Rice policy and impact research at AfricaRice

Aliou DiagneProgram Leader,

Policy and Impact AssessmentAfrica Rice Center (AfricaRice)

AfricaRice Side Event at CORAF/WECARD MeetingSaving Rice Harvests and Moving towards Better Livelihoods

24 May 2010, 15h00-18h00, Marina Hotel, Cotonou

Outline

I. Background: the rice policy environment

II. Project 4: Goal, Purpose & Output

III. Tools for Rice Policy Analysis and Impact Assessment:

• Progress to date

• The Emergency Rice Data System Project

• The way forward

Program 4 Staffing

4 Scientists:• 1 Policy economist (Cotonou)• 1 Impact assessment Economist (Cotonou)• 1 Agricultural Economist (Saint Louis)• 1 Agricultural Economist (Dar Es Salam)

6 Research Assistants

3 Research Technicians

2 Consultants (coordinators of the Emergency rice data)• 1 Statistician (Cotonou)• 1 Statistician Programmer (Dar Es Salam)

Importance of Rice in SSA

• Employs more than 35 million farmers

• Sustains the livelihood for 100 million people

Producers

TradersProcessors

Rice is the most rapidly growing food source in Sub-Sahara Africa

Composition of food consumption in Sub-Saharan Africa(share of total calorie intake per day)

Rice is the most rapidly growing food source in Sub-Sahara Africa

Source: based on FAOSTAT

Composition of food consumption in West Africa(share of total calories intake per day)

Growing Rice Consumption in SSA

Causes:

• Population growth and urbanization

• Consumer preference and diet changes

• Increased consumption of food away from home

• Increased participation of women in labor force

• Convenience and ease of storage and cooking

Sources: IMF and FAO-STAT

The growing GAP between SSA rice Consumption & Production

Source: FAO-STAT

West and Central Africa rice trends

• Production not

keeping pace with

consumption

• Widening domestic

deficit met by

importation

• Accounts for more

than 30% of world rice

imports

• Import bill of more than

US$ 5 billion in 2008

0

5

10

15

20

25

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

Year

Mill

ion

of

ton

nes

Production Consumption

Projection of milled rice consumption in Africa1

7 M t

Source: FAO, ECOWAS and AfricaRice projections for 2008 – 2020 using the 1987-2006 growth rate (4.28%)

Projection of milled rice production in Africa7.5 M

T

Source : FAO and AfricaRice projections for 2008 – 2020 using the 1987-2006 growth rate (3.2%)

Significant changes in rice policy perceptible since the 2008 food crisis

• Proactive measures to boost local production in many member States:

Example: Pubic investments in Malian rice sector reached 85 million USD in 2008 and 106 million USD in 2009

• Emergency measures paid dividends

• Paddy production in Africa increased by 18% in 2008

• CILSS member states recorded a record production in 2008-2009 with a 44% increase compared to 2007

Potential for domestic rice production in Africa

Potential for Production ExpansionAgro-Ecology Actual

harvested Areas (Ha)

Potential cultivable Areas (Ha)

Rainfed Upland 1.8 million -

Rainfed Lowland 630,000 19 million

Irrigated lowlandHumid/semi humid areas

160,000 -

Irrigated lowland Sahel

200,000 3 million

Mangrove Swamp 190,000 1 million

Deep Water Floating 187,000 630,000

Source: Various

African rice is competitive against imports

• Estimated Domestic Resource cost (DRC) < 1 indicates that in many countries it is cheaper to produce rice locally than to import.

• Estimated Nominal Protection Coefficient (NPC) indicates local production is weakly protected except in Nigeria

• Domestic production systems possess comparative advantage and their development could:

Save foreign exchange Contribute to economic growth

NPC DRC

Benin 0.78 0.83

Guinea 1.04 0.84

Mali 1.04 0.95

Nigeria 1.62 0.73

Senegal 1.07 0.47

WARDA, NARS, 2007, 2008

Rice yield by ecology comparable to other major rice producing regions

• Land productivity not significantly different from than other regions

• Rice yield in rainfall ecologies (upland and lowland) comparable to Asia as well

• In Senegal yield increased from 2.5MT/ha to 5.8 MT

0

1

2

3

4

5

6

7

8

Mali Senegal Niger Thailand Vietnam USA

Irrigated rice yield MT/ha

Source: WARDA surveys 2005, Hossain (2002)

