (12%) emphasized the paddy quality as a
contributing factor. Many felt that they either lacked the funds or the knowledge to invest in
improved technology, or that the investment was not financially viable, particularly due to
low volumes processed. Almost none of the miller-traders de-stoned paddy before milling.
Although a better quality imported rice fetched 25% higher price, they felt that there was no
price reward for higher quality local rice, and that consumers were satisfied with the local
rice due to its low price and better condition. Thus, the two markets – one for domestic rice,
another for imported - are segmented.

There is an urgent need for the development of efficient technology transfer methods to
enable the farmers adopt improved production, harvest and post-harvest technologies. This
option is a sine qua non for exploiting the export potential of Nigerian rice. Here VEETEE
and OLAM, two recently-established processing companies in Nigeria owned by Indian
nationals, have taken the lead as they source improved seeds for farmers and also provide
extension services. There is need for more of such private firms to give the Nigerian rice
economy the impetus that would launch it into the international market.

Other complementary measures to be taken include:
       (i)   Development of standards, grades, and classes for paddy and domestic milled
             rice
       (ii)  Development of an efficient local rice retailing and trade expansion program
             through effective packaging
       (iii) Educational programs to convince Nigerian consumers that the domestic rice
             industry can deliver a product that is comparable to the imported rice.


                               Rice Value Chains in Nigeria

In this section, the value chains of Nigerian rice are described. Given the high variability in
the prices of rice (by sources, season, and other factors), this analysis looks at the value
chains from the perspective of determining a margin that farmers are expecting.

Small scale producers are those which cultivate up to a maximum of 5 hectares, irrespective
of the system employed. The majority of individual farmers in this category manage 0.5 to
1.5 hectares. This scale of operation accounts for the overwhelming majority of rice
production in Nigeria, with some estimates rising as high as 95% of total rice output per
season.

Production cost records are rare among this segment of the grower population, and cannot
serve as a reliable barometer of sector-wide projections. A more promising surrogate comes
from input suppliers. .Some input suppliers have come up with rice production kits that give
a good idea on cost of production. The R- Box (Rice Box) for instance contains a systemic
herbicide, pre and post emergence herbicides, “boost extra” fertilizer and insecticide enough
to plant 0.25 ha (Table 26). It also contains 12.5 – 15 kg of treated improved cultivar. It does


                                                                                             61
not however contain granular fertilizers. Four of such boxes plant one hectare and the going
price is N5100 per box. This is for zero or minimum tillage which is one of the technologies
being advocated to substantially reduce the farmer’s cost of production.

The details per hectare are as follows:

Table 26. R-Box components

1.      4 R – Boxes per hectare at N5100/ha     =                          N20, 400
2.      Granular fertilizer (4bags of NPK & 2 Bags of Urea) /ha =          N18, 000
        At an average of N3000 /bag
3.      Planting / Transplanting including Nursery =                       N 1,200
4.      Fertilizer Application =                                           N 1,000
5.      Spray Application =                                                N 2,600
6.      Harvesting =                                                       N 2,000
7.      Bird Scaring =                                                     N 2,000
8.      Weeding                                                            N 3, 000
9.      Threshing and Winnowing                                            N 2, 000
10.     Bagging                                                            N 3, 000
11.     Simple Tools                                                       N 1, 500
12.     Land Rent                                                          N 4, 500
13.     Transportation                                                     N 6, 000
Total cost / ha                                                            N67, 200*


If we assume that these levels of inputs and labor are uniformly applied under all three of the
major production systems (lowland rain fed, upland rain fed, and irrigated), and calculate the
returns based on a sales price of N44.00/kg, at the yields postulated on page 3, we discover
that all three systems are operating well below the break-even point. In the case of the
lowland rain fed system, for example, as depicted in the value chain graphic below, the losses
would amount to N 19,680 per hectare.

Revenue generation at each stage of the value chain – from grower to processor to wholesaler
to retailer – is assumed to be constant across all production systems. The N44.00/kg price
received by the grower for the paddy he delivers to the processor. Since the processor suffers
a 40% shrinkage during the milling/parboiling process, his effective raw material cost per
kilogram of milled product becomes N 73/kg. A WARDA survey of processors in Nigeria
conducted in 2003 reported that raw material represented 82% of the processor’s selling
price, with the remainder made up of operating costs (13%) and processor margin (5%).
Through interviews with Nigerian wholesalers and importers, a consensus emerged with
respect to wholesale and retail mark-ups; each of these two functions was believed to add an
incremental 15% to the value of the final product. Beginning, then, with a base paddy price
of N44.00/kg, value additions along the chain yield a final retail price of N118.00/kg.




                                                                                            62
 Labor       Seed           Others                Labor       Input Materials             T&W           Transport       Bagging         Other

N 1,200     N 10,800        N1,500               N 2,600         N 9,600                  N2,000          N6,000        N3,000          N2,000




Land Rent     Land            Planting        Fertilizing     Spraying          Weeding            Irrigation       Harvesting     Marketing
              Preparation
 N4,500                      N 13,500         N 19,000      N 12,200  N3,000                                         N2,000            N13,000
                                                    @ 1.06 MT.Ha (Actual yield)

                                                             @ 1.08 MT/Ha

                                                                             / (N 16.80/kg)
                                         Cost of production/Ha : N67,200 /N 62.20/kg
                                                                              (N 44.00/kg)
                                         Total selling value/Ha: N 47,520 / N 44.00/kg
                                         Net profit/kg          (N 19,680) / / (N 27.20/kg)
                                                              : : (N 19,680) (N 19.4/kg)

                                         Price variations (N/kg)
                                         Farm gate = 44.00 = 44.00
                                         Processing = ??      = 89.40
                                         Wholesale = ?? = 105.20
                                         Trade
                                         Retail
                                         Wholesale = ?? = 118.00
                                         Retail       = ??


Analysis of the Value Chains

Given the fact that farmers can generally be relied on to modify their practices in such a way
as to insure that there is some modicum of profit from their operations, it clearly does not
make sense to assume that this pattern of loss-making activity is actually the case in Nigeria.
Rather, it seems more logical to assume that farmers will find a way to drive down their costs
to the point where there is some residual profitability in the crop. Normally, these cost-saving
steps will include the use of grain or traditional seed in place of improved varieties, and
minimal use of fertilizer and crop protection products.

The relative revenues which can be expected from each system, at calculated yields and a
farmgate price of N 44.00/kg, are as follow (Table 27).

Table 27. Revenues and costs for different systems.
System                        Yields                 Revenue (N/Ha)                             Costs (N/Ha)
                             (MT/Ha)                   @ N 44/kg                          (assuming 10% net margin)
Lowland Rain fed               1.08                      47,520                                    42,760
Upland Rain fed                0.54                      23,760                                    21,380
Irrigated                      1.46                      64,240                                    57,810

A more reasonable assumption, then, for lowland rain fed production cost components might
be
   • to reduce seed cost from N 180/kg for improved seed, down to N 25/kg for
      unimproved seed, for a savings of N 9,300/Ha (at 60 kg of seed/Ha);
   • to reduce by 67% the R-box application of crop protection products and special
      fertilizers, for a savings of N 6,400; and
   • to reduce by 50% the recommended applications of NPK and Urea, for a cost savings
      of N 9,000.


                                                                                                                                  63
The resulting costs are as follow (Table 28).

Table 28. Estimates of costs with modifications in inputs.

1.     60 kg of unimproved seed at N 25/kg seed                          N 1,500
2.     1/3 application of CPP and special fertilizer products            N 3,200
2.     Granular fertilizer (2bags of NPK & 1 Bags of Urea) /ha =         N 9,000
       At an average of N3000 /bag
3.     Planting / Transplanting including Nursery =                     N 1,200
4.     Fertilizer Application =                                         N 1,000
5.     Spray Application =                                              N 2,600
6.     Harvesting =                                                     N 2,000
7.     Bird Scaring =                                                   N 2,000
8.     Weeding                                                          N 3, 000
9.     Threshing and Winnwing                                           N 2, 00
10.    Bagging                                                          N 3, 000
11.    Simple Tools                                                     N 1, 500
12.    Land Rent                                                        N 4, 500
13.    Transportation                                                   N 6, 000
Total cost / ha                                                        N 42,500


In the table which follows the value chain depictions, these two yields are recapitulated,
along with what would be considered normal yield expectations under intensive cultivation in
each of the different systems.




