Paddy Production As Source Of Household Income

Project and Seminar Material for Agricultural Economics and Extension

Abstract

The study examined the economics of paddy production and marketing in household income in Uzo-Uwani Local Government Area. Using multi-stage random sampling technique, a total of 120 paddy producers and marketers were randomly selected. The relevant data for the study were collected through a set of structured questionnaire administered to the selected respondents. The study described the systems of rice production and marketing in the study area, compared the socio-economic characteristics of rice producers and marketers, and their effects on production and marketing of rice, described the rice market and its distribution channels, compared costs and returns of rice production and marketing, identified and examined the major problems of rice production and marketing and made recommendations for enhancing rice production and marketing. The analytical tools used in this study included descriptive statistics, multiple regressions, enterprise budgeting, costs and returns, marketing and gross margin analysis. Result of the study showed that more males than females were involved in rice farming and more females than males in marketing. Majority of both producers and marketers were within the age bracket of 40-49 years. Amongst all the categories of household sizes, those with 1-10 members for both the producers and marketers had more output than others. Majority of the producers and marketers sourced their funds from personal savings. Most farms and markets were of short distances, therefore transport costs was affordable. Based on the findings of the study, the following recommendations were made feeder roads should be maintained by appropriate government authorities, this will help to retain the affordable transport costs, grading and standardization should encouraged in line with national and international best practices; proper training of both farmers and marketers should be arranged by both government and farmer associations to encourage record keeping, the financial base of both farmers and marketers should be boosted by Government and donor agencies through the facilitation of loans from financial institutions and granting of subsidies.

Chapter One

Introduction

1.1 Background to the Study

Equitable and sustainable economic development cannot ignore basic food commodities particularly in developing countries such as Nigeria. Basic food commodities play important roles in economic development as their availability and costs impinge on food security, expenditures and incomes of households, particularly among poor segments of the population in both rural and urban areas. Of all the basic food commodities, rice is particularly important (Akpokodje, et al, 2001). This is because in Asia, rice constitutes the staple food. In America and Europe, it is frequently taken. In Africa, rice is more important in the urban centres where evidence of rising level of income is more prominent (Lang, 1979; Fulani, 1980).

Nigeria is one of the largest rice producers in West Africa (WARDA, 1981). In Nigeria, also, it is one of the important cereal grains replacing some of the grains and tuber crops. Rice used to be the “white mans” food meant only for the elites and high class individuals in the society. The middle class and the peasants, who constitute a higher percentage of the population, only ate rice at Christmas and other major festive periods. Many of them had the belief that rice symbolized Christmas and vice-versa (Ogbuakanne, 1998).

However, combinations of various factors seem to have triggered the structural increase in rice consumption. According to Akanji (1995), rising demand was partly the result of increasing population growth. Also, increased income levels, following the discovery of crude oil, led to the rise in the demand for the commodity. The most important factor contributing to the shift in consumer preferences away from traditional staples and towards rice is rapid urbanization and associated changes in family occupational structures. As women enter the workforce, the opportunity cost of their time increases and convenience foods such as rice, which can be prepared quickly, rise in importance. Similarly, as men work at great distances from their homes in the urban setting, more meals are consumed away from home where the ease of rice preparation has given it a distinct advantage. The average Nigerian consumes 24.8kg of rice per year, representing 9% of total caloric intake (Rice Web, 2002). According to WARDA (1981), IRRI (1990), and Maclean (2002), Nigeria’s rice production made some remarkable gains from 1980 to 1989. The area under cultivation grew from about 400,000 hectares in 1980 to 900,000 hectares in 1989. Paddy rice production increased from about 600,000 tonnes in 1980 to about 1,422,000 tonnes in 1989 and 3.189.833 metric tonnes from 1990 -1999.

Prior to the World Bank Rice Project and River Basin Development Authorities in Nigeria, domestic rice production depended mainly on natural rainfall which was very erratic in nature. Farmers under this system (rain fed) employed traditional practices and inputs resulting in low yields. This was sufficient in meeting the increasing demand for rice (Onwuchekwa, 1988).

The inability of the farmers to meet rice demand coupled with the fact that production capacity was far below the national requirements for rice, forced the Federal Government to import rice to supplement local production and to bridge the gap between domestic demand and supply (Wudiri and Fatoba, 1992). . Rice imports did not decline until 1981 as a result of some policy measures put in place to check the importation of the commodity. Even then, the quantity imported on an annual basis was over 300,000 tonnes. Imports dropped significantly from 1985 when the ban was placed on rice. Although, rice importation began to rise again in 1991, major importation did not begin until after lifting the ban in 1995 (Ladebo, 1999).

The problems of rice farmers include land tenure system, inefficient labour utilization and lack of finance, capital and credit (Agara, 1979; Okorie, 1987). Also, the rice gall midge infestation in Abakaliki in 1988 and UzoUwani in 1989 are examples of constraint to rice production (Emeribe, 1990).

For efficiency and stability of rice production in West Africa, some countries have embarked on new technological strategies to improve land and labour productivity as well as marketing potentials of small-holder rice farmers and middlemen while preserving the resource base on which their future livelihoods depended (WARDA, 1988). These strategies included modernized rice production systems through the provision of machinery and equipment, seeds and agro-chemicals, improved access to technologies and credit. In October, about seven billion naira (US $54 million) was reported to have been distributed through the Agricultural Co-operative and Rural Development Bank (NACRDB) to small scale farmers to expand rice production. .

