Civil Society for Poverty Reduction Western Province. Rice Production and Marketing In Western Province
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1 Civil Society for Poverty Reduction Western Province Rice Production and Marketing In Western Province July 2011
2 TABLE OF CONTENTS LIST OF GRAPHS... 4 LIST OF TABLES... 4 ACRONONYMS... 5 PART I: INTRODUCTION Overview of rice production and marketing in Western Provinc I.2 The socio-economic profile of the rice business in Western Province... 7 I.3 BACKGROUND Economy of Western province Poverty levels in Western Province... 8 I.4 Rationale and Objective of Rice Marketing Research Rationale Objectives RESEARCH METHODOLOGY The study area Data Collection PART II: FINDINGS Socio-economic characteristics of sample respondents Age and sex of respondents Marital status Main occupation and number of dependents Rice farming by respondents Rice Farming Methodologies & Practices Land for Rice Farming Rice Marketing Transportation Competition
3 2.11 Credit facility, market information and extension service PART III: CHALLENGES CHALLENGES IN RICE PRODUCTION CHALLENGES IN RICE TRADING PART IV: CONCLUSIONS AND KEY RECOMMENDATIONS REFERENCES
4 LIST OF GRAPHS Graph 1: Incidence of poverty Graph 2: Sex Distribution of Respondents Graph 3: Information regarding when respondents started rice farming Graph 4: Tools used by respondents for cultivating land Graph 5: Respondents assessment of rice demand on the market within a year LIST OF TABLES Table 1: Age distribution of respondents Table 2: Means of transportation used by respondents in rice marketing
5 ACRONONYMS BRE Barotse Royal Establishment CSO Central Statistical Office CSPR Civil Society for Poverty Reduction DMDC - Diocese of Mongu Development Centre LCMS - Living Conditions Monitoring Survey MACO Ministry of Agriculture and Cooperatives PPS People s Participation Service SNDP Sixth National Development Plan 5
6 PART I: INTRODUCTION Western province is among the main rice-producing areas of Zambia, yet producers are unable to make a decent living. The majority of households in Western Province depend on subsistence farming for their livelihood. At the same time, there is a general lack of appreciation among the less privileged on the potential of sustainable agriculture in poverty reduction. This is mainly a result of dependency on unreliable rain patterns and limited knowledge and skills in farming. Furthermore, there is a lack of control over the selling price of agriculture produce and especially rice as a cash crop. Agricultural marketing is the main driving force for development in the sector as it has a guiding and stimulating impact on production and distribution of agricultural produce. The weak performance of agricultural markets (both input and output markets) in Zambia has been recognized as a major impediment to growth in the agricultural sector and the overall economy. In Western province, particularly in Mongu, Senanga and Kalabo, rice is the main cash crop produced by the majority of the farmers, following maize and finger millet. However, the nature of the product on one hand and the lack of an organized market system on the other hand have resulted in low producer prices. Furthermore, there are challenges associated with rice production and marketing such as lack of knowledge of grading, limited market information, an excessive number of intermediaries, price seasonality, a limited number of buyers, and a lack of markets. Despite the significance of rice to the livelihood of many farmers as an income generating crop which can help reduce poverty levels in Western province, it has not been given due attention by the government in terms of marketing. 1.1 Overview of rice production and marketing in Western Province Rice is a significant crop in Western Province and according to the Ministry of Agriculture and Cooperatives (MACO) in Mongu over 25 percent of households are engaged in rice farming. The production of rice in the province has increased in recent years. The number of farmers, traders and processors depending on rice for a living has also increased significantly, driven by a growing demand in urban areas for rice as a source of carbohydrates. 6
7 Since on-farm facilities and technology for processing are not well developed, most farmers take their paddy rice to mills and pay a fee for polishing. However, most mills do not produce good quality milled rice capable of generating a good price. In addition, most of these mills are operating way below their full capacity, mainly due to high demand in supply and the limited capacity to hold stocks of paddy rice. Rice growing is a viable and profitable enterprise for many farmers in the Western Province. Given the already increasing yields, any intervention aimed at improving the functioning of rice markets will enhance the farmers profitability and contribute to improving farmers incomes and household food security in the rice growing areas, thereby reducing poverty levels in Western province. I.2 The socio-economic profile of the rice business in Western Province Rice is an important food and cash crop and a significant source of carbohydrates in Western Province, and increasingly among urban consumers in Zambia. According to MACO in Mongu, about one in four farm families in the province grow rice. Trends indicate that rice production is rising based on land cultivated and production as shown in the findings of this research. Even though land for rice cultivation is not yet a constraint, access to land is restricted to landlords. It should be noted that not all farmers own land they cultivate, therefore, land renting and share cropping is common. The nutrient-rich alluvial soils and seasonal flooding of the Wetland Agricultural system (Barotse Flood Plains) is characteristic of 10 percent of the 