                                                                                         64
Small Scale Lowland Rain-fed Rice

The cost assumptions for this system are as indicated in the preceding paragraphs. Seed in of
the unimproved variety, special fertilizers and crop protection products are applied at 1/3 the
recommended levels, and NPK and Urea are applied at 50% of the recommended levels. In
contrast to the losses indicated initially in the full input/improved seed model, which
generated a loss of N 19,600/Ha, this revised set of assumptions generates a positive margin
of N 5,020/Ha.

 Labor       Seed           Others                Labor          Input Materials             T&W           Transport       Bagging         Other

N 1,200     N 1,500         N1,500               N 2,600            N 3,200                  N2,000          N6,000        N3,000          N2,000




Land Rent     Land            Planting        Fertilizing        Spraying          Weeding            Irrigation       Harvesting     Marketing
              Preparation
 N 4,500                      N 4,200              @
                                              N 10,000      1.06 MT.Ha (Actual yield)
                                                                  N 5,800   N3,000                                      N2,000            N13,000




                                                                @ 1.08 MT/Ha

                                                                   N67,200 (N 16.80/kg)
                                         Cost of production/Ha : N42,500 / N 39.35/kg
                                                                   47,520 / / N 44.00/kg
                                         Total selling value/Ha: NN 47,520 (N 44.00/kg)
                                         Net profit/kg             19,680) (N 27.20/kg)
                                                               : (NN 5,020 // N 4.65/kg

                                         Price variations (N/kg)
                                         Farm gate = 44.00 = 44.00
                                         Processing = ??      = 89.40
                                         Wholesale = ?? = 105.20
                                         Trade
                                         Retail
                                         Wholesale = ?? = 118.00
                                         Retail       = ??




                                                                                                                                     65
Small Scale Lowland Irrigated Rice

Cost of production is the same as above except for
           • the additional cost for water which the River Basin Development Authority
              supplies at N5000 / quarter. This amounts to N10, 000 per cropping cycle; and
           • an additional bag of NPK and of Urea per hectare, at an incremental cost of N
              6,000.

Thus the cost of production under irrigated lowland is assumed to be N 58,500/ha.


 Labor       Seed           Others                Labor          Input Materials             T&W           Transport       Bagging         Other

N 1,200     N 1,500         N1,500               N 2,600            N 3,200                  N2,000          N6,000        N3,000          N2,000




Land Rent     Land            Planting        Fertilizing        Spraying          Weeding            Irrigation       Harvesting     Marketing
              Preparation
 N 4,500                      N 4,200              @
                                              N 16,000      1.06 MT.Ha (Actual yield)
                                                                  N 5,800   N3,000                    N 10,000          N2,000            N13,000




                                                        @ 1.46 MT/Ha

                                         Cost of production/Ha :            N 58,500 / N 40.05kg
                                         Total selling value/Ha:            N 64,240 /N 44.00/kg
                                         Net profit/kg         :            N 5,740 / N 3.93/kg

                                         Price variations (N/kg)
                                         Farm gate            = 44.00
                                         Processing           = 89.40
                                         Wholesale            = 105.20
                                         Retail               = 118.00




                                                                                                                                     66
Small Scale Upland Rain fed Rice

In order to compensate for the lower yields associated with this system, it is necessary to
make some Costs are assumed to be equal to those of lowland rain fed production, but with
yields that are 50% lower. The assumption here is that all fertilizer and crop protection
products are eliminated, and that only manual labor is performed. Additionally, marketing
costs per hectare have been halved, to correspond with the reduction in kilos harvested.

 Labor       Seed           Others           Labor      Input Materials              T&W            Transport       Bagging         Other

                                                                                     N 1,000                                        N1,000
N 1,200     N 1,500         N1,500                                                                    N3,000       N1,50000




Land Rent     Land            Planting   Fertilizing    Spraying           Weeding             Irrigation       Harvesting     Marketing
              Preparation
 N4,500                       N 4,200                                      N 3,000                               N2,000            N6,500


                                                   @ 0.54 MT/Ha

                                         Cost of production/Ha :          N20,200 / N 37.41kg
                                         Total selling value/Ha:          N 23,760 / N 44.00/kg
                                         Net profit/kg         :          N 3,560 / N 6.60/kg

                                         Price variations (N/kg)
                                         Farm gate            = 44.00
                                         Processing           = 89.40
                                         Wholesale            = 105.20
                                         Retail               = 118.00




Medium Scale Rain fed

For the purposes of this report, medium scale farmers are assumed to be those which operate
farms ranging in size from 5 Ha and 100 Ha. Farmers’ and farmers groups in this category
use tractor hiring services, work-bulls and animal drawn implements for land preparation.
They upper limit for this class of rice farmers could be pegged at 100ha per holding. Medium
scale farmers, plant rain-fed upland, rain-fed lowland rice as well as irrigated rice.

The cost of production is as in the case of the systems discussed above. However, because
tractors are used by the medium scale farmers for plowing at N5, 000 per hectare and
harrowing at N2,000 per hectare plus 40 liters of diesel or N 4,000, the cost of production
will increase by these amounts. Under the medium scale farmers / farmers groups, the
standard costs of production cited in the small scale operations need to be reduced a further N
11,000 in order to compensate for these incremental costs. In the case of the rain fed lowland
system, this cost savings can be developed by eliminating the use of fertilizers and crop
protection products, yielding a total production cost of N 41,300.




                                                                                                                              67
                                      @ 1.08 MT.Ha

                                                          N 41,300 / N 38.25/kg
                             Cost of production/Ha : N67,200 / (N 16.80/kg)
                                                          N 47,520 44.00/kg)
                             Total selling value/Ha: N 47,520 / (N / N 44.00/kg
                             Net profit/kg                N 6,220 / 27.20/kg)
                                                   : (N 19,680) / (NN 5.75/kg

                             Price variations (N/kg)
                             Farm gate = 44.00 = 44.00
                             Processing = ??      = 89.40
                             Wholesale = ?? = 105.20
                             Trade
                             Retail
                             Wholesale = ?? = 118.00
                             Retail       = ??




Medium Scale Irrigated

The additional N 11,000/Ha in costs for this scale of operation is assumed to be offset by a
reduction of two bags of fertilizer (for a savings of N 6,000), and the elimination of the N
5,800 in costs associated with the specialty fertilizers and crop protection products. These
modifications, net of the additional costs for mechanization, leave a production cost of N
57,700/Ha.

                                         @ 1.46 MT/Ha
                             Cost of production/Ha :     N 57,700 / N 39.52kg
                             Total selling value/Ha:     N 64,240 / N 44.00/kg
                             Net profit/kg         :     N 6,540 / N 4.50/kg

                             Price variations (N/kg)
                             Farm gate            = 44.00
                             Processing           = 89.40
                             Wholesale            = 105.20
                             Retail               = 118.00




                                                                                         68
              Value Chain Analysis of Medium scale Lowland Irrigated Rice


Large Scale Irrigated

Large scale farmers, farmer groups, and cooperatives for this study will be those with farms
in excess of 100 hectares. In Nigeria large scale farms are few and far between. It is hoped
that such farms will proliferate, once the River Basin Development Authorities are privatized
and or are rehabilitated.

The assumptions are that large scale farms will apply appropriate husbandry practices, in
irrigated areas with full water control, using improved varieties.

Others are:
       •       Use of improved seeds
       •       Use of irrigation for rice production
       •       Planting in lines using correct plant population
       •       Preparing land appropriately
       •       Harvesting and threshing mechanically

At current yields. the nominal average production cost per hectare of N70, 000 would need to
be reduced by N 12,200 to permit a 10% margin to be generated within this system. It is
assumed that this would be achieved, as in the previous case, by a reduction of two bags of
fertilizer (for a savings of N 6,000), and the elimination of the N 5,800 in costs associated
with the specialty fertilizers and crop protection products. These changes would result in a
cost per Ha of N 58,200.


