A Segmented Policy Strategy for Rice Value Chain Upgrading in Africa
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1 A Segmented Policy Strategy for Rice Value Chain Upgrading in Africa Matty Demont International Rice Research Institute Los Baños, Philippines, (previously with Africa Rice Center)
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3 US /kg Introduction NRDS 40% Rice harvests in Senegal River Valley 40 Sep-2007 Sep-2008 Sep-2009 Sep-2010 Sep-2011 Sep-2012 Rice price spike Month/year Imported broken rice Local rice
4 Introduction Senegal s NRDS overly relied on productivism Market temporarily flooded, even in times of food crisis! Surplus was not timely absorbed by demand Farmers complain they cannot market their rice Domestic rice markets poorly integrated into broader markets (Barrett, 2008) In , domestic rice only satisfied 20% of demand (USDA, 2015)
5 Introduction Since 2011, new initiatives in rice value chain: PINORD farmers platform Senegalese Rice Promotion & Marketing Company (SPCRS ) Durabilis Vital Value chain upgrading (quality governance, contract farming, branding,...) Complain about low availability of paddy rice Mismatch between buyers and farmers??
6 Is African taste becoming Asian?
7 Diet change in Asia vs. Africa Bennet s Law: rising incomes lead to diet diversification towards: 1.Non-grains (meat, fish, dairy, fruit, vegetables) & animal feed grains 2.Processed products 3.Prepared foods bought away from home
8 Is African taste becoming Asian? Gap
9 Voordracht voor de Gezinsbond Afdeling Eikevliet, Bornem, 12 december 2012
10 Sample of 23 CARD countries, that submitted National Rice Development Strategies (NRDS)
11 Group 1 = coastal countries strongly exposed to rice imports (Senegal, Liberia, Cote d Ivoire, Ghana, Togo, Benin, Nigeria, Cameroon) Group 2 = coastal countries not yet strongly affected by rice imports or with comparative advantage in demand (Gambia, Guinea, Sierra Leone, Kenya, Tanzania, Mozambique, Madagascar) Group 3 = landlocked countries (CAR, DR Congo, Mali, Burkina Faso, Ethiopia, Rwanda, Uganda, Zambia)
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14 Research questions Can Africa become self-sufficient in rice? Can African rice compete against Asian rice? Cost-wise? Cost competitiveness Quality-wise? Quality-based competitiveness If rice quality is upgraded (product upgrading) and farmers linked to markets (channel upgrading), under which conditions are consumers willing to pay for the upgrades?
15 Research hypothesis In many import-biased countries endowed with a port, urban consumers have imported Asian rice preferences Domestic rice is differentiated from Asian rice through intrinsic/extrinsic quality (packaging, branding, reputation) and fails to compete Research hypothesis: undifferentiating before boosting supply
16 Domestic versus imported rice imported upgraded Senegalese
17 Domestic versus imported rice
18 How can we test this hypothesis? Experimental auctions enable observing consumers response to upgrading of 1. Intrinsic quality attributes: Post-harvest quality upgrading Varietal upgrading 2. Extrinsic quality attributes: Labeling and branding Information (radio, TV, peers, )
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21 Auction results Willingness to upgrade standard rice?
22 Auction results 100% 80% 60% 40% 20% 0% Willingness to upgrade (WTU) Willingness to pay (WTP)
23 : 14 experimental auctions in 11 African markets, involving 1,610 women
24 What did we learn? Meta-analysis of 14 experimental auctions in 11 African markets involving 1,610 women:
25 What did we learn? Large segment willing to upgrade to rice with improved intrinsic quality attributes (68%, usually younger, wealthier & more educated) Intrinsic quality attributes add 26 31% value Extrinsic quality attributes further strengthen market share (5%) and add value (8%) Word-of-mouth amplifies comparative advantage in demand
26 A segmented policy strategy Group 1 countries 1. Product (undifferentiation), process & channel upgrading 2. Productivity upgrading 3. Demand-lifting (differentiation): branding & promotion Group 2 countries 1. Productivity upgrading 2. Product (differentiation), process & channel upgrading 3. Export markets Group 3 countries 1. Productivity upgrading 2. Product, process & channel upgrading 3. Upgrading internal marketing infrastructure 4. Regional VC approach
27 Conclusion Experimental auctions have provided support for segmented policy strategy for NRDS Some NRDS will need to be allocate more resources to value chain upgrading to: Increase quality-based competitiveness of domestic rice relative to imported rice Better integrate domestic rice markets into global markets with more elastic demand, increase smallholders participation & improve livelihoods
28 Thank you Merci Me daa si Matty Demont International Rice Research Institute Los Baños, Philippines, (previously with Africa Rice Center)
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