280,000 hectares of agricultural land in Western Province. Fertilizer application is not common even though research trials have indicated good response. A combination of alluvial soils seasonally recharged by flooding, supplemented with cattle manure droppings, maintains reasonable levels of soil fertility. Farmers also plough in the rice stubble after harvest to recycle organic matter. The rice economy in the province is centered on one main commercial variety called Supa, grown predominately for sale. This variety is well adapted to high flood conditions and alluvial soils. Its nutritional properties also place it above any other variety in the province. The average yield per year at 1,755 kg/ha is quite well above national average and is relatively good for low input farming. With regards to markets, most farmers sell to private traders at their farms. Despite widespread opinions that individual private traders exploit farmers, their prices seem 7
8 to be comparable and even higher than established outlets. Some producers sell their products to Mongu, Lusaka and even Namibia. Polished rice fetches a higher price than paddy rice. In the farmers eyes, adding value such as processing and polishing, adds to the costs. I.3 BACKGROUND Economy of Western province The economy of Western Province is based on natural resources related activities such as agriculture, fishing, timber exploitation, crafts and livestock as well as trading. Agriculture is the major economic activity in the province. The province has a considerable amount of natural resources (rivers, lakes, grass, timber, fish, etc.), which have not yet been exploited to full potential for the benefit of the local people. Most of the natural resources are exported from the province in semi- processed form (timber, fish, cattle, etc.) thereby reducing the "value addition" to the local economy Poverty levels in Western Province Incidence of Poverty The Living Conditions Monitoring Surveys (2006 LCMS) showed that Western Province has had the highest incidence of poverty in the country over the years, putting the levels of poverty in the province above the national average. Graph 1: Incidence of poverty Source: LCMS
9 I.4 Rationale and Objective of Rice Marketing Research Rationale Marketing is one of the most important aspects in the development process of a nation, as it contributes to the productivity. The performance of rice marketing has an impact on the income of producers, processors, traders and consumers. The research findings are therefore aimed at providing farmers, consumers, traders, investors, and government with the necessary information on rice marketing in Western province. CSPR in Western province will use the findings of this research to advocate for an improved rice marketing system. If rice was well marketed, Western province would be the major producer of rice in the country with the potential to empower poor and vulnerable families Objectives The overall objective of this study was to analyse the rice production and marketing chains in Western province. The specific objectives were: To analyse the impact of rice production and marketing on the livelihood of the people To examine the support services (extension, input supply, credit, and marketing services) in rice production and marketing. To identify major constraints and opportunities in rice production and supply to the market and provide recommendations of how these can improve. 1.5 RESEARCH METHODOLOGY The study area The study was limited to Mongu and Senanga districts of Western province. The commodity approach to market study resulted in a focus on the marketing chains of rice. It emphasized different market levels, roles of market players in the market channels, price setting, the cost benefit analysis of production of rice, cost-margin for producers and traders, buying and selling strategies, storage, and transport. Market information formed the core of this study. 9
10 1.5.2 Data Collection The data for this research was collected from both primary and secondary sources. Primary data was collected from a sample of respondents. Sources of primary data were smallholder farmers, traders and rice millers. Interviewer-administered questionnaires were used to collect the data. Secondary data was sourced from the Ministry of Agriculture (MACO) and different publications on rice marketing. PART II: FINDINGS 2.1 Socio-economic characteristics of sample respondents This section discusses the social and economic characteristics of the survey and participants. It also presents land ownership, adequacy of land for production, farming methodologies and household needs among communities in the study sites. The analysis of social characteristics includes: Age and sex of respondents Marital status of respondents Main occupation of respondents Number of dependants per household Rice Farming by respondents 2.2 Age and sex of respondents The study covered a total of 85 respondents. As shown in Graph 2 and Table 1 below, the age sex distribution was not skewed, with 72% females and 28% males. Age group distribution analysis shows that, most of the respondents were aged years and year representing 19% each, followed by those aged years at 15%. Low percentages of age distribution were found in age groups (6%), (4%) and 70+ (1%). 10
11 Graph 2 Percent of sex distribution of respondents Table 1: Age Distribution of Respondents Age Male Female Overall n=85 Count % Count % Count % Source: Field data 11
