Rice Marketing Survey Report

Transcription

1 Report Undertaken in: Manatutu Maliana Suai Viqueque & Oecusse August 2004 CARE International Timor Leste

2 Contents Contents 1 References:...2 Acknowledgment:...3 List of Abbreviations EXECUTIVE SUMMARY BACKGROUND AND JUSTIFICATION OBJECTIVE OF THE STUDY SCOPE OF THE STUDY METHODOLOGY RESULTS General Description Cultivation and Production Share Cropping Double Cropping Production and Consumption Land Management and Inputs Marketing Issues VENDOR SURVEY RESULTS Market Characteristics MAIZE National Level Issues and Government KEY FINDINGS Recommendations Conclusion...48 List of Tables Table 1: Farmer interviews...8 Table 2: Vendor Interviews...9 Table 3: farmer interviews...9 Table 4: Average Household Size Table 5: Average Irrigated Rice Area per Household by Table 6: Average Irrigated Rice Yields by Table 7: Average Income of Irrigate Rice by Table 8: Sharecroppers by Table 9: Affect on Income by Share Cropping Table 10; Double Cropping by Table 11: Yield, consumption and surplus Table 12: Land Management by Table 13: Fertilizer Use Table 14: Pest Control by Table 15: Average Cost per Hectare Table 16: Irrigation Quality Table 17; Reasons Given for Poor Irrigation Performance Table 18; Farmers Selling Produce in 2003 (Maize and or Rice) Table 19: Farmers Selling Rice in Table 20; Primary Purchasers of Surplus Rice Table 21: Price per Kg Paddy Table 22; Method of Transport to Market Table 23: Reasons for waiting before selling Table 24: Who is responsible for Selling Produce? Table 25: Who is responsible for the money from the sale?

3 Table 26: Farmers exchanging produce per Table 27; Market Vendors Interviewed Table 28: Local Vendors by Market Table 29; Permanent Vendors by Table 30: Vendors only Selling on Current Market Table 31: Rice Variety per Table 32: Sources of Locally Produced Rice Table 33: Average Rice Sales for Imported and Local Rice by Table 34: Buying and Selling Price of Rice Varieties by Table 35: Vendors who sell to others Table 36: Consumer Preference for Rice Table 37: Farmers Selling Maize Table 38: Main buyers of corn Table 39: Vendors selling corn List of Figures Figure 1:Land Tenure & Production Levels Figure 3: Do farmers sell directly after harvesting? Figure 4: Market chains References: WORLD BANK, UNDP, ADB, JICA: Timor Leste Poverty Assessment 2001 PLANNING COMMISION (RDTL): State of the nation report 2002 ADB, TFET projects: Timor Leste 8 th progress report 2004 OXFAM: Overview of the Rice Sector in Timor Leste Timor Leste National development plan Ac JICA, 2001 The Study on Integrated Agricultural Development in East Timor, Sanyu Consultants Inc. ADB, JICA, UNDP, UNICEF, UNMISET, WB, and Timor Leste: Poverty in a New Nation: Analysis for Action, May 2003 FAO / WFP 2003, Special Report, FAO / WFP Crop and food supply Assessment Mission to Timor Leste. MAFF 2003, Agriculture and Livestock Sector, Priorities and Proposed Expenditure Programs, Draft for Maubessi Meeting, Dili Timor Leste MAFF 2002, Rice Tariff and Global Competitiveness of Domestic Rice Production in East Timor FAO, UNDP, ETTA, 2001, Price Policy for Rice in East Timor Strategy and Options ACIL, July 2002, Agricultural Marketing in East Timor 2

4 Acknowledgment: Many thanks to all the staff from CARE, JICA and MAFF who were involved in developing the survey tools, data collection in the field and providing input to the final report. Thanks also to colleagues from other Local and International NGO s and government departments who provided valuable input to the final writing of this report. CARE East Timor Staff Jill D Salmon Dominggos da Costa Eurico Perriera Rafael Feliciano Gastau Freites Raul Pinto Venancio Collo Agustinha Duarte Profiro da Costa Team Leader Research Coordinator Research Coordinator Enumerator Enumerator Enumerator Enumerator Enumerator Enumerator List of Abbreviations ARP II ASC RDTL MAFF FGD PRA Suco Aldea CIET DOLOG BULOG CNL FAO WFP UNOPS WUA TFET Agricultural Rehabilitation Project II Agricultural Service Centre Republica Democratica Timor Leste Ministry of Agriculture, Fisheries and Forestry Focused Group Discussion Participatory Rural Appraisal Villages Sub villages Care International in East Timor Depot Logistik Badan Urusan Logistic Centro Logistik National Food and Agriculture Organisation World Food Program United Nations Office for Project Services Water User Association Trust Fund for East Timor 3

