Policy options for accelerated
growth and competitiveness of
the domestic rice economy in
Nigeria
By
Oluyemisi Kuku-Shittu...
NSSP Rice Study Team
(alphabetic and by location)

In Nigeria

In Washington, DC

Akeem Ajibola
Kwabena Gyimah-Brempong
Ol...
Background of the Rice Study
 To achieve a transformation of the agricultural sector and food security
in Nigeria, the go...
Research Objective
 What is the potential to increase rice production (quantity and
quality) in Nigeria to achieve self-s...
Methodology
 Review the characteristics and current state of the rice economy
in Nigeria (demand and supply)

 Assess th...
A simple fact.. Rice has quickly become one of the
leading food staples in Nigeria
(Both by per capita consumption and HH ...
Demand for Rice has been rising rapidly in per capita
terms – leading to rising imports
(Production has only kept up with ...
Explaining the rise in demand..
 Urbanization and rising incomes (50 percent of Nigerians now live
in urban centers)
 Im...
The Result... domestic & imported rice are not perfect
substitutes
220
Enugu Imported

180
Naira/Kg

200

Enugu Local

160...
Implications...
 Even under the best of circumstances, does Nigeria have
the potential to..
• Grow the rice sector and pr...
For example, a big challenge for Nigeria is import
tariffs have not been easy to enforce in the past
 Officially reported...
Can Nigeria rapidly expand its
Domestic rice production?

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Assessing Potential for Production Growth
Suitability of Rice Production Areas
Highly suitable and rice is grown
Highly su...
Even under the best scenario, Nigeria will not
be able to produce enough to meet demand
Biophysical Rice Output Potential ...
What of the potential to
improve product quality?

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Comparing rice value chains between Nigeria & Thailand („09)
0.19

0.45

1.1
0.09

0.9

0.28

0.8

0.06

0.7
0.6

0.10

0....
Comparing rice value chains between Nigeria & Thailand (‟09)
1.2

Import Parity
Price, 1.12

1

0.06

0.7

0.10

0.6

0.19...
So – what does it all mean? (looking at price structure of the rice
value chain in select countries (2009, USD and %)
1.20...
What are the alternative strategies
for Nigeria, therefore – to achieve
competitiveness and growth in rice
production?

IN...
Policy Scenario 4 (S4)
“Import Restrictions”

Policy Scenario 2 (S2)
“Market Improvement”

1.20

Import parity price with ...
Improving rice competiveness is a Win-Win strategy
on production side, and...
58.0%
Minimum
45.1%

Increased
Accelerated

...
.. consumption side, and...

9.8%
7.0%
0.9%

3.3%

2.7%
0.0% 0.3%

1.0%

Minimum
-7.7%

Increased
Accelerated

-14.9%

-19...
.. on household incomes
% change in rural pc real income from the base
13.2%
Minimum
Increased
Accelerated

7.7%
0.9%

2.9...
Additionally... higher tariffs will create food price
inflation while agricultural real incomes fall
Tariff rate (%)
63

7...
Key Findings (1)
 Technology change can drive much of the growth required, but
not likely to lead to self sufficiency in ...
Key Findings (2)
 Historical data has shown that an import restriction policy
alone is not effective in reducing rice imp...
Policy Implications (1)
 If import tariffs are warranted (e.g. using the „infant
industry argument‟), it will be essentia...
Policy Implications (2)
 Finally, profitability cannot be achieved so long as local
varieties are not competitive
• Consi...
Overall Key Messages
“Nigeria has the potential to increase the competitiveness of
local rice along the value chain – but ...
Thank You

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Assumptions in the crop simulation model
Simulation scenarios
1: Seeds
share of Improved
varieties

Inputs

Baseline

Seed...
Parameters used in the policy scenarios
EMM
scenarios

Exogenous
parameters
shocked

Targeted key endogenous
variables

In...
..technical change is the driving force for much of the growth
% Change in Yield

