Th4_Improving Food Security through Rice Value Chain Upgrading in Africa:

907 views
729 views

Published on

3rd Africa Rice Congress
Theme 4: Rice policy for food security through smallholder and agribusiness development
Mini symposium 3: Socio-economic drivers of change in rice sector development
Author: Demont

Published in: Technology, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
907
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
31
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Th4_Improving Food Security through Rice Value Chain Upgrading in Africa:

  1. 1. Improving Food Security through Rice Value Chain Upgrading in Africa: What Can We Learn from Experimental Economics? Matty Demont Senior Economist, Market Research and Value Chain Specialist, International Rice Research Institute (IRRI), Los Baños, Philippines m.demont@irri.org Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  2. 2. Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  3. 3. Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  4. 4. Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  5. 5. Three types of countries • Coastal countries strongly exposed to urban bias (Senegal, Liberia, Cote d’Ivoire, Ghana, Togo, Benin, Nigeria, Cameroon) • Coastal countries not yet strongly affected by urban bias or with comparative advantage in rice demand (Gambia, Guinea, Sierra Leone, Kenya, Tanzania, Mozambique, Madagascar) • Landlocked countries (Mali, Burkina Faso, Ethiopia, Rwanda, Zambia) Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  6. 6. Observation • In many import-biased countries endowed with a port, domestic rice fails to compete quality-wise with imported Asian rice • As a result of urban bias, urban consumers have become used to the superior quality of imported Asian rice and developed preferences for it Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  7. 7. Observation • Domestic rice clearly differentiated from imported rice – Quality-wise – Packaging, branding, image – Word-of-mouth – Status considerations (foreign = cool)f-mouth – Status considerations (foreign = cool) Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  8. 8. Which ones are domestic rice? Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  9. 9. Research hypothesis • Domestic rice now not only has to compete quantity-wise, but also quality-wise, but how? • In the absence of strong consumer attachment to domestic rice, best short- and medium-term option = dedifferentiating domestic from imported rice – Quality-wise – Packaging, branding, image Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  10. 10. Research hypothesis • Proposed three-stage investment sequence for upgrading rice value chains in import-biased countries strongly exposed to urban bias: Quality upgrading, processing infrastructure, certification, branding, ... Quantity increase, scaling up, aggregation and storage infrastructure Advertizing and generic promotion Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013 Value-adding Supply-shifting Demand-lifting
  11. 11. How can we test this hypothesis? • Can experimental economics help? • Experimental auctions enable assessing consumers’ response to upgrading of 1. Intrinsic quality attributes: • Post-harvest quality upgrading • Varietal improvement 2. Extrinsic quality attributes: • Labeling and branding • Information (radio, video, word-of-mouth) Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  12. 12. Case studies Mini-Symposium 4, Sub-Theme 3: Rice processing and marketing, Hall 3, 14:30–16:00 1. M. Ndour: Branding of local rice in Senegal 2. M. Ouedraogo: Consumers’ response to local quality rice in Burkina Faso This presentation: 3. Dedifferentiating imported from local rice in Cameroon Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  13. 13. Rice quality upgrading in Cameroon • Institute of Agric. Research for Development (IRAD), Cameroon developed uniform steam distributed (USD) parboiling technology • Mimics high-grade imported rice in physical and eating characteristics: – – – – – Whiter Lower broken fracture Fewer cracked grains Absence of burnt grains and impurities Higher swelling ratio during cooking Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  14. 14. Rice quality upgrading in Cameroon IRRI Seminar, International Rice Research Institute (IRRI), Los Baños, Laguna, Philippines, 4 April 2013
  15. 15. Research questions • Do consumers perceive the IRAD rice as being similar to imported rice? • Are they willing to pay price premiums for it? Relative to – Traditionally parboiled local rice – Improved non-parboiled local rice • Did IRAD technology successfully qualitydedifferentiate domestic from imported rice? Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  16. 16. Targeting urban market: Yaoundé Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  17. 17. Setting up laboratory setting Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  18. 18. Choosing products to be auctioned • Kept the varietal component constant • Using a single rice variety: Tox 3145 • Processed into four different end-products Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  19. 19. Upgrade 1: nonparboiled homogenous (NPH) rice nonparboiled broken (NPB) rice (benchmark) Upgrade 3: improved parboiled rice (IRAD) Upgrade 2: traditionally parboiled (TRAD) rice Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  20. 20. Randomly recruit shoppers Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  21. 21. Start the experimental session Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  22. 22. Explain auction mechanism Five principles: 1. Endow-and-upgrade 2. First price buys & pays second price 3. Real transaction (bids are binding) 4. Random drawing (1 product & 1 round) 5. Anonymous Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  23. 23. benchmark Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  24. 24. Descriptive results Willingness to upgrade 100% 80% 60% 40% 20% 0% Willingness to pay 140 120 100 80 60 40 20 0 Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  25. 25. “Perceived dedifferentiation” is measured through a quiz question: “Which rice variety(ies) are imported?” 12% 63% 5% 16% IRADimp 0 1 1 1 0 0 1 0 1 0 1 1 0 1 … Correct answer = “none”: only 3% Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  26. 26. Econometric results Determinants of consumers’ WTP to upgrade non-parboiled broken rice to alternative rice types Variable First hurdle: propensity of upgrading Second hurdle: amount paid Coefficient SE Marginal effect Coefficient SE Marginal effect NPH 0.524** 0.233 0.123** –115.492*** 34.526 –32.754*** IRAD 0.593*** 0.207 0.139*** 5.081 21.266 15.648 Pre-tasting 0.498*** 0.180 0.117*** 1.014 18.800 11.885 Post-CIT –0.040 0.117 –0.009 –1.987 16.956 –1.700 NPH × pre-tasting –0.528*** 0.206 –0.124*** –29.346 28.524 –23.588 NPH × post-CIT 0.001 0.138 0.000 19.530 22.450 7.615 IRAD × pre-tasting 0.051 0.239 0.012 3.034 15.055 2.357 IRAD × post-CIT –0.094 0.165 –0.022 21.677 14.413 6.238 IRADimp 0.564*** 0.205 0.132*** –60.981** 27.894 –10.661** NPH × IRADimp –0.424* 0.223 –0.099* 0.672 27.082 –9.519 IRAD × IRADimp 0.127 0.224 0.030 62.015** 24.921 27.010** Morning 0.060 0.189 0.014 –27.298 18.225 –9.220 Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  27. 27. Conclusion • Consumers are 14% more likely to upgrade to improved parboiled rice (IRAD) • Those who perceive IRAD rice as being imported (63%) – Paid 5% price premiums for IRAD rice – Discounted traditionally parboiled rice by 2% • Major value of IRAD technology = ability to successfully quality-dedifferentiate domestic from imported rice in urban markets in Cameroon  Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013
  28. 28. Thank you! Matty Demont Senior Economist, Market Research and Value Chain Specialist, International Rice Research Institute (IRRI), Los Baños, Philippines m.demont@irri.org Third Africa Rice Congress, Yaoundé, Cameroon, 21–24 October 2013

×