                                         @ 1.46 MT/Ha

                              Cost of production/Ha : N 58,200 / N 39.85kg
                              Total selling value/Ha: N 64,240 / N 44.00/kg
                              Net profit/kg         : N 6,040 / N 4.15/kg

                              Price variations (N/kg)
                              Farm gate            = 44.00
                              Processing           = 89.40
                              Wholesale            = 105.20
                              Retail               = 118.00




At full-input production costs, current empirically-derived yields, and a Farmgate sales price
of N 44/kg, growers would be losing money at whatever rice-growing system they practice.
This led us to hypothesize a series of value chains which more credibly represented farmer
behavior, including reductions in input costs up to the point where short-term profitability
could be achieved.



                                                                                            69
This, of course, typically produces a vicious circle of insufficient use of inputs leading to
sub-par yields, leading in turn to low revenues, making it impossible to purchase sufficient
inputs. The following table recapitulates the different actual yields and consequent financial
outcomes for each major system and size of operation, assuming reduced application of
inputs (Table 29). It also includes yields that would normally be expected under each system,
under efficient cultivation and compliance with good agricultural practices.

Table 29. Yields by System by Size (Yield = MT/Ha, Margin = N/Ha)
                          Current      Current Margin        Normal Yield         Normal Margin
                          Yield                              With full inputs     With full inputs
 Small        Lowland
 Scale        Rain fed        1.06           5,020                 3.0                64,800
              Upland
              Rain fed        0.54           3,560                 2.0                20,800
              Irrigated       1.46           5,740                 4.0                98,800
 Medium       Lowland
 Scale        Rain fed        1.08           6,220                 3.0                53,800
              Irrigated       1.46           6,540                 4.0                87,800
 Large
 Scale        Irrigated       1.46           6,040                 5.0                150,000


                 Actions to Improve Rice Value Chains in Nigeria
If Nigeria is to achieve success in reducing its import dependence on imported rice, in a
sector where 95% of the production is in private hands, then margin generation must be
adequate to persuade growers to continue to produce rice. At the relatively low returns
indicated above for the upland rain fed system, it seems unlikely that there would not be
some more lucrative crop rotation for this growing region. At the very least, it is clearly not a
system on which Nigeria can count on for significant increases in national rice production.

The remaining systems, at all three scales of operation, would appear to generate attractive
margins for landholders, once normal yield levels have been established. This would be
especially true for the irrigated components at each scale of operation, since the possibility
would exist to generate two crops each year.

If lowland rice production generates attractive margins for growers, it remains to be seen
whether these returns can be competitive with other crop opportunities available to growers
on the same land, and whether Nigerian rice can be competitive against imported Asian rice
in its own domestic market. This study was unable to generate data on comparative costs and
benefits for rice and other horticultural crops within Nigeria. Such a study was conducted,
however, and subsequently cited in the KNARDA Technical Handbook for Fadama
Programme, as cited in Water Quality and Monitoring and Environment Status in Nigeria
(1996), FEPA Monograph 6 (Table 30).




                                                                                                70
Table 30. Cost and benefit of irrigated crops in Kano State, Nigeria, during the 1992/93 dry
season

                                                                           Cost of
      Crop            Yield/Ha       1993 Market      Total Income       Production      Benefit
                                       Price (N)         (N/Ha)            (N/Ha)        (N/Ha)
     Wheat            2500 kg         700/100kg          17500              9535          7765
  Rice (Paddy)        6000 kg         600/100kg           36000           144860         21140
  Maize (Green       60000 cobs         0.4/cob           24000             12560        11440
      cobs)
    Tomato           200 baskets     120/basket          24000             15180          8820
     Onion             150 bags        150/bag           22500             14780          7720
   Sugarcane            50 tons       1000/ton           50000             23660         26340
     Pepper          200 baskets     120/basket          24000             13580         10420
     Garlic           25 baskets     1800/basket         45000             18830         26170

At least for the time period in question, rice performed very well in terms of comparative
benefit per ha against the other seven commodities analyzed.

In the beginning of this document, we described the factors causing low rice yields in Nigeria
– poor quality seed, low fertilizer use, limited area in irrigation, and lack of good agricultural
practices. In addition to increasing the production of domestic rice, many other
accompanying issues need attention in the Nigerian rice sector to ensure sustained
competitiveness vis-à-vis the imported rice. These include:

   1. Improve availability of credit to all actors of the value chain, from production to
      processing to marketing: Most farmers have no access to input credit. Field visits
      and interaction with small scale farmers across the country emphasize empowerment
      of small scale farmers to enable them to purchase improved seeds, fertilizer, crop
      protection products, and farm equipment. Mechanisms should be flexible and include
      a variety of tools such as: farmer group credit, input dealer credit linked to farmers,
      and warehouse credit. Processors – both parboilers and millers -willing to improve
      quality of their rice should have access to credit to upgrade their technologies, and
      they, or the traders, need storage capacity.
   2. Increase the attractiveness of Nigerian rice: Currently, Nigerian and imported rice
      markets appear segmented, with local processors unable to see the greater profits in
      better processed local rice. At the same time, a part of the appeal of local rice is its
      better, fresher taste. These efforts can make, through niche marketing to the middle
      and upper income groups, an image of local rice as attractive and preferable to
      imported one.
   3. Ensure that Nigerian input sector works to benefit the farmers, and makes
      available good-quality inputs to the country rice growers.




                                                                                               71
                           IV. Rice Privatization Efforts

                                      Purpose
                                      The purpose of this brief report is to highlight how
                                      privatization efforts are advancing in the rice sector
                                      in the three countries studied (Mali, Niger, and
                                      Nigeria) to better understand how it is that the private
                                      sector is engaged in efforts on input provision,
                                      production, processing, and marketing. Although not
                                      exhaustive, this chapter provides some historical
                                      information for each of the countries, allowing for
                                      better understanding of the current development stage
                                      of the rice value chain in each of the countries.



                                         Mali
                                        History
As described in the INSAH publication of December 2007 titled “Concertation pour le
renforcement de l’échange des données statistiques et des informations sur l’économie du
riz”, there have been eight separate stages in the evolution of the Malian government’s
involvement in the national agricultural economy:

   1. 1961-1968: Interventionism and the Five-Year Plans – This socialist-inspired stage
      featured heavy reliance on central planning, including creation of monopoly public
      enterprises, state control of production and marketing, price controls for basic
      foodstuffs, encouragement of export-oriented cash crops (cotton, peanuts), and
      mandatory collectivization of agriculture in the form of cooperatives. The principal
      consequence of this phase was the reduction in agricultural production, especially
      cereal production.
   2. 1970-80: Economic and Financial Reformation -- In response to reductions in
      agricultural productivity, persistent periods of drought, and chronic budget deficits,
      the state set out to adjust its role in agricultural development.
   3. 1981: National Food Security Commission -- Faced with high costs of agricultural
      initiatives not absorbed by growers, charges for state programs were assessed against
      the grower/cooperative community. Problems of limited access to credit led to the
      creation of the National Agricultural Development Bank.
   4. 1981: Restructuring of the Grain Markets -- Priorities were the satisfaction of
      fundamental food needs, supply of raw materials to the industrial sector, and the
      development of agricultural exports. License requirements for imports and exports
      were liberalized. This period saw a gradual rise in the price for grains, increases in
      production, better flow of product to markets, elimination of consumer subsidies, and
      an increase in consumer demand for local grains.


                                                                                           72
   5. 1982-1987: Structural Adjustment – Here there was a gradual liberalization in the
      control over economic and commercial activities wielded by state-owned monopolies.
      Staff were reduced, and budgets were tightened for these enterprises.
   6. 1988-1992: Agricultural Sector Adjustment – This period experienced devolution of
      control from the state to producer associations of responsibility for sectoral
      administration. Many state-owned enterprises were restructures or privatized, price
      controls over agricultural products were eliminated, rice prices were fully liberalized,
      and export taxes were removed or suspended. This in turn led to increases in
      production of rice and other grains, increases in grower incomes, improvement in the
      availability of food stocks, increases in demand, and reductions in food aid.
   7. 1992-2006: Master Plan for Rural Sector Development -- In order to reduce the
      profile of the state in the rural sector, a system of consensus-building between the
      state, the private sector and the donor community was instituted. There was an
      emphasis on investments in irrigation systems and the adoption of specific programs
      for product marketing and capacity-building.
   8. 2007-Present: Agricultural Orientation Law – Responding to a long list of constraints
      (declines in agricultural productivity, inaccessible and insufficient markets, limited
      volumes of value-added products, chronic land ownership problems, unreliable
      agricultural incomes, non-existent professional rights for agricultural producers), this
      project set out to reinforce the role of the agricultural sector as the economic motor of
      the national economy by making it sustainable, modern and competitive.