5 1. EXECUTIVE SUMMARY Timor Leste is an agrarian society with the majority of the population living in the rural areas and primarily dependent on agriculture for their livelihood. Rice is considered the second most important staple grown in Timor Leste after Maize. As a result, the rehabilitation of the irrigated areas has been a major focus for Government efforts and donor spending. These efforts have been partly responsible for significant improvements in rice harvests, an estimated 12% increase for the year 2003 (FAO/WFP 2003). However, this increase is mainly attributed to an increase in the area planted to rice rather than improvements in production per area. In parallel with this, the repair of major infrastructure such as main network roads and market facilities have been undertaken and should begin to assist Timorese farmers in marketing surplus production. However, this survey indicates that despite improvements in production and market access, the majority of farmers are still facing significant constraints in selling their produce. Indeed, it appears from the survey that few farmers are producing a harvest adequate enough to sell a significant portion. Farmers are still producing for subsistence purposes and few are engaged in the marketing of their produce on a routine basis. The quantities of rice sold remain small and the number of farmers selling remains few. The main reasons for this identified by the report include: Limited yields due to small land holdings and low production levels, Farmers still producing for subsistence purposes, Disincentive for farmers to sell due to prices they consider low and unstable Lack of buyers in the market, Quantity and quality of locally produced rice cannot yet compete with better quality and relatively cheap imported rice, Domestic market dominated by readily available, cheap and good quality imported rice. Small quantities of Rice and Maize sold for immediate cash requirements. This study is not intended to be a nation wide survey and indeed only five districts and six irrigation schemes were targeted, however, it is hoped that this report provides some insight into the pattern of the domestic rice trade experienced in the targeted districts, the constraints faced by both farmers and domestic traders alike and the challenges faced by Timor Leste in developing a domestic market in Rice. It is hoped that the patterns and trends revealed by the study can provide direction for future study and identify areas for intervention or recommendations for both NGO s and the government to support domestic producers and traders in developing the market in domestic rice. 4

6 2. BACKGROUND AND JUSTIFICATION Since independence in May 2002, East Timor has experienced significant development in a number of areas, for example largely improved access to primary health care and primary education, restoration of basic infrastructures; such as ports, network roads, and water and electric supplies. During the Development Partners Meeting in Dili in June 2003, the rapid progress in social services was confirmed and widely shared by the participants. However, given the fact that approximately 80% of the rural population make their living from agriculture (MAFF 2003) it has been emphasised that more attention, investment and effort should be directed towards agricultural and rural development. Furthermore, it was articulated that sustainable and equitable economic growth in the rural areas is essential for national stability. Since independence, the agricultural market has undergone a period of significant change. During the Indonesian period, farmers enjoyed relatively cheep agricultural inputs such as fertiliser and seed and a guaranteed purchase price for domestic rice which created an artificial market for the crop. Since independence and the subsequent withdrawal of these systems, Timorese farmers have been challenged with obtaining agricultural inputs at an affordable price and a market for any surplus they produce while competing with high quality, readily available and relatively cheap imported rice. This has been compounded by the challenge of rebuilding lives disrupted by the conflict and the development of new trading links in the absence of traditional market relations between East and West Timor. However, domestic agriculture has begun to recover and the capacity for crop production is being restored. Paddy production in particular has been greatly improved owing to continuous efforts to rehabilitate irrigation systems. The FAO/WFP Crop and Food Supply Assessment Mission 2003 reported that a 12 percent increase in rice production was expected, primarily due to improved irrigation capacity. However, at the same time maize production was expected to experience a 34 percent reduction due to erratic rainfall during that period. Bearing this in mind, it is anticipated that a significant increase in domestic rice production may be achieved and some farmers will produce surplus crops. Hence, preparedness for absorbing any surplus is required. For marketing too, rapid changes have taken place. Comoro and Becora markets in Dili were restored by ADRA Japan with financial assistance from JICA in the earlier emergency phase. Furthermore, it is a common observation that market facilities in the major district capitals and townships are gradually being restored. Main network roads are functional and can now link producers and consumers. Despite this, many farmers are faced with a challenging socio-economic environment. In Indonesian time, Badan Urusan Logistic known as BULOG purchased products as the official agency for logistical and marketing support for crop production. However, the present policy environment and trend towards Free Trade does not equip the Government to intervene in this manner, e.g., the government purchasing products or offering a guaranteed price for producers. There are also serious questions, based on experience, of the sustainability of this type of 5

7 intervention. Alternatively, farmers need support in accessing markets and improving the quality and competitiveness of their produce. On the other hand, in the context of the sustainability and the maintenance of the rehabilitated irrigation systems, Water Users Associations (WUAs) will need to install a cost recovery mechanism, such as collection of water use fees. Enhanced marketing and trade may be one means of developing sustainable irrigation systems. Some general studies related to the agricultural market have already been conducted. However, so far, there has been limited observation carried out with farmers regarding their strategies in marketing and trade. Many argue that without a niche market, farmers will not produce more crops as a conventional wisdom. However, this year may be the first where significant numbers of farmers are able to produce surplus since the independence of Timor Leste. Observing how farmers dispose of surplus production and how they access markets is central to supporting the development of the rural areas. 6