Local rice cheaper than import in many countries:

Yearly retail price of rice in Senegal

100

150

200

250

300

350

400

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

CF

A/k

g

Local Imported

Competitivity of local rice enhanced by upward trend in international prices

Source: OSIRIZ/InfoArroz,CIRAD

•Upward trend in pricesGlobal rice prices are projected to increase by 2.5 to 3% every year until 2017 (USDA, 2008)

•High volatility

•The variability (CV) of Thai100 up from 15% in 1990s to more than 50% in 2000-08

•Impressive surge in prices in 2008 followed by a fall just as spectacular

World market prices of selected Thai Rice

120

220

320

420

520

620

720

820

920

1,020

1,120

J an-

02

May-

02

Sep-

02

J an-

03

May-

03

Sep-

03

J an-

04

May-

04

Sep-

04

J an-

05

May-

05

Sep-

05

J an-

06

May-

06

Sep-

06

J an-

07

May-

07

Sep-

07

J an-

08

May-

08

Sep-

08

J an-

09

May-

09

Thai100 Thai25 A1Super

Rice Production in Africa: Summary of constraints

• Low aggregate yield -owing to large share of

upland rice farming system and to subsistence

farming

• Inadequate use of critical inputs

• Insufficient development of irrigation facilities

• Lack of double-cropping

• Limited size of the cultivated area

• Widespread use of hand-held tools

Rice Production in Africa: Marketing and policy/institutional constraints

• Post-harvest technologies and practices• Poor quality of the marketed product • Insufficient public investment in rural

infrastructures• Absence of the private sector in seed production• Limited access to credit • Policy environment not conducive for private

sector investment –But this is changing

Project 4 MTP 2010-2011

Project goal and purpose Goal:

To reduce poverty and food insecurity in SSA through sustainable development of the rice economies

Purpose:To generate options for policy and institutional

changes for an efficient and pro-poor rice production and marketing system

Project 4 outputs

• Output 1: Tools, methods and enhanced capacity for impact assessment, policy analysis and priority setting

• Output 2: Rice policy options and institutions for competitive domestic rice production

• Output 3: Improved post-harvest systems for competitive domestic rice production

• Ex-post Impact Assessment

Implementation• Implemented through and by NARS with

Funding and backstopping by AfricaRice:• Impact studies: 16 NARS currently involved• Post-harvest: 3 NARS currently involved• Rice Statistics 21 NARS currently involved

• Use of common methodologies• Sharing of questionnaires and survey designs• Sharing of analysis tools

• Training• Methodology-learning workshops• One-one training on the job

Methodologies

• Econometric modeling• Experimental economics• Psychological methods• Policy Analysis Matrix (PAM)• Multi-market models• CGE models• Household surveys• Aggregate time series data (e.g.

FAOSTAT)

…Ex-Post Impact Assessment Methodology

• Counterfactual outcomes framework: Comparing outcomes with and without

intervention/treatment

• Average Treatment Effect (ATE) methodology

• Estimation of actual and potential impacts

• Aggregation to national and regional level impacts using population census weights

2008 Research highlights

Enhanced NARES capacity in policy analysis and impact assessment

• 155 NARS Economists and University Students trained in ex-post impact assessment since 2002

• 20 NARS trained in the Policy Analysis Matrix (PAM) tool since 2005

• 19 NARS visiting scientists hosted since 2006 (13 in 2009 alone)

• Development of Stata modules for ATE adoption and ex-post impact assessment being used by NARS collaborators , SSA-CP post docs and Ph.D & Msc students at Ibadan, Pretoria , London & Gottingen universities

• Development of the Emergency Rice Initiative Spreadsheet (ERIS) during the 2008 food crisis to assist member states boost local rice production

•

Software tools for impact assessment: the Stata impact module

Linkage of international prices to Africa prices•Price changes in Thailand are transmitted faster to Senegal than to Mali•Contemporaneous price changes (short-run effect) between Thailand and Senegal or Mali is not statistically significant •19% of the price difference between Senegal and Thailand is eliminated each month•Nearly a year is required for full adjustment to price change in Thailand

Adjustment Coefficient

Short-run effect

3 month adjustment

6-month adjustment

12- month adjustment

Thailand-Senegal

0.193**

(0.034)