The liberalization that initiated in the early 1980s also affected the rice sector, although the
road traveled was not straight:

   •   1980: Subsidies for rice consumers were cut with the abolishment of price controls.
   •   1984: Producers of the l’Office du Niger were allowed to sell their produce in any
       markets.
   •   1988-89: Rice prices were liberalized, first for all areas except the large-scale
       irrigated zones, then everywhere.
   •   1981: Rice import taxes and fees were abolished, and imports liberalized.
   •   1987-1988: Rice imports forbidden
   •   1988/89: Rice imports allowed; import taxes and fees amounting to 46% reinstated.
   •   1988-1989: Wholesalers dictated to buy local rice in similar quantity as imported rice.
       Rice exports liberalized.
   •   1989: Credit access was liberalized, but a fixed interest rate of 12% was given for
       Banque Nationale de Développement Agricole (BCEAO).
   •   1995: Import taxes and fees reduced to 11%.
   •   1999: TVA was increased from 10 to 18%.
   •   2000: TEC Tariffs were set at 10%

The transition which has occurred over the past half-century has thus been from a centralized
approach with respect to agriculture, to one which recognizes the importance of private
ownership and private initiative. Looking at residual state involvement along the four key
steps of the rice value chain – Inputs, Production, Processing and Commercialization – we
see the state involvement quotient as follows:


                                                                                             73
                                      Input sector

• Once controlled by the state, the import of fertilizer and crop protection products is now
  entirely privatized.
• Credit financing of these agricultural chemicals is also completely in private hands. This
  is not meant to imply that formal bank credit to the agricultural sector, and most
  especially to the small and medium size producers and producer organizations, is
  adequate or satisfactory; by all accounts it is not.
• The import and distribution of seed is still controlled by the state, although a transfer of
  this function to the private sector is apparently underway.
• Producer organizations have an important role in input supply.

                                      Production

• The state still owns all the major irrigated perimeters which generate the majority of the
  rice produced in Mali.
• The state remains responsible for the operation and upkeep of the irrigation pumps and
  the primary and secondary canals
• Land holders are responsible for the upkeep of the tertiary canals, although it is not
  clear whether ownership of these canals resides with the state or with the landholders
• Farmer associations and cooperatives have a central role in the current model,
  particularly in the irrigated schemes, as farmers can access credits and inputs and sell
  their produce through them.
• Private irrigation areas have been encouraged by the granting of land titles, and by the
  attribution of large parcels to agribusinesses for purposes of rice cultivation. This
  development has been promoted by USAID, although success appears to have been
  limited by a lack of access to credit. Trials with some twelve developers conducted with
  USAID support have not been able to attract any candidates.
• The Millennium Challenge Corporation/Millennium Challenge Account has developed
  a model involving the assignment to individual “agribusiness” of 10-120 hectare
  parcels, complete with credit financing. The MCC will finance additional areas in
  irrigated rice.

                                       Processing

• The state, which once controlled all processing activities, has withdrawn from such
  activities. These are now in the hands of private sector and producer organizations
• The major processing facilities formerly operated by the state have been privatized,
  although all but one of them have now ceased operations. Their inability to remain in
  production is reportedly due to a lack of access to financing, lack of competiveness vis-
  à-vis small millers, and to grower reluctance to sacrifice control over the disposition of
  the rice bran from their own production.




                                                                                           74
Marketing

  • Sale and distribution is in private hands, through a network of collectors at production
    level and by wholesalers and retailers in the major population centers.
  • State intervention in sale and distribution is limited to import regulations and the
    maintenance of the surface road network.
  • Import regulations on rice continue.


                                           Niger
As we have already seen in the case of Mali, the period from 1960 until today marks a
comparable transition, over four distinct periods, for the Niger rice economy from a fully
state-run sector to a more mixed public-private structure.

                                         History

Phase 1 (1960-1980): State Control

   •   Division Générale des Aménagements Hydro-Agricoles (DGAHA), created within
       the Union Nigérienne du Credit et de Cooperation (UNCC), is responsible for
       building the irrigation projects
   •   UNCC was responsible
           o for training and organizing farmers,
           o for operating and maintaining the irrigation works
           o for supplying seed, fertilizers and crop protection products (through the
               Centrale d’Approvisionnement – CA)
   •   Société Riz du Niger (RINI) was responsible for the transformation and sale of the
       final product
   •   Office des Produits Vivriers du Niger (OPVN) looked after all rice imports
   •   Caisse Nationale de Crédit Agricole (CNCA) was responsible for providing working
       capital and investment financing

This system broke down, due to the limits
   • of state financial resources which could be injected into the rice sector to keep it
       subsidized and in expansion mode, and
   • of UNCC to meet its many other agriculture-related responsibilities and still keep the
       DGAHA fully funded and operational

Phase 2 (1980-1983): State Control (cont.)
   • Office National des Aménagements Hydro-Agricoles (ONAHA, established in 1978)
      was set up as a free-standing government agency to take over the responsibilities of
      the DGAHA, and to work with UNCC to
          o Build out irrigation projects
          o Manage, maintain and operate irrigation projects


                                                                                         75
           o Train smallholder farmers, and
           o Establish the inventory of projects, and keep it current
   •   Donor and government support for ONAHA enabled it to increase rice acreage 2,5-
       fold from 1980 to 1989, and to triple rice production during this same period
   •   Troubles emerged, however, as ONAHA provided services to smallholder
       organizations at below-market rates, ultimately compromising ONAHA’s ability to
       meet its responsibilities

Phase (1983-1990): Partial Devolution

   •   Responding to budgetary constraints and donor pressure, ONAHA was relieved of its
       responsibility for management of irrigation projects
   •   Management responsibility was passed over to grower cooperatives, which in turn
       signed service contracts with ONAHA for maintenance and upkeep
   •   The coops assumed responsibility for
            o Management of water, canal maintenance, and tertiary and quaternary drains
            o Management of the labor force, the nurseries, and the supply and distribution
                of inputs
            o Collection of fees and the sale of harvests
            o Management of related activities, such as mills, woodlands, shops and ag
                credit
   •   This system worked only for so long as the donors rehabilitated the irrigation works,
       and provided the smallholder organizations with working capital free of charge
   •   As the government was faced with financial constraints in the late 1980’s, the
       cooperatives struggled to maintain their financial stability, and the rate of new
       irrigation project establishment fell off

Phase 4 (1990- 2007): Continued Reduction in State’s Role

   •   RINI loses its role as monopoly seller of paddy rice (although rough rice prices
       continue to be fixed by the State until 1991)
   •   De-control of the inputs sector
   •   Liquidation of CNCA
   •   Precipitous decline in funding for ONAHA, leading to a decline in ONAHA technical
       services for cooperative growers
   •   Liquidation of CNCA and bankruptcy of BDRN (Banque de Développement de la
       République du Niger), plus freeing of rough rice price, leading to decline both in the
       financial viability of the cooperatives, and the condition of the existing irrigation
       works

Looking once again at residual state involvement along the four key steps of the rice value
chain – Inputs, Production, Transformation and Commercialization – we see the state
involvement quotient as follows:




                                                                                          76
                                        Input sector

  • Current policy envisions a staged 3-year transition from CA’s role as ‘guarantor of
    price/guarantor of supply” to an eventual withdrawal by government in favor of the
    private sector, during which time the private sector is expected to “muscle up” to the
    job.
  • In terms of the evolution in the roles of CA and the private sector in the supply of
    agricultural inputs, the following schedule demonstrates the fact that seed distribution is
    now entirely in the hands of the private sector, and that the roles of the two channels
    have moved in several different directions as regards fertilizer sales over the past five
    years.

Table 31. Percentage of seed and fertilizer supplied by CA and private sector, from 2003 to
2007.