8 3. OBJECTIVE OF THE STUDY The main objective of the study is to survey the marketability of domestic rice and develop recommendations for possible interventions to support producers. 4. SCOPE OF THE STUDY Geographical set up of the study: The study has been conducted in five target s, i.e. Manatutu, Bobonaro (Maliana), Uatulari (Viqueque), Oecusse and Suai which are recognised as major rice growing areas and which are expected to produce a surplus of paddy this year.! Laclo Irrigation System, after a long halt period, is being recovered and some surplus production is expected this year.! Maliana has also its intensive irrigation systems, including Maliana I & II and was a traditional rice growing area. The Agricultural Service Centre (ASC) is operational under TFET.! Viqueque, Uatulari Irrigation Systems in particular were also major rice growing areas and practised double cropping in the past. There may be some sound perspective for trading rice amongst local producers there.! Suai is also a rice producing area but many rice fields are not cultivated, especially those opened by transmigrants under Indonesian occupation.! Oecusse has been experiencing unexpectedly high harvests compared to other districts (ARP II). There is also potential influence from cross border trade. The scope of the study is three-fold: to observe the supply side; demand side; and linkages of demand and supply. Supply side: A study on emerging strategies amongst farmers regarding marketing/ trade. 1. Identify size of surplus production and its projection for the near future 2. Observe farmers strategies in dealing with their surplus? 3. Identify potential markets? Perhaps some farmers will find some markets in nonrice growing areas, i.e. uplands within a kinship network or a barter trade basis? Demand side: A study on demand is conducted in selected areas of country. 1. Some groups may needs food on a credit basis. If local rice is sold on a credit basis then it may have a comparative advantage against imported rice. 2. Any preference for local varieties amongst nationals, e.g. Rice and maize. 3. Is there is niche market, capital, rural centre, village, hindering areas, or nearby/ right in the producing place? Who wishes to buy local produce? Linkages 1. Are there any existing linkages between particular producing areas and markets? 7

9 2. Perhaps some farmers will find some market in uplands within kinship network on a batter trade basis? 3. To what extent has the ASC contributed to rural development in Maliana? 4. What can we learn from the experience of the ASC? Can this area be a model for other rice growing areas? 5. Are there both positive/ negative impacts on East Timor farmers from the crossboarder trade (legal/illegal)? 5. METHODOLOGY CARE undertook questionnaire surveys with farmers and vendors in each of the five s. Vendors in the Dili markets of Becora, Taibessi and Comoro were also interviewed. In addition to the survey, PRA activities were undertaken with farmers in each of the s to triangulate data collected through the interviews and also to gain a more general idea of the current production and marketing situation. The following interviews took place: Table 1: Farmer interviews Sub Scheme Interviews Viqueque Uatolari Uatolari I 145 Oecusse Tono Tono I 89 Oecusse Oemata Oemata Hutu 52 Maliana Maliana Memo 88 Suai Zumalai Beco II 69 Manatutu Manatutu Laclo In addition to the Farmer survey, CARE undertook interviews with market vendors in the targeted districts and also in the major Dili markets of Becora, Taibessi and Comoro. No data was available as to the size of the markets and many of the market vendors are non-permanent, as a result, a sample of 20 vendors from each of the main Dili markets was taken and 10 from the local district markets. In small local markets, where a sample size of 10 was not possible as there were inadequate numbers of vendors, all the market vendors selling rice and corn were interviewed. 8

10 Table 2: Vendor Interviews Sub Market Interviews Dili Comoro / Don Aleixo Comoro 22 Dili Taibessi Taibessi 19 Dili Becora / Cristo Rei Becora 19 Viqueque Uatolari Uatolari 22 Maliana Maliana Maliana 30 Suai Suai Suai Kota 30 Manatutu Laclo Manatutu 8 Oecusse Oecusse Tono RESULTS 6.1 General Description Table 3: farmer interviews Status Child Partner (Wife) Number % Number % Number Household Head % Number % Gender Male Female % 12.5% 100.0% % 100.0% 100.0% % 7.6% 100.0% % 15.3% 100.0% In total 496 households were interviewed and analyzed, the majority of which were male household heads (see Table 1). Thirty four female headed households were interviewed and where the household head was not available, the partner or eldest child was interviewed instead. 9

11 Table 4: Average Household Size Mean Maximum Minimum Maliana Manatutu Oecusse Suai Viqueque The average household was comprised of 6 direct family members living under the same roof. Households ranged from 1 family member to 20. Manatutu had the highest average household at almost 7 members, while Oecusse had the lowest at just over Cultivation and Production Approximately 75% of the population of Timor Leste live in the rural areas, with around 75% relying exclusively on agriculture for their income (TL Poverty in a New Nation, 2003). However, the contribution of agriculture to non-oil GDP remains small and actually declined to 26% in 2000 from 32% between 1993 and 1998 (TL Poverty in a New Nation, 2003). This decline is mainly attributed to the destruction of infrastructure and assets, population displacement and the absence of agricultural subsidies such as fertilisers and seed, which previously supported Timorese farmers (Timor Leste, Poverty in a New Nation: Analysis for Action, 2003). Both irrigated and dry land rice is cultivated and estimates for the number of households engaged in Rice production vary from 23% (The National Development Plan, Planning commission 2002) to 30% (Timor Leste Suco Survey 2001), with the Timor Leste Household Survey estimating 26%. Of the 36,700 hectares estimated by FAO/WFP (Crop and Food Supply Assessment Mission, 2003) to be under lowland rice cultivation, approximately 34,386 hectares have access to irrigation water. Only 3,500 hectares are planted a second time and upland rice is estimated at around 3,500 hectares. The main rice producing areas are concentrated in Viqueque, Bobonaro, Manatutu, Baucau, Oecusse and Cova Lima (FAO/WFP 2003). In general Timorese farmers are subsistence producers employing a low input/output system. Rainfall and its distribution are the main determinants of agriculture production, soils are often poor and the climate is regarded as unreliable and sometimes erratic (FAO/WFP 2003). This has been illustrated in recent years by climatic fluctuations in part caused by the El Nino effect. 10