0.067

(0.099)

51% 74% 93%

Thailand-Mali

0.119**

(0.034)

0.279

(0.097)

49% 68% 87%

Senegal-Mali

0.112**

(0.036)

0.379**

(0.042)

57% 70% 85%

Bamba et. al. (2008)

Further evidences of SSA comparative advantage in rice

• Rice maize stratification project results provide ample evidence that rice production systems in Benin, Guinea, Nigeria and Senegal are competitive with Asian imports

– Ncho et al. (2008)

• Irrigated rice production in Togo enjoys substantial comparative advantage vis-a-vis imports

Koffi-Tessio et. al. (2008)

• import demand for rice in West Africa is relatively unresponsive to changes in price

Sellar (2009)

Irrigated rice farmers’ technical efficiency in the Senegal River Valley

• Improved technologies like enhanced short/medium duration Sahel cultivars and the use of the ASI thresher have a positive impact on technical efficiency as well the compliance with input recommendations

• The modest technical efficiency scores observed implies that more research and extension efforts are warranted to increase technical efficiency

Diagne et al. (2008)

Experimental end-market analysis to strengthen value chains of Senegal River

Valley rice (Demont et al., 2009)

Elicit WTP to upgrade local low-quality

rice (red dish) into 3 alternatives:

1. Imported Thai-25 rice

2. Unlabeled local quality rice

3. Labelled local quality rice (Rival, PINORD)

2009 Research Days, 2-5 November, Cotonou

• Consumers pay premium of 43 F/kg for local quality rice relative to imported rice

• They further add 29 F/kg for Rival label• WTP to upgrade local low-quality rice into alternative rice drops after sensory

test due to good taste of local mixed-grain rice

2009 Research Days, 2-5 November, Cotonou

Nerica Diffusion and Adoption

Population Adoption parameters

Cote d’lvoire

(2000)

Guinea (2001)

Benin

(2004)

Gambia

(2006)

Exposure rate 9% 39% 26% 57%

Actual adopion rate (adoption & exposure)

4% 23% 18% 40%

Potential adoption rate (ATE)

27% 58% 50% 84%

Adoption rate among exposed (ATE1)

38% 59% 68% 86%

Adoption rate among non-exposed (ATE0)

25% 57% 53% 82%

Adoption Gap 23% 35% 32% 44%

• Access to extension/training have significant effects on NERICA adoption

• A large number of farmers adopt the NERICA because of its non-yield varietal attributes:–short growth cycle –plant height–consumption and grain qualities

• Possible gender bias in the dissemination of NERICA varieties in Guinea.

Factors Affecting NERICA Adoption

• A low diffusion rate and lack of seed have so far limited the adoption of the NERICA

• NERICA adoption impact on rice yields is heterogeneous with some farmers not experiencing any yield increase when adopting NERICA

• Positive impact on income, child schooling, health, food consumption and poverty

• Nerica impact significantly higher for women than for men (Benin, Cote d’Ivoire, Gambia and Guinea)

• The ASI thresher reduces labour needed for threshing so it can contribute to attain the objective of double cropping in the SRV.

Main conclusions on NERICA and ASI adoption and impact

Future Research Direction

1. A platform for Rice Policy Research in Africa built on the Rice data systems project collaborative framework

2. Partial equilibrium model of SSA rice sectors to:

• Assess the medium- and long-term effects of changes in global rice markets and their policy implications for sub-Saharan Africa food security

• Simulate the effects of alternative policy and investment options for Africa’s rice production in the medium to long terms

Future research direction:Policy Research and Advocacy

3. Research to develop rice value chains in Africa:

• Analysis of the market failures in the African rice seed sectors

• Strategies and policy and institutional options to stimulate the emergence of a competitive processing sector for better quality rice

• Strategies and policy and institutional options to stimulate the development of demand-driven rice value chains in SSA.

Future research direction:Policy Research and Advocacy

4. Widening of the impact assessment indicators, methods and tools used:

• Assessment of impact on more poverty and environmental indicators

• Use of randomized control trials (RCT)

• Estimation of direct and indirect impacts

• Use of ICT tools for data collection and information dissemination (PDA and web-based tools).

Future research direction:Ex-post Impact Assessment

Thank you! Merci!

Center of Excellence for Rice Research