 Input                           Annual Volume
                                 2003    2004        2005      2006     2007
 Seed
 % supplied by CA                0%         0%       0%        0%       0%
 % supplied by private sector    100%       100%     100%      100%     100%
 Fertilizer
 % supplied by CA                42, 9%     37, 3% 60, 7% 79, 1% 51, 3%
 % supplied by private sector    57,1%      62,7% 39,3% 20,9% 48,7%


                                        Production

  • All agricultural production systems are already in private hands, although the AHA
    continues to manage/maintain/deliver all irrigation services.
  • These AHA are classified as belonging to the public domain of the state, which gives
    them a judicial status which is “inalienable, un-assignable, and non-transferrable.”
  • There is increasing number of small-scale irrigated areas operated by producers with
    motor pumps, and a gradual transformation of the rainfed systems into such small-scale
    irrigated areas.

                                          Processing

  • RINI, with the State as principal shareholder, continues to play a pivotal role in rice
    transformation in Niger.
  • It was designated for privatization in 1993, and then placed in bankruptcy in 2002.
  • It was then “resuscitated” by Presidential Decree in 2003 to handle the country’s
    strategic reserves.
  • Between 2003 and 2006, RINI transformed an average of 9,000 MT per year. At an
    assumed production of 70,000 MT of rough rice per year, RINI’s share of the total
    transformation market amounts to only 10-15% of total production.


                                                                                            77
  • The remaining transformation is supplied either by the “mini-rizeries (SSL,
    SOTRAGRI, Gaya) which process some 22% of the annual harvest, or by
  • Village mills which account for the remaining 63-68% of the rice processing activity in
    the country.
  • All of the mini-rizeries and village mills are in private hands.

                                         Marketing

  • OPVN, which had been sole rice importer up until 1983, then responsible for storage of
    all rice imports which came under food aid programs up until 2003, assumed the role of
    “buyer of last resort” when RINI was declared bankrupt in 2003.
  • Price is always a source of conflict between OPVN and the cooperatives, aggravated by
    OPVN’s role of discounting AHA balances due from all remittances to the cooperatives.
  • Naturally, the cooperatives do their best to sell outside the OPVN system, especially
    through export channels to Nigerian buyers of both processed and rough rice.


                                           Nigeria
There is no clear chronology of Nigerian government policy with respect to privatization
within the rice sector, such as we have already seen for Mali and Niger. Absent such data, we
will pass directly to a review of the current state of government involvement in each of the
four general activity areas we have identified in the previous two countries.

                                        Input sector

  • The state buys some quantity of improved seeds which it passes on to state agencies at a
    subsidy of 25 to 50 percent for sale to farmers. This tends to distort the market and
    discourages private investors in the seed industry.
  • The Nigerian Agricultural Credit and Rural Development Bank (NACRDB) is the sole
    bank for government sponsored programs on agricultural production. Credit access is
    generally considered deficient, and many of the productivity-related problems found in
    Nigeria are attributed to problems
  • Fertilizers for farming purposes in Nigeria comes from three main sources namely:
  • Federal Government through the Fertilizer Procurement and Distribution Department
    (FPDD) through the State Governments and the private sector.
           o Federal Government procured 250,000 tones of fertilizer in 2005 and
               500,000 tones of fertilizer in year 2006 which is about 2 and 8 percent
               respectively, of the estimated requirement of 6 million tones of fertilizer for
               Nigeria’s agricultural needs. It subsidizes this fertilizer by 25 percent and
               distributes same quantity mostly through State indents. It also sells directly to
               end users at the same 25 percent subsidy.
           o State Governments also procure fertilizers from their functional fertilizer
               blending plants to supplement federal allocations. Some states in addition
               import fertilizers directly. The states apply deeper subsides in addition to the


                                                                                             78
               Federal subsidy. As a result, the fertilizer market is neither regulated nor
               uniform. Fertilizers can cost less than N1, 500 per bag of 50 kg in some states
               and up to N2, 500 per bag in others and between N2700 – N4, 500 in the open
               market.
            o The private sector also imports fertilizers but less due to the uncertainty in the
               fertilizer pricing system. The different levels of subsidies distort the markets
               and many entrepreneurs who ventured into fertilizer imports got their fingers
               burnt. There is a felt need to critically have a second look at the fertilizer
               market in Nigeria. The pricing regime is presently chaotic to say the least.
•   Crop protection products constitute the most advanced input sub-sector in Nigeria. The
    private sector controls over 90% of procurement and sales and is primarily market
    driven.
•   Farmers buy crop protection products from the open market and many CPP companies
    import and procure products for sale to farmers. These companies have aggressive
    marketing arrangements with sales agents who go to the field to sell their products.
•   Some of these companies also have agricultural extension agents on their payrolls who
    backstop extension delivery in the field. Competition amongst the major CPP suppliers
    is stiff and healthy.
•   Two companies are packaging “boxes” which include CPPs, seeds, and other inputs
    along with recommendations. These boxes or kits have been relatively successful and
    appreciated by smallholder rice farmers. For example, the rice kit known as R- Box
    contains inputs a farmer needs to plant 0.25ha (except granular fertilizer). This kit also
    contains folia fertilizer which has been found to increase yield significantly.

                                        Production

• The irrigation sector in Nigeria can be divided into three categories:
        o Public irrigation schemes, which are government executed schemes.
        o Farmer – owned and operated irrigation projects (improved fadama).
        o Residual fadamas or flood plains
• Although irrigated surfaces in Nigeria represent only 17% of the total hectares in rice
  production, they generate 26% of total production. Moreover, at an average yield of
  1.46 MT/ha, they have the potential for wholesale increases in production on the
  existing surfaces. No other production system in Nigeria is thought to have anything
  approaching the potential of the irrigated surfaces for increasing the availability of
  domestic rice supplies.
• These public sector irrigation lands currently belong to the state. The government has
  selected a number of public sector irrigation schemes for divestiture. These schemes are
  presently supervised by the Federal Ministry of Agriculture and Water Resources
  (FMAWR). At present, no divestitures have yet taken place.




                                                                                             79
Processing

 • Three categories of millers are present in the country: large millers, small millers and
   cottage millers. Private sector operations dominate activities across all three categories.
 • Where additional milling capacity is considered necessary, there is little consideration
   to the state assuming responsibility for the construction and operation of the needed
   facility. Rather, the tendency is to consider Public-Private Partnership approaches to the
   capitalization, construction and management.
 • Two multinationals are in Nigeria working in the market for quality rice. These two
   companies are looked upon as models for private sector interventions to upgrade and
   professionalize what has, heretofore, been an essentially artisan paradigm.




                                       Marketing

 • The sale and distribution functions of domestically-produced rice are in private-sector
   hands
 • The sale and distribution functions for imported rice, representing some 40% of milled
   consumption in Nigeria, are also managed by the private sector.
 • The state is heavily involved in the regulation of rice imports, as the following schedule
   demonstrates.




                                                                                           80
Table 32. Chronology of Nigeria’s trade policy on rice

Prior to April 1974                 66.6% tariff
April 1974-April 1975               20% tariff
April 1977-April 1978               10% tariff
April 1978-June 1978                20% tariff
June 1978-October 1978              19% tariff
October 1978-April 1979             Imports in containers under 50kg were banned
April 1979                          Imports under restricted license only for Government Agencies
September 1979                      6-month ban on all rice imports
January 1980                        Import license issued for 200,000 tons of rice
October 1980                        Rice under general import license with no quantitative
                                    restrictions
December 1980                       Presidential Task Force (PTF) on rice was created and it used
                                    the Nigerian National Supply Company (NNSC) to issue
                                    allocations to customers and traders
May 1982                            PTF commenced issuing of allocations directly to customers
                                    and traders in addition to those issued by NNSC
January 1984                        PTF disbanded. Rice importation placed under general license
                                    restrictions
October 1985                        Importation of rice (and maize) banned
July 1986                           Introduction of Structural Adjustment Program and the
                                    abolition of Commodity Boards to provide production
                                    incentives to farmers through increased producer prices
1995                                100% tariff
1996                                50% tariff
1998                                50% tariff
1999                                50% tariff
2000                                50% tariff
2001                                85% tariff
2002                                100% tariff. Presidential committee on rice production
                                    expansion was set up to help Nigeria become self-sufficient in
                                    rice by 2004 and a net exporter by 2005!
2003                                150% tariff
Sources: Sutcliffe and Ayomike, 1986; Federal Government Budgets, 1984-1986, 1995-2003; SAP and the Nigerian
Economy, 1987, taken from “Integrated Assessment of the Impact of Trade Liberalization” UNEP (2005).