12 Table 5: Average Irrigated Rice Area per Household by 2003 Mean Maximum Minimum Sum Maliana Manatutu Oecusse Suai Viqueque Based on the survey results, the average household cultivates approximately 1.18 ha, though there is considerable difference between s, with Oecusse cultivating an average of 0.77ha and Maliana 1.73ha. Land cultivation ranged from 0.01 ha to 8 ha, though the majority of farmers cultivated approximately 1 hectare of irrigated rice. This is similar to the overall estimate of 1.2 hectares per household (Timor Leste: Poverty in a New Nation: Analysis for Action). The total area cultivated to irrigated rice by the respondents was ha. Agricultural data in a country like Timor Leste is notoriously difficult to collect and analyze without undertaking actual measurements. Farmers do not use standard units of measurement and have only an arbitrary idea of the area that they cultivate. Survey interviews with farmers were conducted either in the Paddy field or in farmers homes, plots were not actually measured, but estimated by farmers and CARE staff, and where possible paced out or a visual estimation undertaken. Farmers themselves are not always aware of how much land they cultivate in terms of hectares, and land units vary between different areas, the absence amongst farmers of standard measuring units makes it difficult to make accurate estimates of land area. Table 6: Average Irrigated Rice Yields by 2003 Average Harvest Per Hectare Maliana Manatutu Oecusse Suai Viqueque On average, a household achieves Kg (or almost 1.8MT) of irrigated Paddy per hectare. Suai achieved the highest mean harvest rate ( kg/ha), while Viqueque had the lowest ( kg/ha). These figures are consistent with those estimated by the FAO/WFP assessment mission for 2003 where areas with access to water during the cropping season yield approximately 1.8mt. Yields can be higher, up to 3mt where fertilizers and improved seeds are used (FAO/WFP 2003). 11

13 There is no standard measuring unit in Timor Leste that is universally used by farmers, as a result, staff used the local units and converted them into kilo grams. There is a need to establish standard measuring units as well as reliable data for land owned and cultivated by farmers in order to make accurate estimates of land cultivated and production levels. This is also important for tracking changes in terms of agricultural development over time and for determining future interventions by Government and other stakeholders. Table 7: Average Income of Irrigate Rice by 2003 Average Income Per Hectare Maliana $36.49 Manatutu $97.84 Oecusse $56.88 Suai $ Viqueque $54.04 $77.28 During the survey and Participatory Rural Appraisals, Crop Analyses, or Cost Benefit Analyses were undertaken to estimate the level of income a farmer could potentially achieve if they sold their whole crop of irrigated rice prior to household consumption. It should be noted that this is not the real income experienced by farmers, as in reality, only a small portion of the harvest is sold, the majority being used for household consumption. However, the analysis is useful in indicating the limited ability and financial incentive for farmers to sell. The costs involved were the real costs experienced by the respondents and were primarily land rent, land preparation, seed, transport, processing and in some cases paid labor for specific activities such as harvesting. Other inputs such as fertilizer and pesticides were also included, but the application of chemicals amongst the respondents was limited (see below). Overall, average income was estimated at $77.28 per hectare; however the variation between districts was significant, rising to $ per hectare in Suai compared to $36.49 per hectare in Maliana. Variations in yield between districts and the selling price of rice were the main determinants causing the difference in potential income between districts. The higher potential income in Suai was a result of the higher yields experienced per hectare combined with a higher selling price of $15.50 per sack or $0.17 per kilo compared to around $0.11 per kilo in other areas. In addition, the absence of sharecropping reduced production costs significantly for Suai farmers. Despite this, in all s the income that could be potentially obtained from the sale of one irrigated crop is minimal and probably inadequate to finance the feeding of a family of 6 for one year (see below). In addition, few farmers are producing a second irrigated rice crop. Only in Suai, was there a high level of double cropping that might encourage the marketing of some produce while maintaining food stocks for family consumption and food security (see below). The reluctance to produce a second crop, even in areas where there is adequate water availability appears to be party due to the lack of financial incentive, but also due to farmers preferring to use 12

14 crop residues and undergrowth for grazing livestock (MAFF November 2003). The relative importance and profitability of livestock may outweigh the gains from a second crop of irrigated rice. Following this, it may be more effective to support livestock initiatives rather than focusing on encouraging double cropping, especially bearing in mind the relative cheapness of imported rice. The diversification of agricultural livelihoods in general for both consumption and cash is needed, in particular given the risk prone conditions Timorese farmers face. However, if livestock initiatives were to be encouraged as an important alternative income source, diversification of crops for livestock feed would also require support and development in addition to more extensive support for animal health. 6.3 Share Cropping During the Oxfam led seminar for the report Overview of the Rice Sector, participants agreed that although land tenure was an issue, it did not impact upon rice production (Oxfam 2004). However, this was in terms of contested or conflicting land rights rather than sharecropping. The results of this survey however raise the issue of land tenure in terms of sharecropping and identify it as a significant impact on both production and income. A significant proportion of the farmers interviewed are sharecroppers; just over 25% did not cultivate their own land, but rented land from someone else, this may be a large local land owner or a family member. The proportion of sharecroppers was highest in Manatutu (47.2%) and lowest in Suai (0%). Share croppers are farmers who rent land each season. Rent is normally paid in produce, with the land owner receiving half of the harvest. In some cases farmers reported that if their harvest was particularly poor, due to harvest failure, the land owner may forgo his portion and allow the farmer to keep the full harvest. Table 8: Sharecroppers by Sharecropper Yes No Maliana 34.1% 65.9% 100.0% Manatuto 47.2% 52.8% 100.0% Oecusse 1.4% 98.6% 100.0% Suai.0% 100.0% 100.0% Viqueque 48.2% 51.8% 100.0% 25.5% 74.5% 100.0% Sharecropping has a significant impact on both food security and income as half of the harvest is shared with the land owner immediately after the harvest and in some 13