26.4%

24.0%
Minimum

% Change in Area
M...
Changes in relative rice prices (% change from base year)
% change in relative producer price from the base
Minimum
Increa...
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Th4_Policy options for accelerated growth and competitiveness of the domestic rice economy in Nigeria

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3rd Africa Rice Congress
Theme 4: Rice policy for food security through smallholder and agribusiness development
Mini symposium1: Trade policies to boost Africa’s rice sector
Author: Kuku-Shittu

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  • In domestic market, prices for imported rice are consistently higher than for local rice, indicating imperfect substitution between domestic rice and imported rice; also, the price gap became larger after 2007Domestic prices of imported rice broadly tracked import parity with tariff through December 2007The sharp world price increase in 2008 was not completely passed on to Nigerian market. Import tariffs were reduced to zero in late April 2008, import parity dropped, but domestic prices for imported rice remained high. Imports thus appear to have been constrained during the mid-2008 through late 2009 periodPossible existence of import restrictions (quota) in 2008 and 2009, and there may have been substantial rents. By early 2010, import parity prices rose and were again approximately equal to the domestic price through the end of 2011.Sources: Nigeria Bureau of Statistics data and authors’ calculation
  • Using exporting countries’ data, Nigeria imported 2.1 mn tons of rice in 2010 Aggregated from household consumption data of NLSS 2011, imported rice is 2.3 mn tonsNigeria reported imports were 711K tons, equivalent to 35% of world rice exports to Nigeria
  • Add – low suitability to legendTM: Drop either slide 23 or 24, one of them enough to tell the key story.
  • It is obviously that achieving short-term biophysical potential, rice production is still below rice consumption
  • Potential quality premium – 20% - by improving quality, 20% premium can be gainedthere is additional 20% room for additional cost to improve the quality , and local rice could be made competitive, under the assumption that tariff is 32%Source: For Nigeria, Source: For Nigeria, based on author’s own field visits in Niger state and estimates by Chemonics (2009); For Thailand, based on Maneechansook (2011) and FOB data from the Association of Rice Exporters in Thailand. For Bangladesh, the source is Minten, Murshid, & Reardon (2013)and refers to fine quality rice grain.
  • Because of negative effects on other sectors of the economy, real incomes fall (as rice prices rise, consumers have to reduce spending)
  • What is the crop simulation model – biophysical, not economics, Information is at pixel level – and at farm levelExplain some verbally Biophysical – 3 factors (seeds, nitrogen, water)
  • Th4_Policy options for accelerated growth and competitiveness of the domestic rice economy in Nigeria