                                                                                                               81
                                      Conclusions
All countries have advanced in privatization of their rice sector, but state control still
continues.

In Mali, producer organizations have an important role in the rice sector, from input supply,
to processing and marketing. Much of the state control in these sectors is no longer there.
The state continues its involvement in the irrigated areas, but is slowly engaging producers in
their maintenance. Processing sector has been privatized, as is the marketing.

Despite a number of historical attempts, it would still appear that the State remains very
involved in the rice sector in Niger. In all four of the major components of the value chain –
inputs, irrigated production, processing and commercialization – it appears that the
government’s efforts to disengage itself from ownership of resources and enterprises have
met with only limited success, and with considerable back-sliding even where some progress
had been made (as in the case of RINI and OPVN).

Nigeria’s input supply sector continues to be strongly affected by government involvement.
There are privatization efforts in the irrigated areas. Production and processing are now in
private hands.




                                                                                            82
   V. West Africa’s Regional Agricultural Policy and This Study


              Brief Description of the Regional Agricultural Policy
The vision of the West African agricultural policy ECOWAP is set within the perspective of
a modern and sustainable agriculture based on effective and efficient family farms and the
promotion of agricultural enterprises through the involvement of the private sector. This will
be done to answer three challenges: (1) adequately feed an increasing West African
population which is quickly urbanizing, especially through regional availability; (2) promote
sustainable development, both socially and environmentally, through production systems that
are productive and also respect the environment; and (3) construct a strong regional market
and increase presence of West African agriculture in the international market.

The overall objective of the West African Agricultural Policy (ECOWAP) is to “contribute in
a sustainable way to meeting the food needs of the population, to economic and social
development, to the reduction of poverty in the Member States, and thus to reduce existing
inequalities among territories, zones and nations.” Specifically, the policy aims to:

• Ensure food security for the rural and urban population of West Africa and the health
  quality of its products through regional food sovereignty;
• Reduce dependence on imports by granting priority to food production and processing and
  by developing regional complementarities and comparative advantage;
• Support the equitable economic and commercial integration of agricultural enterprises into
  national, regional, and international markets for rural income increase, particularly that of
  women;
• Develop human capacity, create employment and incomes both up- and downstream of
  production, and contribute to the development of rural sector services (including in health)
  to improve living conditions of the rural population, especially women;
• Ensure intensification of production systems which is appropriate to the different agro-
  ecological contexts, to ensure increased production while developing and preserving
  natural resources and biodiversity;
• Contribute to the reduction of the economic vulnerability, reduce factors of instability and
  regional insecurity;
• Provide West African agriculture with appropriate funding mechanisms to meet the
  diversity of farming systems and the various investment needs.

Interventions to attain these objectives of ECOWAP are seen to fall along three major axes:
• Increasing the productivity and competitiveness of West African agriculture;
• Implementing a trade regime within West Africa;
• Adapting the trade regime vis-à-vis countries outside the region.

The first of these axes focuses on (1) improving food security, (2) increasing farmer incomes,
and (3) reducing poverty at farm and rural community levels, while the second and third axes




                                                                                            83
are directed towards assuring access to regional and international markets for selling
additional produce, made possible by the adoption of modern farming systems.
The policy documents sees increase in productivity and competitiveness of agriculture
requiring modernization of farming, development of agro-food chains, management of shared
resources, and prevention and management of famine and the management of the effects of
natural disasters. The first two – particularly relevant to this report –are elaborated upon.

Modernization of farming practices will be achieved by making modern inputs accessible to
the farmer, through agricultural research and dissemination, and by increasing the knowledge
and capacity of rural enterprises. ECOWAP emphasizes that the modernization of agriculture
should go hand in hand with land tenure security within the framework of settlement rights.
The development of water control, as well as water and soil conservation activities and the
improvement of soil fertility, are also important for ensuring this modernization.

Modern agriculture requires farmer access to inputs such as fertilizer, improved seeds,
phytosanitary products, farm equipment, water, land, and labor. The policy states that for
farmers to purchase these inputs, both equity capital and rural finance are required, and refers
to significant regional dimensions to improving access to agricultural inputs, finance, land,
and labor, such as rules and regulations to ensure access through well functioning markets,
investments in infrastructure, knowledge, and institutions. The policy also notes that the
development of regional capital markets expands access to regional finance.

Finally, the policy documents also stresses the importance of agro-food chains in assuring
demand for agricultural production and growth of rural incomes, and therefore, the policy
will support development of diverse chains (1) important chains for food security; (2) food
stuff chains for international markets (e.g., coffee and cotton); (3) strategic chains at the
regional level (e.g., cattle, diary and vegetables); and (4) strategic chains in regard to the
preservation of natural resources and the environment (e.g., timber).

The policy notes the fact that water resources management will be increasingly challenging,
both for groundwater resources and rivers. The policy also considers financing of
agriculture, and a need to do it at different levels, including:
• Financing of agricultural activity itself (i.e. farms) – this should rest principally on public
   and private mechanisms and resources (the banking sector) mobilized at the national level;
• Improvement of production environment and that of the chains should be undertaken by
   regional program targeted by research, dissemination of results, infrastructures, etc.
   Funding shall come from ECOWAS own funds and external sources;
• For financing of private-sector based regional activities, such as production and
   distribution of inputs, resources should mainly come from the private sector.


                                Conclusions of this Study

This study identified numerous areas for action in the rice value chains for these countries. It
is clear that productivity increase is necessary in all three countries through greater use of


                                                                                              84
inputs and adoption of good agricultural practices. In all countries, average yields lag greatly
behind those of world, and whereas some systems in some countries – such as irrigated
systems in Mali – do have relatively high yields, further yield gains are possible. The
traditional systems are in all countries subsistence-oriented, and have a great deal of room for
productivity growth. Evidence of intensification is clear, in Mali and in Niger, where pumps
are used to establish private irrigation systems. Efforts to increase productivity in these
traditional systems will have vast implications on food security and will improve livelihoods
of the poorer rural dwellers.

At the same time, it is clear that production increases can also be gained through increase in
irrigated area, both spatially (by taking more land into irrigation) and temporally (by
increasing amount of land in double-cropping).         Nigeria’s many failed or underutilized
irrigation systems form a good basis for further development in this respect.

This study, while acknowledging the importance of gains in productivity and production for
attainment of food security and poverty alleviation – and, indeed, most of the objectives of
the Common Agricultural Policy stated above – has focused on underlying constraints to
competitiveness of West African rice, as identified through interviews and stakeholder
consultations. These focus in particularly on the following:
• Credit: Poor credit access affects all stakeholders along the value chain. Although
   irrigated area producers typically fare better than those of traditional systems, this
   constraint impacts them as well. Constraint also particularly affects processing sector, and
   slows down the relatively inexpensive upgrading of simple village mills.
• Quality: Much of West African rice is of very poor quality but its improvement is no
   simple task: actions are needed from production (e.g., use of uniform varieties) to
   processing (use of more sophisticated mills) and transport and marketing (avoidance with
   dirt and good storage). Although recent very high world prices have made consumption
   of local rice a necessity for many, without increased quality, competitiveness vis-à-vis
   Asian rice will not be increased in a sustainable fashion.
• Branding: Despite the quality problem, many in West Africa prefer local rice due to its
   freshness or taste. This is particularly the case in Mali. Branding will be required to
   further stress the image of local rice, but it will only work when tied together with efforts
   on the quality side.

                                        Conclusions

Process of this study and preliminary conclusions were discussed with ECOWAS;
unfortunately, no contact was possible with UEMOA due to staff travel. It is expected that if
a proposal be developed based on these conclusions, both organizations will be further
consulted.

The focus and conclusions of this study fit squarely within the vision, objectives and
approaches of the Common Agricultural Policy, as briefly described below.