15 cases; services for tractors or buffalo owned by the land owner are also deducted from the harvest. (See table below for effect on income). As a result, sharecroppers are normally left with at most, half of the harvest for household consumption and / or sale. In addition, many farmers reported that the plot of land they cultivate may change each season, though it was unclear as to the reason why. Many farmers interviewed, in particular in Manatutu indicated that their plot the previous season was in a different location and they were unsure if they would remain on the current plot next season. The possibility of cultivating a different plot of land the following season may be an additional disincentive for sharecroppers to invest in their land. Figure 1: Land Tenure and Production Levels Statistics : Mean Variables : Kg / Ha Mean yeild (kg/ha) Share Cropper Land Owner Average Land Tenure 14

16 As mentioned above, overall, farmers are producing an average of kg/ha. However, there is also a significant difference in production levels between sharecroppers and landowners. On average land owners yield kg/ha compared to kg/ha for sharecroppers. A difference of kg/ha. It is a common observation that when farmers do not own their own land, the incentive to invest is reduced, in particular this disincentive may be exaggerated if farmers are constantly changing the plot of land they cultivate. Sharecroppers may also be among the poorer sectors of the rural population with limited ability to invest in other factors such as labor and inputs. Table 9: Affect on Income by Share Cropping Land Tenure Average Income Per Hectare ($) Sharecropper Land Owner During the crop analysis, potential income was estimated. Overall, average income, as mentioned above was $77.28 per hectare. The average income was also calculated for land owners and sharecroppers. For share croppers, the portion of the harvest paid to the land owner was considered a cost and was deducted from the gross revenue resulting from the sale. The affect of sharecropping on income is highly significant. Average income for land owners was estimated at around $ per hectare, while sharecroppers, if they sold all of the harvest would make a loss of $11.65 per hectare. The survey identifies a sector of the rural population that needs additional support and assistance from Government and other institutions. There may also be a need to establish fair, maximum rate for land rent to address issues of both food security and family income. However, this may be difficult, for although losing half the harvest to rent is a significant loss, the rent is related to yield and there appears to be a certain amount of flexibility in the system, for example if harvests are particularly low, land owners may wave the rental fee. In addition, a monitory fee is not yet viable as the majority of farmers are still producing for subsistence purposes and have limited disposable income. 15

17 6.4 Double Cropping Table 10; Double Cropping by Number of Irrigated Rice Crops / Year One Two Maliana 100.0% 0.0% 100.0% Manatuto 98.0% 2.0% 100.0% Oecusse 98.6% 1.4% 100.0% Suai 15.2% 84.8% 100.0% Viqueque 91.4% 8.6% 100.0% 85.3% 14.7% 100.0% In the south where there is a second rainy season, and in areas with supplementary irrigation, it is possible to grow a second crop of maize or rice (FAO/WFP 2003). However, the FAO/WFP estimated that the relative importance of the second crop is small, approximately 10 percent of the total production area. Farmers also claim that the low and unstable buying price for rice acts as a disincentive to increase production either by increasing the area cultivated or by planting a second crop if the returns to labour are small compared to household consumption needs and the opportunity to sell. In addition, limited water availability and labour constraints in the face of cultivating other crops such as maize, mung bean or cassava may also be a reason for the limited number of farmers double cropping. Farmers also apparently prefer to use the crop residue to graze their livestock as appose to planting a second rice crop. The survey results indicated that in most cases (85.3%) farmer s only plant one irrigated rice crop per year. However, in Suai 84.8% of farmers interviewed indicated that they double cropped. In the remaining s, a very small percentage of farmers interviewed achieved two cops of irrigated rice per year. The prevalence of double cropping in Suai is probably partly responsible for the higher percentage of farmers selling produce in 2003 (see below). The higher prevalence of double cropping in Suai may in turn be influenced by the higher selling price of $15.50 per sack (50kg), making the investment in a second rice crop more attractive to farmers. Double cropping may also be due to the presence or influence of transmigrants who moved there during Indonesian rule. More effective and efficient cultivation techniques may have influenced the farming systems employed in the area. 6.5 Production and Consumption Although this survey does not attempt to delve into more specialized discussions regarding food security, when discussing production levels and surplus, it is useful to relate the average production of rice per hectare to estimated yearly consumption 16