12 2.3 Marital status The survey revealed that the majority of respondents were married (62%) followed by single persons (22%), while 9% and 7% were divorced and widowed, respectively. Marital status is most likely to influence important decisions in one s life including income generating activities such as rice farming and trading. 2.4 Main occupation and number of dependents The survey results show that farming is the main occupation for most of the respondents (95%) in the study area. Regarding the number of dependents per household, the majority of respondents (45%) reported having 3-6 dependents, while 29% reported to have 7 and more dependents and a further 26% of respondents had 1-3 dependents. 2.5 Rice farming by respondents From the responses, the survey showed that there has been a rapid increase in the number of rice farmers in the study area in the past decade. Results in Graph 3 show that 50% of respondents started cultivating rice between 1-5 years ago while 33% started rice farming between 5-10 years ago. Comparatively few farmers started their rice farming over 10 years ago (17%). Graph 3: Percent Distribution of when Respondents started Rice Farming Source: Field data 2.6 Rice Farming Methodologies & Practices Graph 4 below summarizes the type of tools used to till or cultivate the land. Approximately 51% of the respondents reported to have tilled their rice farms using a 12
13 plough with oxen, while 47% stated that they cultivated land by hand and hoe and only 2% of the respondents use other methods such tractors which they hire. Figure 4: Percent distribution of the tools used by respondent for cultivating land Other methods Source: Field data The survey revealed that the demand for rice is not constant and tends to fluctuate according to the season. The majority of respondents indicated that rice demand rises in the rainy season because of low supply on the market. The low supply of rice is a result of lack of storage facilities, as farmers try to sell off all their rice stocks before the onset of the rains for fear of losing their produce. Graph 5: Respondents assessment of rice demand on the market within a year Source: Field data 13
14 2.7 Land for Rice Farming Land is a major factor of production especially in farming. In this respect, information regarding land ownership among the study participants was also obtained. According to data indicated in Graph 6, more than 84% of the farmers owned the land that they used for rice farming, compared to only 16% who reported to have rented the land. Among the respondents interviewed for this study, land ownership patterns did not vary according to sex. Graph 6: Land tenure (access to agriculture land) and sex of respondents The study also attempted to assess the yields in terms of harvest and income realised. The indication from respondents with regards to yields is that most of the farmers produce about 10-15/50kg bags of rice accounting for (63%) of respondents with an income range of K1, 000,000 to K1, 500, 000. Those producing bags accounted for 37% with income ranging from K1, 600,000 to K5,000,000, and only 10% respondents produced more than 50 bags of rice, earning above K5,000,000. The low yields were attributed to many factors, among them floods, lack of rice seed, high labour cost, lack of animal draft power and poor farming methods. 2.8 Rice Marketing Mongu rice is normally sold in public markets in Mongu and in Lusaka. Public markets have increasingly become part of the rice distribution chain because of the domination of informal traders. They provide an important outlet for rice especially for those farmers who are unable to transport their produce in bulk to take advantage of 14
15 economies of scale. The farmers either sell the rice to the market traders at a wholesale price or secure a market stand to sell directly to consumers in the town of Mongu. Several entrepreneurs have set up rice mills in Mongu. Both traders and farmers take the paddy rice for processing to these mills. The marketers then buy the polished rice and sell it at wholesale or retail price in Lusaka and other parts of the country. 2.9 Transportation Transportation remains one of the biggest components of marketing costs. Both farmers and traders rely on ox-carts to move rice from farms to roadsides. They hire or hike trucks to move the crop to urban centres for processing and marketing. Transportation is the biggest challenge and contributes the most towards marketing costs due to poor sandy roads and lack of bridges. Kalabo for instance is almost cut off during rainy season and is only accessible by boat. Table 2: Means of transportation used by respondents in rice marketing Type of Transport Percentage Oxcart 20% Public Transport 70% Boats 10% 2.10 Competition There are very few major distributors active. Informal traders dominate rice distribution. APG Milling is the biggest buyer and distributor of rice in Western Province and has one of the best marketing networks and packaging. In addition, APG Milling is a leading promoter of rice processing and marketing standards. Its core business is milling and rice polishing. It owns a modern plant with a capacity to process 1.5 tons/hour. It plans to expand this to 2.5 tons/hour. It works 16 hour shifts per day. The mill is equipped with grading cylinders capable of separating 50 percent long grain rice and 50 percent broken grain rice Credit facility, market information and extension service The survey results indicated that about 90% of the farmers and traders need credit but the majority of them have no access to credit, be it cash or in kind to purchase inputs like fertilizer, seed, chemicals and sprayer. This is because such facilities do not exist or where they exist, interest rates are too high. 15
