A Commodity Value Chain Analysis of Rice, Cassava and Maize Production in Nigeria
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Saweda Onipede Liverpool
Prepared for the IFPRI
Stakeholder Workshop: Developing Evidence for Agricultural and Rural Development Policies and Strategies in Nigeria
and Rural Development Policies and Strategies in Nigeria Abuja, May 20, 2006
Outline:
• Commodity value chain analysis and the case for staple crops
• Current trends ‐ The motivation for selected crops
• Methodology –
Methodology (Policy Analysis Matrix)
(Policy Analysis Matrix)
• Identified Gaps – and potential strategies to address these:
• Selected States
• Primary Data Collection
Primary Data Collection
• Preliminary Results
• Conclusion and future work…
Commodity Value Chains
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BORDER
Source: Dr. Rashidur Shahid IFPRI Research Fellow (2008)
Current trends…
Trends in Cassava Production in Nigeria (tons)
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2
2003
2
2005
2
50,000,000
,
,
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20 000 000
20,000,000
15,000,000
10,000,000
5,000,000
0
Source: FAOStat (2008)
Current trends…
Source: FAOStat (2008)
Methodology
• Policy Analysis Matrix (PAM)
• Structure
• Private Prices
Private Prices
• Social Prices
• Comparative Advantage indicators (SCB, DRC,NPCo,NPCi)
p
g
(
)
• Benefits ‐ Macro Micro Linkages
• Limitations – Static Analysis
Data
• Primary Data
– Fadama II survey data
– Interviews with stakeholders at various levels
of the value chain
• Secondary Data
– Studies on Rice and Cassava done by various
research organizations and their collaborators
(IITA, USAID Markets)
– Various manuals on crop production
Some Model Assumptions
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• Base Scenarios*:
Scenarios :
– Inadequate but positive investment in inputs
– Medium level accessibility to town or regional
market
– Current macroeconomic policies
• Yields
Cassava -average yield
C
i ld off 15t
15tons/ha
/h
Rice – average yield of 1.4tons/ha
* Results reflect the returns to investment in crop production on a hectare of land
Preliminary Results…
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Profit per hectare in Rice and Cassava Production in Nigeria
Under Base Scenario Cases (in Naira)
100,000.00
50,000.00
0.00
-50,000.00
Rice
Cassava Export
Cassava Domestic
-100,000.00
-150,000.00
PRIVATE PRICES
SOCIAL PRICES
Social Cost Benefit Ratio for Cassava and Rice
Production in Nigeria Under The Base Scenario
3.50
3.00
2.50
2.00
1.50
1 00
1.00
0.50
0.00
CassavaExport
Cassava Domestic
Rice
Cassava Export Price Sensitivity Analysis
Sensitivity Analysis For The Social Profitability of
Cassava Production for Cassava Chip Export
Social P
Profit (Naira)
100000
80000
60000
40000
20000
0
-20000
$200
$250
$300
$350
$400
-40000
-60000
60000
-80000
-100000
-120000
Export price
$450
$500
$550
Preliminary Results…divergences
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Profit per hectare in Rice and Cassava Production in Nigeria Under Base
Scenario Cases (in Naira)
100,000.00
80,000.00
60,000.00
40,000.00
20,000.00
0.00
-20,000.00
Rice
Cassava Export
-40,000.00
-60,000.00
-80,000.00
-100,000.00
-120,000.00
PRIVATE PRICES
SOCIAL PRICES
Cassava Domestic
Preliminary Results…divergences
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Divergences in Rice Production Due to
Government Policies and Market Imperfections
40000
35000
30000
25000
20000
15000
10000
5000
0
-5000
Output Market
Tradable inputs
Domestic inputs
-10000
Divergences in Cassava Production For The
Domestic Market Due to Government
Policies and Market Imperfections
5000
Divergences in Cassava Production For Export
due to Government Policies and Market
Imperfections
30000
2 000
25000
20000
0
15000
Output
Market
-5000
Tradable
inputs
Domestic
inputs
10000
5000
0
-5000
-10000
-10000
-15000
Output Market
Tradable inputs
Domestic inputs
Preliminary Results continued…
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Cost shares in rice production in
Ni
i
Nigeria
capital
services 2%
3%
Tradable
Costs
14%
Cost shares for Cassava Production
in Nigeria
service 2%
capital
3%
Labor Costs
81%
Labor Costs
82%
Tradable
Costs
13%
Alternative Policy Scenarios
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• Cassava
– Local market vs. export market
– Improved yield
• Adequate input use – credit, receipt of government
subsidyy
• Adequate extension services
– Labor saving
g technology
gy
SCB ratios under different scenarios of
cassava production for export
4
3
2
1
0
Base Scenario
(Export Market)
IVarieties 45 tons/ha IVarieties 55 tons/ha
0.6
SCB ratio under different scenarios for
cassava production for domestic market
0.5
0.4
0.3
0.2
0.1
0
* IVarieties=improved varieties
Base Scenario
(local Market)
Reduced Labor
Time
IVarieties Local
Market
Alternative Policy Scenarios
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• Rice
– Base vs. Fadama II data
– Improved yield ( the case of guaranteed
markets e.g. OLAM mills)
• Adequate input use – credit,
credit receipt of government
subsidy
• Adequate extension services
– Improved quality of rice
Profitability of rice production under
different scenarios in Nigeria (Naira/ha)
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
,
0.00
-10,000.00
-20,000.00
Base scenario
Fadama
Farmers
-30,000.00
Reduced
Quality
difference
Rice OLAM
farmers
-40,000.00
,
-50,000.00
private profits
SCB ratio under different scenarios for rice
production in Nigeria
social profits
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Base
scenario
Fadama
Farmers
Reduced
Quality
difference
Rice OLAM
farmers
Summary and Conclusions
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CASSAVA
• There are slight distortions in the cassava system
• At $200-$300/ton, Nigerian farmers do not have
comparative advantage in the production of cassava
chips for export
• The domestic market for cassava products provides an
avenue for the returns of farmers to be improved
• Increased yields (e.g. by adoption of proper agronomic
practices training) , higher world prices
practicesprices, reduced
transportation costs and minimized loss in post
production and processing could make Nigeria
competitive
i i at the
h iinternational
i
l llevel.
l
Summary and Conclusions
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RICE
• There are distortions in the rice production system largely
due to the import duty and input subsidy
• The average Nigerian rice farmers does not have
comparative advantage in the production of rice due to low
yields and the quality differential relative to imported rice
• Programs which provide farmers with access to the input
market (chemicals and credit) with training and that
provide a g
p
guaranteed output
p market enable farmers to
have comparative advantage in production of rice even
without government support and this has potential
benefit for both producers and consumers
Next Steps
p
• Gather primary data on selected states
• Complete analysis of various scenarios
and policy situations
• Consider other levels of the commodity
value
l chain.
h i
• Explore the potential impact of various
policy actions where the atmosphere
under which farmers operate is more
favorable.
Thank you!
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Canadian International Development Agency