    1. 1. Policy options for accelerated growth and competitiveness of the domestic rice economy in Nigeria By Oluyemisi Kuku-Shittu Postdoctoral Fellow, Development Strategy & Governance Division, International Food Policy Research Institute (IFPRI-Nigeria) October 21, 2013 Africa Rice Congress 2012 Yaoundé, Cameroon INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    2. 2. NSSP Rice Study Team (alphabetic and by location) In Nigeria In Washington, DC Akeem Ajibola Kwabena Gyimah-Brempong Oluyemisi Kuku-Shittu Xinshen Diao Paul Dorosh Michael Johnson Jawoo Koo Mehrab Malek Angga Pradesha Hiroyuki Takeshima INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    3. 3. Background of the Rice Study  To achieve a transformation of the agricultural sector and food security in Nigeria, the government has identified rice as one of the key food staples – with high ambitions to.. • Reverse decades of neglect in agriculture • Catch up to an Asian type green revolution (including transforming the rice post-harvest sector), AND in the process.. • Achieve rice self-sufficiency by 2015  IFPRI was asked to provide research evidence and help the government in identifying priority policy areas for achieving this goal.  The following are drawn from the results of analysis by the “Rice Study Team” of NSSP INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    4. 4. Research Objective  What is the potential to increase rice production (quantity and quality) in Nigeria to achieve self-sufficiency? • Does local rice have the potential to realize a higher growth rate in yield and production? And if it does, will this be enough to achieve self-sufficiency? • Does it have the potential to improve product quality to effectively compete with imports?  In the wake of the Government introducing higher import tariffs and promoting the expansion of large scale milling operations to quickly achieve its policy goal.. • Is this economically efficient and effective in the long run? • What alternative (or complementary) policy strategies will be needed given the characteristics of the rice economy? INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    5. 5. Methodology  Review the characteristics and current state of the rice economy in Nigeria (demand and supply)  Assess the potential to increase competitiveness – rice yields, production, and improve rice quality in Nigeria? • Analysis of bio-physical production potential and identification of most promising competitive rice farming type • Analysis of rice value chain and optimal rice processing sector development  Using an economic model, weigh in the welfare effects of alternative policies for realizing this potential (e.g. through import tariffs and improvements in production, quality and marketing) --measured in terms of the self-sufficiency goal, increased rural incomes, and food security. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    6. 6. A simple fact.. Rice has quickly become one of the leading food staples in Nigeria (Both by per capita consumption and HH expenditures) Urban Rural Commodity kg/pc Rank kg/pc Rank Rice 35.0 2 30.6 2 Maize 18.2 4 27.5 4 Sorghum 8.7 5 39.3 1 Millet 8.5 6 26.2 5 Cassava* 38.2 1 30.3 3 Yam 22.7 3 15.7 6 *Processed  An average Nigerian household spent 6% of total income on rice consumption  In monetary term rice ranks No.1 in consumption among all staple items for both rural and urban households INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    7. 7. Demand for Rice has been rising rapidly in per capita terms – leading to rising imports (Production has only kept up with population growth) 360 Milled Rice Imports (million tonnes) 5.0 4.0 Milled Rice Production (million tonnes) Population (million) - R-axis 300 240 180 2.0 120 1.0 60 0.0 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 3.0 Data source: USDA international database (2012) INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Population (Million) Production & Imports (Million tonnes) 6.0