As regards the objectives of ECOWAP:



                                                                                             85
• Ensure food security for the rural and urban population of West Africa and the health
  quality of its products through regional food sovereignty: Given heavy and growing
  reliance on rice, it will be increasingly important in food security. Regional food security
  will only be achieved by increasing competitiveness of local vis-à-vis Asian rice.
• Reduce dependence on imports by granting priority to food production and processing and
  by developing regional complementarities and comparative advantage: See above; rice
  import dependence will only be improved through greater competitiveness. Whereas all
  three countries possess greater resources for rice production, attainment of significant
  regional exports of rice is by far closest for Mali.
• Support the equitable economic and commercial integration of agricultural enterprises into
  national, regional, and international markets for rural income increase, particularly that of
  women: Current rice production and processing occupies numerous individuals. Greater
  attention to quality issues, and further processing needed to ensure quality would likely
  further increase employment. Credit access would lead to greater number of input
  dealers to supply producers.
• Develop human capacity, create employment and incomes both up- and downstream of
  production, and contribute to the development of rural sector services (including in health)
  to improve living conditions of the rural population, especially women: See above; value
  addition through greater quality and branding will increase employment.
• Ensure intensification of production systems which is appropriate to the different agro-
  ecological contexts, to ensure increased production while developing and preserving
  natural resources and biodiversity: Reduction of soil fertility was identified as an
  important constraint, and is tied with insufficient use of nutrients. Greater credit access
  in rice production areas would lead to greater use of inputs – including fertilizer.
  Development of branded high quality products will create the demand for better rice –
  and incentives and means for farmers to further use inputs.
• Contribute to the reduction of the economic vulnerability, reduce factors of instability and
  regional insecurity: Economic opportunities inherent in increasing competitiveness will
  likely lead to income growth among all actors in the value chain.
• Provide West African agriculture with appropriate funding mechanisms to meet the
  diversity of farming systems and the various investment needs.

One of the three interventions identified in ECOWAS is increasing the productivity and
competitiveness of West African agriculture, which is therefore very much in line with this
assessment. ECOWAP sees that these require modernization of farming and development of
agro-food chains, important components of the actions identified by this study. Credit as an
important vehicle for modernization is specifically mentioned in the policy document.
Improving use of water resources is also in line with the policy; this assessment has seen
purchase of motor pumps through better credit as a way to help farmers cope with changing
water resources.

This study has reviewed current state of privatization in the three countries, and although
obstacles remain, privatization is well advanced in all of them. ECOWAP clearly
emphasizes the important role of private financing of agriculture, both when it comes to
agricultural activity itself and the financing of private sector actions. ECOWAP, however,
identifies an important role for public-sector regional programs in research, dissemination of


                                                                                            86
results, and infrastructure development: improvement of production environment and that of
the chains. This study, it is hoped, will lead to such program – development of competitive
rice value chains in Mali, Niger, and Nigeria through pilot efforts that demonstrate the
importance of quality, branding, and credit access.




                                                                                        87
VI. Financial Statement




                          88
             Appendix 1. AHA Perimeters in Niger
                                Superficie   Année de Source de        Nbre          Nbre   Nbre
AMENAGEMENT                     nette (ha)   mise en  financement      exploitants   GMP    Coopérative   REHABILITATION
                                irrigable    service

SERVICE REGIONAL DE NIAMEY


SAGA                            395          1966      CHINE N         1 112         7      1             Rehab.1987
KOUTOUKALE                      341          1981      FED             720           7      1             19 ha maraîchage
                                                                                                          Rehab.1988;2001;
SEBERI                          397          1979      CHINE P         1 100         6      1             2003/04
N'DOUNGA 1                      286          1974      CHINE P         775           5      1             Rehab.1988
N'DOUNGA 2                      285          1975      CHINE P         1 047         5      1             Rehab.1988
LIBORE                          272          1973      CHINE N         900           3      1             Rehab.1988
SAY 1                           250          1981      Belgique        354           8      1             Rehab 1989
SAY 2                           195          1988      Belgique        377           6      1
NAMARDE GOUNGOU                 245          1984      FED             484           5      1             22 maraîchage
DOGUEL KAINA                    116          1978      KFW             320           3      1
TIAGUIRIRE AVAL                 183          1984      CHINE P         436           6      1             Réhab. 1984
                                                                                                          Réhab. 1983/17     ha
KARAIGOROU                      144          1970      FED             437           4      1             mar.
KARMA                           133          1971      FED             413           4      1             Réhab. 1988
SAADIA AMONT                    111          1973      FNI             332           2      1             Réhab. 1987
KIRKISSOYE                      100          1964      FAC             334           2      1
SAADIA AVAL                     26           1985      Belgique        55            1      1
KOURTEREY                       10           1966      Ex Dignitaire                 2      1             Abandonné
GOUDEL                          51           1989      STABEX          120           2      1             Abandonné
LATA                            242          1990      FED             449           3      1
N'DOUNGA G                      112          2000                                           1
S/TOTAL 20                      3 894                                  9 765         81     20

SERVICE REGIONAL DE TILLABERI


FIRGOUNE NORD                   100          1980      USAID/C.ENT     ?             1      ?
                                                       FNI
FIRGOUNE SUD                    86           1988      USAID/Ent.      437           1      1             EXT 1989
DIOMANA                         470          1991      FED             769           8      1
GABOU-BONFEBA                   370          1991      FED             709           5      1
NAMARI GOUNGOU                  729          1980      IDA/KFW         2 050         13     1
DJAMBALLA                       661          1983      IDA/KFW         1 632         13     1
TILLAKAINA                      86           1967      FED             291           3      1             REHAB. 1984
YELWANI                         120          1984      BOAD            381           4      1
TOULA                           256          1975      FED             756           6      1
DAIKAINA                        120          1964      CHINE P         392           4      1             REHAB. 1985
DAIBERI                         350          1986      FED             660           5      1
KB 1                            425          1986      BAD             865           9      1
KB 2                            268          1989      BAD             627           5      1
KOKOMANI                        54           1974      FAC             139           3      1             REHAB. 1987
SONA TERRASSE                   39           1977      FAC             26            1      1             REHAB.



                                                                                                                 89
                                                                                                         1983(abandonné)
SONA CUVETTE                       162         1974     FAC            415         3       1             REHAB. 1987
LOSSA CUVETTE                      173         1974     FAC            430         3       1             REHAB. 1987
S/TOTAL 17                         4 469                               10 579      87      16



SERVICE REGIONAL DE GAYA
TARA                               120         1975     AFRICA         275         12      1             En réhabilitation
BOUMBA                             22          1990     FNI            73          4       1             Abandonné 2000
GAYA AMONT                         170         1990     CHINE P        325         6       1             Début d'exploitat. 91
GATAWANI DOLE                      93,2        1994     FED            306         11      2
YELOU                              36,26       2002     BOAD           145         1       1
KIZAMOU                            13,6        2002     BOAD           64          1       1
SORMO                              35          1989     BOAD           276         1       1             Réab en 2002
LIGUERE                            15          1989     BOAD           60          1       1             Réab en 2002
DIOUNDIOU                          13          2004     BOAD
ANGOUAL MADE                                   2004     BOAD
S/TOTAL 10                         518,06                              1 524       37      9

SERVICE REGIONAL DE KONNI


KONNI 1 ET 2                       2447        1979     Niger FK BIR   3000        33      2

IBOHAMANE                          750         1969     FAC            700         15      1             REHAB. 1987
GALMI                              250         1984     KFW FNI        848         6       1
MOULELA                            65          1965     FAC            124         4       1             REHAB. 1987
KAWARA                             52          1968     FAC            69          4       1             REHAB. 1987
TOUNFAFI                           28          1981     FAC            57          5       1             REHAB. 1987
DJIRATAWA                          512         1981     IDA CCCE       716         42      4             4 COOPERATIVES
AGHAROUSS                          83          2002     PROG.Sp        332         1       1
S/TOTAL 8                          4 187                               5 846       110     12

SERVICE REGIONAL DE DIFFA

                                                                                                         REHAB. 1987 canaux
CDA/DIFFA                          160         1975     CVLT           350         3       1             en terre
LADA                               60          1981     CBLT           145         1       1
TAM                                20          1979     FED CEAO       74          1       1             Réhabilité en 2002/03
CHETIMARI                          55          1995     AFD            212         3       1
S/TOTAL 4                          295                                 781         8       4
S/TOTAL GENERA 57                  13 363                              28 495      323     61