16 The distribution of market information refers to the availability of relevant information about demand, supply and price of the crops. The survey result indicates that 79.2% of the households had price information before they sell their produce to the nearby market but 20.3% of the interviewed farmers do not have access to any information. Information gathered from 85 farmers and traders revealed that about 90% of them get information on prices of rice from other traders and farmers and their personal observations. Most farmers interviewed (80%) indicated that there are no extension services in their locality and attribute this to non availability or shortage of agriculture staff to offer such services. PART III: CHALLENGES 3.1 CHALLENGES IN RICE PRODUCTION The research found that rice farmers face a lot of challenges in rice production and this has contributed to low yields. Some of the challenges of rice production include the following; Lack of farming inputs i.e. fertilizer and seed. Most farmers use recycled seed Lack of farming equipment such as ploughs Floods and droughts are a constraint to rice production in the province, mostly due to variation in rainfall patterns from year to year Low working capital/lack of startup capital. Most farmers are poor and have no financial resources to enable them increase production. Lack of transport to move rice produce and lack of infrastructure Lack of credit facilities for rice growers and traders Lack of support from government, no extension services available High cost of labour for rice growing 3.2 CHALLENGES IN RICE TRADING Findings indicated that rice trading in the province has a lot of challenges which include the following; Inadequate capital for rice buying by traders 16
17 Poor road infrastructure to access areas where rice is grown No uniform price for rice among farmers due to lack of market information Influx of cheap rice from outside the country in shops like Shoprite Inadequate quality rice polishing mills in the province High cost of transportation of paddy rice from fields to polishing mills No specific price for rice as each farmer sets prices they want PART IV: CONCLUSIONS AND KEY RECOMMENDATIONS Rice is a significant crop in Western Province with over 25 percent of all households growing it. Results show that there has been an increase in rice production over the last 10 years. Rice is an exceptional crop due to its adaptability to flood plains and its high yields compared to other field crops. Though Western province has a tremendous and vast flood plain area suitable for rice production, little of it has been used. If rice production and marketing were well supported by government, Western province would be capable of feeding the entire nation of Zambia and even beyond with Super rice popularly known as Mongu rice. Hence, increasing production and productivity of this crop may contribute to food security and thereby reduce poverty levels in the province which is regarded as the poorest province in the country. A number of factors have been identified in this research as affecting marketing and production of rice in the province: Access to market information Quantity of paddy rice produced Extension contacts Access to credit facilities Road infrastructure Inadequate polishing technology Based on the results of these research findings, we recommend that in order to improve rice production and marketing in Western province, the following should be addressed; 17
18 1. Intervention to increase rice production and productivity of rice farming The quantity of rice produced at farm level affects the level of supply of rice. However, farmers are not maximizing production due to socioeconomic factors that hamper their use of improved technologies and agricultural inputs. Rice producers in Western province use little inputs and yet they own vast plots of land. Introduction of improved varieties, provision of certified seed, using of modern technology, pest and disease control should be promoted by government. 2. Provision of price and market information to farmers. Most rice farmers rely on other farmers for sourcing of price and buyer information. There is therefore a great need by government through extension officers to make information available to farmers at the right time and place. This could be done through regular visits by extension officers to farming communities. Government should therefore assist with proper price and market information that should trickle down to the communities. 3. Promoting education and trainings in production and marketing Increased awareness regarding rice marketing and continuous education and trainings of rice farmers on production and marketing will have a positive impact on rice farming and production. 4. Improved road infrastructure in rural areas Poor road infrastructure has a negative impact on rice production. Most farmers in the province are exploited by briefcase businessmen who hire four wheel drive vehicles to buy rice at very low prices because farmers are unable to transport their produce to the nearby markets in Mongu. There is therefore need for an improved feeder road network in rural areas so that public transport can be able to reach far flung areas. This will enable farmers to transport their produce to better markets in Mongu. 18
19 5. Facilitating extension services The result of the research indicates that extension services are not available in most areas. Extension services could improve the marketing of rice, thereby increasing rice production. It is therefore, highly recommended that government should consider recruiting extension officers so that such services could be available. 6. Provision of credit facilities to rice farmers and traders There is need to offer low interest credit facilities to rice farmers and traders in the province. Access to credit facilities will boost the production levels. 19
20 REFERENCES Diocese of Mongu Development Centre (DMDC) Living Conditions Monitoring Survey (LCMS), 2006 Ministry of Agriculture and Cooperatives (MACO), 2010 reports Mongu District profile, 2000 Western Province Position Paper on the Sixth National Development Plan (SNDP), Civil Society perspective,
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