    8. 8. Explaining the rise in demand..  Urbanization and rising incomes (50 percent of Nigerians now live in urban centers)  Imported rice is preferred for higher quality and versatility • Cleanliness (free from stones and other debris) • Swelling capacity and taste • Grain shape (non-broken, long grained)  Local rice has a lower price and some household prefer its taste or choose it for specialized uses, but it is often not properly processed (high percentage of brokens, etc.) Per capita consumption (kg/pc) Local Rice Imported Rice Income elasticity of demand Local Rice Imported Rice Urban National average Rural Urban Rural Urban Rural Urban Rural 10.9 21.4 24.1 9.1 0.20 0.64 0.53 1.03 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    9. 9. The Result... domestic & imported rice are not perfect substitutes 220 Enugu Imported 180 Naira/Kg 200 Enugu Local 160 Enugu Import Parity w Tariff 140 120 100 80 60 Aug-11 Mar-11 Oct-10 May-10 Dec-09 Jul-09 Feb-09 Sep-08 Apr-08 Nov-07 Jun-07 Jan-07 Aug-06 Mar-06 Oct-05 May-05 Dec-04 Jul-04 Feb-04 Sep-03 Apr-03 Nov-02 Jun-02 Jan-02 Aug-01 Mar-01 40 Source: Authors’ calculation using NLSS 2011 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 9
    10. 10. Implications...  Even under the best of circumstances, does Nigeria have the potential to.. • Grow the rice sector and produce enough to meet local demand? • Improve the final product and branding of local rice in order to compete more favorably with imported rice?  What does it mean given the government’s current policy framework and strategy for achieving these objectives? • On paddy production and access to inputs and output markets to rapidly expand output? • On post harvest / rice milling capacities – to improve quality and branding • On import tariffs? (which has its own challenges) INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    11. 11. For example, a big challenge for Nigeria is import tariffs have not been easy to enforce in the past  Officially reported imports are much lower than the number estimated from exporting countries’ reports (e.g. most rice imported by Benin is re-exported to Nigeria)  The high tariffs may encourage under-reported imports to avoid tariff payment Nigeria Rice Import Data and World Export Data, 2006-2010 Million MT 3.0 Nigeria Imports 2.5 Exports to Nigeria 2.0 1.5 1.0 0.5 0.0 2006 2007 Source: COMTRADE data. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 2008 2009 2010
    12. 12. Can Nigeria rapidly expand its Domestic rice production? INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    13. 13. Assessing Potential for Production Growth Suitability of Rice Production Areas Highly suitable and rice is grown Highly suitable and other crops (rice not grown) Highly suitable but no crops are grown Medium suitability and rice is grown Medium suitability but no crops are grown Low suitability Source: IFPRI Spatial Production Allocation Model (SPAM), Global Irrigation Map (University of Frankfurt), Various literature Area (1000 ha) Category Rainfed rice Irrigated rice Other crops High suitability area Output (1000 ton) Medium suitability area High suitability area Medium suitability area 68 843 96 1,162 3 103 11 403 1,231 1,231 No crops 2,871 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 24,617 Page 13
    14. 14. Even under the best scenario, Nigeria will not be able to produce enough to meet demand Biophysical Rice Output Potential (Million MT) – based on crop simulation results under different technology inputs Suitability High Medium Low Total (Current rice area, 1000 ha) (71) (946) (573) (1,590) Baseline Output, Rainfed (current, million metric tons) 0.1 1.6 0.8 2.5 1. Seeds, Rainfed 0.2 1.8 0.8 2.8 2. Seeds + Fertilizer, Rainfed 0.2 2.3 0.9 3.3 3. Seeds + Fertilizer + Irrigation 0.2 2.4 1.4 4.0 Simulation Output Results (million metric tons) Source: Crop simulation model results Page 14
    15. 15. What of the potential to improve product quality? INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    16. 16. Comparing rice value chains between Nigeria & Thailand („09) 0.19 0.45 1.1 0.09 0.9 0.28 0.8 0.06 0.7 0.6 0.10 0.18 0.19 0.5 Thailand, Maneechansook (2011) and FOB data from the Association of Rice Exporters in Thailand for Par-boiled rice 100% 0.32 0.3 0.2 0.1 Exporter Margin and FOB Freight & handling Potential Quality Premiun Retailer Margin 0 Import Tariff & Retail Margin Source: Nigeria: Author field visits; 0.36 Wholesaler Margin Paddy production cost in Nigeria is 35% of total value chain and is 1.3 times higher than in Thailand 0.4 Paddy Trader & Processing Margin  Trader/Wholesale costs & margins for smallscale rice value chain are almost double that of Thailand Farm Gate Margin  Farm Gate Margin Quality premium can be 20% of total value chain (potential) 1 Import Parity Price, 1.12 Paddy Trader & Processing Margin  1.2 US$/kg Starting with Small Scale Channel for Nigeria