18 levels of an average family. This should indicate the quantity of rice remaining that can be identified as surplus available for sale. Although the composition of the farming households interviewed varied, the average household was approximately 6 family members. In order to provide a general idea of the consumption needs of an average family, 2100 kilo calories per head was assumed (SPERE standards). 1 Normally 65% of calorific intake should be obtained from carbohydrates. Assuming that 65% of calorific intake comes from rice, approximately 350 grams of rice would be consumed by each family member per day and 2.10kg of rice by the average family of 6. This would mean a yearly requirement of kg of rice for the average family, or kg per person per year. Table 11: Yield, consumption and surplus Average Harvest Per Hectare (kg) Average yield of milled rice per hectare (kg) Average cultivated area Average yield of milled rice per cultivated area Balance after consumption (kg) Maliana Manatuto Oecusse Suai Viqueque Based on the average harvest per district and deducting 40% for losses during milling, average milled rice is approximately kg per hectare, or kg for the average area cultivated of 1.18 hectares. After family consumption requirements have been deducted, this leaves an average balance of kg of rice for sale. However, this does not take into account post harvest losses, which for rice are estimated at 5% (FAO/WFP 2003) and seed requirements, normally assumed to be 40kg/ha. In addition, this analysis does not take into consideration the loss of half the harvest to land owners by sharecroppers. This would constitute a considerable reduction in the rice available to the households who practice sharecropping. The assumption that 65% of the diet comes from carbohydrates may also be an under estimation as the Timorese diet is high in carbohydrates. Based on historical 1 For an active adult male it is normally 2400 kilo calories and less for women and children of different ages. 17

19 evidence and rising trends to substitute Rice for Maize, FAO/WFP estimated 84% of the calorific content of the Timorese diet came from the staples, Maize, Rice and Cassava (FAO/WFP, 2003). However, some of this would be provided by Maize and Cassava as well as rice. These estimates indicate that in general, the majority of farmers interviewed are subsistence farmers, consuming all or the majority of their harvest, with only small quantities available for sale. 6.6 Land Management and Inputs In general Timor is considered to be dominated by low input / output subsistence agriculture (FAO/WFP 2003). The majority of farmers are still using traditional cultivation techniques and limited application of inputs or improved seed. Poor land preparation and cultivation practices, low quality and often mixed seed and poor post harvest processing and storage all contribute to low yields and poor quality produce compared to imports. Table 12: Land Management by By Hand Buffalo Trampling Land Preparation Buffalo Plow Hand Tractor Other Maliana 0.0% 0.0% 0.0% 100.0% 0.0% 100.0% Manatutu 24.5% 34.0% 0.0% 41.5% 0.0% 100.0% Oecusse 0.7% 6.4% 0.0% 92.9% 0.0% 100.0% Suai 0.0% 1.4% 1.4% 92.8% 4.3% 100.0% Viqueque 0.0% 52.4% 0.0% 44.1% 3.4% 100.0% 2.8% 21.0% 0.2% 74.4% 1.6% 100.0% From the results of the survey, the majority of farmers are using hand tractors to prepare their fields (74.4%). This is as high as 100.0% in Maliana. However, in Viqueque and Manatutu, a significant number are using buffalo trampling (Rencah) for field preparation (52.4% and 34.0% respectively). However, despite the high prevalence of farmers using hand tractors for field preparation, during the PRA s access to tractors was identified as one of the major constraints encountered by communities in all areas. Tractors were either limited in number or in many cases, not functional. Limited access to spare parts and a low skill level in repairing damaged tractors were factors that affected their availability. Limited access to buffalo was also a constraint identified. Limited access to tractors and buffalo can lead to late planting as farmers wait for the previous farmer to complete land preparation before they can access a tractor or buffaloes. During the survey trial in Manatutu, which took place in early March, 18

20 farmers were still engaged in planting their fields and in some cases they where still undertaking land preparation. The reason cited by farmers was competition for tractors and Buffalo. In addition, Rencah (buffalo trampling) can cause soil compaction, uneven and deep planting and minimal turn over of top soil, which has a significant affect on yield. Rencah is also labor intensive as a number of farmers are required to control the animals and prevent them from damaging the paddy field walls or from entering other areas which have already been planted. Table 13: Fertilizer Use Fertilizer Use Chemical Organic None Maliana 17.0% 0.0% 83.0% 100.0% Manatutu 15.1% 5.7% 79.2% 100.0% Oecusse 79.9% 0.7% 19.4% 100.0% Suai 12.1% 0.0% 87.9% 100.0% Viqueque 0.0% 0.0% 100.0% 100.0% 29.2% 0.8% 70.0% 100.0% In general, the use of chemical inputs by farmers remains low due to difficulties of price and access in the districts. This is corroborated by the survey results. With the exception of Oecusse, the use of chemical inputs remains limited, only 29.2% of respondents used chemical fertilizer and 34.6% used chemical pesticide. The use of chemical herbicides was very minimal with only 0.8% of respondents applying them. The exception however was Oecusse, where 79.9% of interviewees reported using fertilizer and 76.1% of respondents applied chemical pesticides. In Maliana and Suai, some farmers were using chemicals and it is possible that the significant level of chemical use in Oecusse and the higher prevalence in border areas is influenced by cross-border trade. Although 15.1% of farmers in Manatutu indicated that they used chemical fertilizers and 41.5% applied chemical pesticides. 19