SRNY - SRTY - SRGA : Double campagne annuelle de riz sur tous les AHA de ces trois SR, sauf à Tillakaina où l'on pratique le
maraîchage sur 86 ha et Sona terrasse qui est un périmètre de polyculture de 39 ha. Ces deux AHA sont du SR de Tillabéri
SRKI : Coton, Céréales (mil/sorgho) en hivernage, blé et oignon en saison sèche
SRDA : Céréales (mil/sorgho/riz) en hivernage, poivron, oignon en saison sèche




                                                                                                                 90
      Appendix 2. Rice Irrigation Schemes Currently Not In Use In Nigeria
S/N   NAME OF PROJECT                             STATE           HECTARAGE FOR       COST OF
                                                                  REHABILITATION   REHABILITATION
                                                                       (Ha)             (Nm)
1     Peremabiri Irrigation Project               Bayelsa              1,100            1,600
2     Longkat Irrigation Project                  Plateau              200              320
3     Ganawuri Irrigation Project                 Plateau               50               50
4     Odugbo Irrigation Project                   Kogi                 100               50
5     Okpareke Irrigation Project                 Kogi                  50               25
6     Ezillo Irrigtion Project                    Ebonyi               200              120
7     Ezamgbo Irrigation Project                  Ebonyi                50               20
8     Nduerukwu Irrigation Project                Ebonyi                60              33.85
9     Ifem Ikwo Irrigation Project                Ebonyi               100              25.0
10    Norcap Irrigation Project                   Ebonyi                20              15.5
11    ABC Farms Irrigation Project                Ebonyi                20              36.84
12    Nabo Irrigation Project                     Ebonyi                20              24.80
13    ADC Irrigation Project                      Ebonyi                15              17.06
14    Owutu Irrigation Project                    Ebonyi               200              100.0
15    Nzerem Irrigation Project                   Cross - River         50              25.0
16    Adim Irrigation Project                     Cross – River         50              55.5
17    Nkum Ibi Irrigation Project                 Cross - River         25              30.5
18    Assiga Irrigation Project                   Cross – River         25              30.5
19    Idomu Irrigation Project                    Benue                 25              30.5
20    Katsina Ala Irrigation Project              Benue                200              100.0
21    Makurdi Irrigation Project                  Benue                200              100.0
22    Allam Irrigation Project                    Abia                  50              12.50
23    Bende Irrigation Project                    Abia                 200              116.0
24    Igwu Irrigation Project                     Abia                 150              161.0
25    Ndiebe Irrigation Project                   Abia                 100              80.0
26    Ndiojiogwo Irrigation Project               Abia                 150              23.0
27    Amaka Abam Irrigation Project               Abia                 150              50.0
28    Ndioji Abam Irrigation Project              Abia                 100              50.0
29    Adani Irrigation Project                    Anambra              1,500            800.0
30    Akpugo Eze Irrigation Project (Oji River)   Anambra               50              17.5
31    Lower Anambra Irrigation Project            Anambra              3,500           5,200.0
32    Ogboji Irrigation Project                   Anambra               92              40.0
33    Enugu – Abor/ Ufuma Irrigation Project      Anambra               88              36.0
34    Odoekpe Irrigation Project                  Anambra               50              24.0




                                                                                       91
S/N   NAME OF PROJECT                                STATE          HECTARE FOR        COST OF
                                                                   REHABILITATION   REHABILITATION
                                                                        (Ha)             (Nm)
35    Amankpu Irrigation Project                     Anambra             38               17.0
36    Ifite Ogwari Irrigation Project                Anambra             30              12.0
37    Dep Irrigation Project                         Nasarawa           200              200.0
38    Rutu Irrigation Project                        Nasarawa            50              20.0
39    Sabon Gida Irrigation Project                  Nasarawa           200              28.0
40    Bassa Irrigation Project                       Nasarawa            50              28.0
41    Loko Irrigation Project                        Nasarawa            50              28.0
42    Ibu Irrigation Project                         Imo                200              300.0
43    Ihitte – Uboma Irrigation Project              Imo                500              311.0
44    Igwu River (Arondi Ziogu) Irrigation Project   Imo                200              111.0
45    Ahiazu Mbaise Irrigation Project               Imo                100              19.0
46    Mbiabet Irrigation Project                     Akwa - Ibom        100              55.5
47    Ekoimbat Irrigation Project                    Akwa – Ibom         60              35.5
48    Eyehedia Irrigation Project                    Akwa – Ibom         35              20.5
49    Nung Obong Irrigation Project                  Akwa – Ibom         45              253.5
50    Kot – Obong Irrigation Project                 Akwa – Ibom         20              15.5
51    Itoikin Irrigation Project                     Lagos              450              898.0
52    Ikosun Irrigation Project                      Ekiti               60              105.5
53    Balanga Irrigation Project                     Gombe              500              400.0
54    Yau Irrigation Project                         Borno              200              51.0
55    Daya Irrigation Project                        Borno              200              51.0
56    Abadam Irrigation Project                      Borno              200              24.0
57    Damask Irrigation Project                      Borno              200              24.0
58    Ngabu Irrigation Project                       Borno              200              51.0
59    South Chad Irrigation Project                  Borno              200              250.0
60    Kwara Irrigation Project                       Sokoto             300              311.0
61    Wurno Irrigation Project                       Sokoto             1,200            461.0
62    Kalmalo Irrigation Project                     Sokoto             400              211.0
63    Kwakwazo Irrigation Project                    Sokoto             250              245.0
64    Ukhun/ Erha Irrigation Project                 Delta               50              32.0
65    Dwam Irrigation Project                        Adamawa            200              272.0
66    Dasin Irrigation Project                       Adamawa            200               8.6
67    Mayo – Bani Irrigation Project                 Adamawa             50             14.969
68    Lake Geroyo Irrigation Project                 Adamawa            570              235.0
69    Kano River Irrigation Project                  Kano              15,000           1,000.0
70    Thomas Irrigation Project                      Kano               600              131.0



                                                                                        92
S/N   NAME OF PROJECT                                STATE      HECTARE FOR        COST OF
                                                               REHABILITATION   REHABILITATION
                                                                    (Ha)             (Nm)
71    Guzu – Guzu Irrigation Project                 Kano            200             168.0
72    Magaga Irrigation Project                      Kano           300               90.0
73    Argungu / Tabarau Irrigation Project           Kebbi          100               12.0
74    Fadama Irrigation Project in Gafara,           Kebbi          200               8.5
      Dolekaina and Guradangaji.
75    New Erinle Irrigation Project                  Osun           500             600.00
76    Esa Oke Dam Irrigation Project                 Osun           800              200.0
77    Ife Odan Dam Irrigation Project                Osun           250              250.0
78    Old Erinle Dam Irrigation Project              Osun           150              150.0
79    College of Education Irrigation Project        Osun            50               50.0
80    Orile – Owu Irrigation Project                 Osun           100              125.0
81    Ero Irrigation Project                         Ondo            20               5.3
82    Bakura Irigation Project                       Zamfara         50               49.5
83    Bakori Irrigation Project                      Zamfara        7,000           1,200.0
84    Tungan Kawa Irrigation Project                 Niger          800              800.0
85    Chan chaga 1&2 Irrigation Project              Niger           30               10.5
86    Agaie Scheme Irrigation Project                Niger           20               11.5
87    Kpayi Scheme Irrigation Project                Niger           55              13.75
88    Papiri Scheme Irrigation Project               Niger           80               17.5
89    Tamani Scheme Irrigation Project               Niger           10               7.0
90    Edozhigi Irrigation Project                    Niger          850              133.0
91    Badegi Irrigation Project                      Niger          760              117.5
92    Toroko Irrigation Project                      Niger           80               20.5
93    Loguma Irrigation Project                      Niger          100               20.5
94    Bangi Irrigation Project                       Niger           50               20.5
95    Galma River Basin and Irrigation Project       Kaduna         300              200.0
96    Birnin Gwari Irrigation & Settlement Project   Kaduna         150              150.0
97    Kogun River Irrigation Project                 Kaduna         150              100.0
98    Gurara River Irrigation Project                kaduna          60               40.0
99    Kangimi / Kaduna River Irrigation Project      Kaduna          90               50.0
      Grand Total                                                  47,003          20,016,169




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