    17. 17. Comparing rice value chains between Nigeria & Thailand (‟09) 1.2 Import Parity Price, 1.12 1 0.06 0.7 0.10 0.6 0.19 0.5 0.4 0.36 0.32 0.3 0.2 0.1 Farm Gate Margin Exporter Margin and FOB Freight & handling Import Tariff & Retail Margin Potential Quality Premiun Retailer Margin Wholesaler Margin 0 Paddy Trader & Processing Margin Oguntade (2011); Thailand, Maneechansook (2011) and FOB data from the Association of Rice Exporters in Thailand for Par-boiled rice 100% 0.8 Paddy Trader & Processing Margin Source: Nigeria, Author field visits and 0.50 0.9 Farm Gate Margin  Beyond the farm gate -- milling, trader, and Wholesale costs and margins are significant (about 2.4 times that of Thailand) 0.45 0.06 1.1 US$/kg .. With the Medium / Large Scale Channel in Nigeria 0.19
    18. 18. So – what does it all mean? (looking at price structure of the rice value chain in select countries (2009, USD and %) 1.20 Import parity price = $1.12 1.00 23% Rice Trader/Marketing Margin  Nigerian farmers capture the smallest share of final price (32 to 39%) compared to Thailand and Bangladesh (52 to 81%) – although prices (USD equivalent) at farm gate are about equal. US$/kg Paddy Trader/Miller Margin 0.80 Farmgate Price 41% 0.60 45% 20% 17% 20% 31% 0.40 0.20 32% 39% 11% 7% 52% 81% 22% 58% Standard Premium Nigeria Premium Thailand Standard  Wholesale trader and marketing price margins in Nigeria capture the bulk of the final price, especially along small scale milling channel (41%) – more than twice those seen in Asia. Premium  The key to lower production and market costs is through yield growth and improved market efficiencies  The key to improve competitiveness with import brands is through improved processing and handling for quality products Bangladesh INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Source: Nigeria, Author field visits and Oguntade (2011); Thailand, Maneechansook (2011); Bangladesh, Minten, Murshid, & Reardon (2013).
    19. 19. What are the alternative strategies for Nigeria, therefore – to achieve competitiveness and growth in rice production? INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    20. 20. Policy Scenario 4 (S4) “Import Restrictions” Policy Scenario 2 (S2) “Market Improvement” 1.20 Import parity price with tariff = $1.12 23% 1.00 Tariff US$/kg To answer this question, we used an Economy-wide Multimarket Model (EMM) to address 4 alternative policy scenarios Rice Trader/Marketing Margin 0.80 Paddy Trader/Miller Margin 41% 0.60 Farmgate Price 45% 0.40 Policy Scenario 1 (S1) “Technology Change” 20% 0.20 39% 32% Standard Premium Policy Scenario 3 (S3) “Combined S1 & S2” Premium Standard Premium Page 20
    21. 21. Improving rice competiveness is a Win-Win strategy on production side, and... 58.0% Minimum 45.1% Increased Accelerated 21.5% 24.7% 18.3% 11.4% 4.4% 5.7% S4 - Import RestrictionsS1 - Technology Change Source: Nigeria EMM model simulation result INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 2.5% 4.8% 7.0% S2 - Market Improvement 8.5% S3 - Combined S1 & S2 Page 21
    22. 22. .. consumption side, and... 9.8% 7.0% 0.9% 3.3% 2.7% 0.0% 0.3% 1.0% Minimum -7.7% Increased Accelerated -14.9% -19.3% S4 - Import Restrictions S1 - Technology Change S2 - Market Improvement S3 - Combined S1 & S2 Source: Nigeria EMM model simulation result INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 22
    23. 23. .. on household incomes % change in rural pc real income from the base 13.2% Minimum Increased Accelerated 7.7% 0.9% 2.9% 1.3% 0.5% 0.9% 4.7% 1.5% -2.6% -6.8% -13.4% S4 - Import Restrictions S1 - Technology Change S2 - Market Improvement S3 - Combined S1 & S2 % change in urban pc real income from the base Minimum Increased Accelerated 0.2% 0.7% 2.0% 0.2% 0.3% 0.5% 0.4% 1.3% 3.7% -2.1% -6.0% -13.4% S4 - Import Restrictions S1 - Technology Change Source: Nigeria EMM model simulation result S2 - Market Improvement S3 - Combined S1 & S2 Page 23
    24. 24. Additionally... higher tariffs will create food price inflation while agricultural real incomes fall Tariff rate (%) 63 75 78 88 98 100 113 153 169 200 268 400 change in real GDP (%) 12 -0.2 10 -0.4 8 Change in real GDP -0.6 6 Change in CPI -0.8 4 -1.0 2 -1.2 Change in CPI (%) 0.0 0 Source: Nigeria EMM model simulation result INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 24