21 Table 14: Pest Control by Pesticide Use Chemical Manual Organic None Maliana 5.7% 3.4% 2.3% 88.6% 100.0% Manatutu 41.5% 15.1% 5.7% 37.7% 100.0% Oecusse 76.1% 0.0% 0.0% 23.9% 100.0% Suai 40.9% 0.0% 3.0% 56.1% 100.0% Viqueque 5.8% 0.7% 0.0% 93.4% 100.0% 34.6% 2.5% 1.5% 61.4% 100.0% Seed The majority of farmers were using saved seed (95.4%), a combination of local varieties and improved varieties such as Membramo and IR64. Only 1% used certified seed and the remainder planted seed bought or exchanged locally. The origin of certified seed was unclear. Seed quality and consistency is frequently identified as a key issue in terms of production and the quality of produce by many stakeholders involved in agriculture in Timor Leste (Stakeholder Workshop on Seed CARE, 29/5/04). Farmers generally save seed from the previous season and this seed may be several generations old. Over time seed become mixed and produces non-uniform grain and poor yields. As a result, milled rice is also of non-uniform size and has a high level of broken grain, around 30% (Cesar da Silva, Rice Marketing Workshop, 29/7/04). This was also an issue raised by the ASC in Maliana. Because farmers generally sell relatively small quantities of grain to the ASC, milling machines are not emptied and cleaned after each milling, this results in milled rice of non-uniform size and contributes to the quality of domestically produced milled rice compared with imported rice. During the Stakeholder workshop on Seed, the need to establish standards for seed quality and also a domestic seed multiplication facility were raised. Improving farmer knowledge and understanding regarding the need to restock their seed supplies to retain the viability and quality of their seed stocks is also needed. A number of organizations are already currently working on this issue. Table 15: Average Cost per Hectare Number Mean Maliana 88 $ Manatutu 53 $36.96 Oecusse 140 $ Suai 66 $ Viqueque 139 $ $

22 On average, the cost of production was $ per hectare. The main costs encountered by the respondents were land preparation which is normally between $30 and $50 per hectare for tractor or buffalo rental which tends to be paid in rice, paid labor for some agricultural activities and inputs. For sharecroppers, land rent was the most significant cost. If the average yield over all districts kg per hectare, the cost per kg of rice is $0.09. Given the average selling price of $0.13 per kilo gram, farmers receive a profit margin of only $0.04 per kilo gram or 30%. This profit margin is relatively healthy. Perhaps the limited proportion of farmers selling is related to relatively small land holdings and low production per area. There is also some anecdotal evidence from discussions in development circles of communities hoarding their produce, a consequence of the recent conflict and two consecutive years of drought induced crop failure. Table 16: Irrigation Quality Is the irrigation adequate? Yes No Don t Know Maliana 87.4% 12.6% 0.0% 100.0% Manatutu 96.2% 1.9% 1.9% 100.0% Oecusse 97.9% 2.1% 0.0% 100.0% Suai 76.8% 21.7% 1.4% 100.0% Viqueque 18.7% 81.3% 0.0% 100.0% 70.2% 29.4% 0.4% 100.0% Overall, 70.2% of farmers felt that the irrigation systems were adequate, while overall 29.4% indicated that there were problems. In fact, during the survey, farmers in all areas indicated that there remained problems associated with the schemes. This was highest in Viqueque, where 81.3% of those interviewed were frustrated with the condition of the irrigation scheme and felt it was one of the most significant constraints that they faced. In this case, the intake gate was not functional and farmers had redirected water from other sources and used the existing channels to irrigate fields. Also, in Suai, a significant number of farmers (21.7%) stated that there were still problems with the irrigation system. In most cases damaged irrigation channels and inadequate water debit were the main problems faced (see table below). 21

23 Table 17; Reasons Given for Poor Irrigation Performance Reason Water debt inadequate Irrigation is none technical Irrigation is damaged Drought Frequency Percent 18 13% 4 3% % 2 1% % Where the irrigation was said to be poor or problematic, the main reasons given were that the irrigation scheme was damaged, this normally related to the water channels being physically broken or silted, or that the water debt was low. During farmer discussions, some farmers indicated that they owned land that they currently did not cultivate due to problems with the irrigation, either the water debt was insufficient or the channels servicing that land were currently broken and irrigation water did not reach the plot. In terms of production, a number of issues can be identified through the survey. Irrigation remains an issue for farmers in all the study areas and relatively few farmers are growing a second irrigate rice crop, despite this being the main objective behind the significant investments in irrigation reconstruction and repair. Given the investments in this area, the ongoing repair and maintenance of current systems still needs to be addressed. While communities may be able to take responsibility for routine repair and maintenance of non-technical schemes and secondary canals, where WUA s have been established, they still have no clear direction or skills and are not functioning effectively. There needs to be significant investment in community capacity building, organization and training in order to establish sustainable systems for irrigation use, repair and maintenance. For more intensive repairs, this is currently beyond the scope of the community. For future construction and rehabilitation of irrigation schemes, community involvement is essential from the onset, in particular in determining how the schemes will be maintained and managed in the future. Land preparation is a significant constraint for farmers and impacts upon production levels. Addressing the limited availability of hand tractors and training or establishing means of maintaining and repairing those already existing should be a priority. For the future, tractors for which spare parts can be accessed are essential. In Manatutu, during the survey MAFF was undertaking training with farmers in buffalo traction. This should be considered as a more sustainable alternative to hand tractors given the current level of mechanical skill that farmers possess and the limited access 22