Based on this, Nigeria launched the Presidential Rice Initiative in August 2002 to improve rice production and processing by enhancing farmers access to subsidized farm inputs and suitable rice varieties coupled with border protection. Against the backdrop of the celebration of international year of rice in 2004, government also reiterated its intention to bolster the sector to reach self- sufficiency in 2005, through the diffusion of Nerica varieties and the launching of a “Nucleus Estate Initiative” (NEI).

Marketing, according to Dixie (1999), is the series of services involved in moving a product (or commodity) from the point of production to point of consumption. Agricultural marketing, according to Kohls and Downey (1998), is the performance of all business activities involved in the flow of agricultural goods and services from the point of initial agricultural production until they are in the hands of ultimate consumers Arene (1998) defined agricultural marketing as all those legal, physical and economic services that make it possible for products from producers to get to consumers, at the place desired by consumers, and at the price agreeable to producers and consumers for effecting a change of ownership/possession.

Olukosi and Isito (1990) defined agricultural marketing from the micro and macro view points. From the micro-perspective, agricultural marketing is the performance of all business activities which direct the forward flow of goods and services to the consumers in order to accomplish the producer’s objective. The macro view-point of agricultural marketing, examines the total system of economic activities concerned with the flow of agricultural products from the producer to the final consumer.

1.2 Problem Statement

Neglect of agricultural activities has been a very serious problem affecting both producers and marketers of agricultural produce in the country. This situation appears to be aggravated by government and policy makers who have not considered production and marketing of food crops as serious problems to the economic development of the nation (Osuji, 1980; Nwokolo, 1991).

Some experts and researchers have carried out studies/research on rice production and marketing differently, example, Okereke (1991) compared the economics of rice production from traditional farmers. Nwoye (1997) investigated the economics of rice production by small-holder farmers in Anambra State. Okorji and Onwuka (1994) estimated the profitability of rice production at Uzo-uwani area of Enugu State while Ogbuakanne (1998) studied the economics of rice marketing in Orumba Local Government Area of Anambra State of all these, None compared the profits of the producers and marketers (middlemen)in the same study. In Uzo-uwani Local Government Area, there are two basic enterprises in rice business; those involved in the production of rice (farmers) and the people involved in buying paddy, processing and selling to retailers, consumers, or even the farmers. The class of people that make up the latter enterprise are the wholesalers.

Often, people believe that middlemen are making the profit while farmers suffer. This may or may not be correct. Studies have not tried to relate the producer’s margin with marketer’s margin in the same environment and season. This has led to spatially separated conclusions at different points in time. The consequence may be poor policy formulation due to wrong signal. This study is aimed at filling this research gap with special reference to Uzo-Uwani Local Government Area.

1.3 Objectives

The overall objective of the study was to assess the role of paddy production to household income and food security.
Specifically the study intended:

To assess the contribution of paddy production to total household cash income.
To assess the contribution of paddy production to household food security.
Describe the trend of paddy production in the study area.
Examine the effect of price variation on paddy production in Nigeria.

1.4 Significance of the Study

There is a consensus on the assertion that the economic survival of any nation depends largely on her ability to feed the citizenry and also export the surpluses to earn foreign exchange (Nwokolo, 1991).

It is also hoped that the findings of this study will help to further highlight the activities and roles of producers and marketers in production, processing, distribution and sale of rice. Moreover, the study will make the Nigerian government to appreciate the contributions of producers and marketers in the rice industry and hence seek ways of encouraging them in their various activities. It is finally hoped that information from the study will form a source of reference to students, institutions and researchers and provide a basis for future studies on related issues.

1.5 Research Question

What are the contributions of paddy production to the source of household income?
What is the the contribution of paddy production to household food security?
What is the trend of paddy production in the study area?
What is the effect of price variation on paddy production in Nigeria?

1.6 Scope / Limitation of the Study

This study on the paddy production as a source of household income will use a time series data in some parts of the research. Uzo-Uwani Local Government Area will be used as a case for the rest of the research work.

Limitation of the study

Time:

Time was a major constraint in this research, considering the researcher has to combine the research and other academic activities.

Finance:

Its well known that finance is major player in every research work

Chapter Five

Conclusion and Recommendations

5.1 Conclusion

The results from this study indicated that the contribution of paddy production to total household cash income was 69% compared with other sources that accounted for only 31%. Households are likely to raise their incomes and produce enough food from paddy production and other related agricultural sectors, if the government would improve infrastructures particularly in building a irrigation systems, and improve road networks this will ease the transportation of crops to the market and the supply of farm inputs into this village and its neighbours, consequently encouraging farmers to intensify their agricultural activities.

From the empirical analysis result, it is evident that price of rice and quantity of production has a positive effect on each other, which corresponds with the theory of supply. Thus a decrease in price of rice reduces the quantity that is being produced by the farmers so as not to run into a loss in production.

5.2 Recommendations

Based on the result from this study, the following recommendations are necessary:

The government should stabilize the quantity of rice produced in the country, at a point in which the price of rice will favor the both consumers and producers.
More effort should be given to production of rice considering its relevance to food security and the rising population of the country and efforts should be placed to counter the excessive rise in price.
The Cobweb theory can be used by the government to regulate the response of price to rice production.
Since increase in price brings about an increase in production, In line with the theory of Supply which states that the higher the price, the higher the quantity supplied: government should implement policies that will subsidize the price of rice to consumers and increase the level of food security in the country.

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