24 to spare parts. It may also assist in reducing labor requirements and problems associated with buffalo trampling. The application of chemical inputs is a controversial subject, and in Timor Leste, the promotion of such chemicals is debatable where the majority of farmers are still subsistence level. However, there is some evidence from the survey that in areas where there chemicals are available, yields are also higher. However, there is a need to provide access to chemicals at an acceptable price for those who choose to use them. In parallel with this, if chemicals are provided, farmers need training with regards to correct input use and application. This is essential to reduce the costs of production and minimize the negative impacts on the environmental and human and crop health. Soil analysis should also be a key component to ensure that farmers do not overdose the inputs they apply. Training in alternatives to chemical use such as green manures should also be pursued as a more sustainable alternative. Similarly, alternative means of overcoming pests should be explored. 6.7 Marketing Issues The survey indicates that in the targeted areas there is still a lack of surplus rice, with the majority of farmers producing mainly for subsistence purposes. Production levels remain low and the level of surplus available for sale is limited. The market in rice is dominated by imported rice which is generally of better quality, cheaper and readily available. Alternatively farmers complained that there was a lack of buyers and that the selling price of rice is low and unstable. Table 18; Farmers Selling Produce in 2003 (Maize and or Rice) Farmers Selling Harvest (2003) Yes No Maliana % Manatuto % Oecusse % Suai % Viqueque % % 50.0% 50.0% 100.0% 26.4% 73.6% 100.0% 14.2% 85.8% 100.0% 84.1% 15.9% 100.0% 12.4% 87.6% 100.0% 31.0% 69.0% 100.0% 23

25 Overall 31.0% of respondents sold a portion of their harvest of corn or rice in This was highest in Suai (84.1%) and lowest in Viqueque (12.4%). It is often observed that farmers sell small portions of their harvest when cash is required for specific family requirements, or that farmers sell their rice immediately for cash and when stocks run out, purchase rice for consumption or substitute it with another staple. The livelihood flow diagrams drawn by communities as part of the PRA s, indicated that the proportion of rice sold ranged from 0% to 25%, while corn is predominantly for household consumption, although a small amount may be sold on a needs basis. Most communities indicated that they normally sell around 15% of their rice harvest to fulfill household needs such as school fees and health related costs, while corn and cassava are almost exclusively for household consumption. Table 19: Farmers Selling Rice in 2003 Farmers Selling Rice Yes No Maliana 29.5% 70.5% 100.0% Manatuto 25.0% 75.0% 100.0% Oecusse 14.2% 85.8% 100.0% Suai 73.1% 26.9% 100.0% Viqueque 10.1% 89.9% 100.0% 25.1% 74.9% 100.0% In terms of rice sold, overall 25.1% of farmers sold some of their rice harvest in 2003 and again, this was highest in Suai and lowest in Oecusse. The higher incidence of farmers selling in Suai and Maliana is probably related to the higher yields achieved in these areas, while Suai may also be affected by the high incidence of double cropping in this area (81.8%), and the higher selling price of $15.50 per sack or $0.17 per kilo compared to around $0.11 per kilo in other areas. 24

26 Figure 1: Reasons why farmers did not sell produce 19.96% Reason for Not Selling Only for consumption Harvest Failure Low and unstable price No buyers 11.98% 0.20% 67.86% A combination of factors affects farmer decision making with regard to the sale of their produce. The decision not to sell was mainly due to lack of surplus, with harvests being used for subsistence purposes only (67.89%). In many cases farmers indicated that the current yield was also inadequate for household needs and at some point during the year they would either purchase rice or replace it with other staples such as maize or cassava. During the PRA s, staff undertook seasonal calendars and in most communities at least one or two months were encountered were food stocks were depleted and additional rice or corn would be bought, normally around September, October and November. An absence of buyers (19.96%) and a low or unstable buying price (11.98%) were also reasons why farmers chose not to sell. Many of the farmers interviewed and who participated in the PRA s complained that the price they are offered for rice is too low and was a disincentive to increase production in particular considering the relatively high costs of production that they face. If rice is sold, it is generally sold when cash is required for a specific purpose. 25

27 Table 20; Primary Purchasers of Surplus Rice Farmer s selling produce directly Market Vendor Buyers of Rice (%) Wholesaler ASC Cooperative CNL Kiosk Maliana Manatutu Oecusse Suai Viqueque The majority of farmers who are selling a portion of their rice harvest are selling to market vendors (63.9%). Alternatively, a significant proportion are selling produce themselves locally amongst neighbors or family and friends. Only 3.0% of farmers interviewed indicated that they sold their rice to the ASC and 3.0% sold to a cooperative. This was highest in Maliana where 7.7% of the farmers selling rice sold their harvest last year to the Agricultural Service Centre. Approximately 12.5%of farmers in Manatutu claimed that they sold some surplus to the ASC, however, given the distance of the Maliana ASC from Manatutu, it is more plausible that respondents confused the ASC with CNL. In all locations, surplus was sold within the district. The survey results indicate that there are few vendors buying rice at the farm gate and other than the ASC and CNL there is a lack of middle men who can purchase in quantity from farmers and process and pack produce prior to selling on the local and Dili markets. Table 21: Price per Kg Paddy Mean Maliana $0.10 Oecusse $0.11 Suai $0.17 Viqueque $0.16 Manatutu $0.11 $0.13 The average buying price of Paddy in the targeted areas was $0.13 per kilo, however the price of Paddy varied between districts. The price per kilo gram of Paddy was highest in Suai and Viqueque where farmers cited $0.17 and $0.16 per kilo of Paddy respectively. The higher buying price of rice in these areas may be 26