    25. 25. Key Findings (1)  Technology change can drive much of the growth required, but not likely to lead to self sufficiency in the short and medium term.. • A modest increase in rice yield, from 1.9 to 2.2 MT/ha improves the competitiveness of local rice (esp. when it high quality variety) • Rice production can reach a similar level achieved by a high tariff rate of 400% • Rice consumption increases while import-dependency falls to 33% (from 45%) • Other crop production will not be hurt  When technology change is combined with market improvement, local rice competitiveness increases significantly • Both production and consumption increase while import dependency rate falls below 30% • Income gains go to both rural and urban consumers • Rice growth is not accompanied by domestic food price inflation as in the case of the high protection policy Page 25
    26. 26. Key Findings (2)  Historical data has shown that an import restriction policy alone is not effective in reducing rice imports and increasing rice production (as the modeling analysis confirms) • From the model results, it shows that doubling rice import tariff rate (to 100%) only modestly raises domestic rice production, and at a tariff rate of 400%, rice production only increases by less than 20% • Tariff-induced supply response is through rice area expansion without yield growth • Other crop production can be negatively affected  Consumers are hurt by raising high import tariffs alone. With reduced consumption caused by high tariffs, imports still account for 20% of total consumption INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 26
    27. 27. Policy Implications (1)  If import tariffs are warranted (e.g. using the „infant industry argument‟), it will be essential to ensure.. • Consistency in tariff policies (e.g. to avoid using tariffs simply as an instrument for domestic price stabilization in the short run), and • In the commitments of public resource allocations to improve the enabling environment to attract private sector investments and growth in the rice sector  Improving infrastructure condition is key for lowering processing (e.g. power) and market costs (e.g. roads)  Encouraging the private sector to lead the competiveness efforts in domestic market INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 27
    28. 28. Policy Implications (2)  Finally, profitability cannot be achieved so long as local varieties are not competitive • Consistency in policy is the pre condition for profitability to the private sector • Proper policies are needed to encourage the private sector to develop right varieties that can compete with imported rice and make them available to farmers • Avoid winner-picking in the milling sector and encourage more small and medium sizes of millers INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 28
    29. 29. Overall Key Messages “Nigeria has the potential to increase the competitiveness of local rice along the value chain – but cannot feasibly achieve its self-sufficiency goal in the short-to-medium term” To spur growth and improved competitiveness...  Increasing yield growth • Emphasize the right seeds • Increase the number of small scale competitive rice farmers • Encourage small-scale and privately operated irrigation technology (are there lessons from elsewhere, e.g. Asia?) • Fertilizer market efficiency is important (private sector involvement) • Mechanization policy to promote intensification (e.g. for double season production) -- and preferably through private sector service providers  Increasing quality of domestic rice • Emphasize right varieties, further processing, and branding  Import restrictions alone will not be effective at stimulating a large supply response Page 29
    30. 30. Thank You INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    31. 31. Assumptions in the crop simulation model Simulation scenarios 1: Seeds share of Improved varieties Inputs Baseline Seeds Share of improved seeds Rainfed - 50% Improved (IR-8 type), 50% Traditional Irrigated - 100% Improved Fertilizer (Nitrogen in kg/ha) Irrigation Share of irrigation area 3 All three Improved varieties Fertilizer Irrigation Rainfed - 100% improved varieties in high suitability area - 75% improved varieties in medium suitability area - 50% improved (unchanged) in low suitability area Irrigated - 100% Improved Rainfed North Rainfed South improved: 56 kg/ha improved: 8 kg/ha traditional: 0 traditional: 0 Irrigated North: 64 kg/ha 2: Seeds+fertilizer Improved varieties Fertilizer South: 95 kg/ha Rainfed North Rainfed South improved: 56 kg/ha improved: 40 kg/ha Irrigated North: 128 kg/ha South: 150 kg/ha 10% 21% (Assuming some of the irrigated area is not fully developed irrigation (By substituting system) irrigation area for all other crops to INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE rice) Page 31
    32. 32. Parameters used in the policy scenarios EMM scenarios Exogenous parameters shocked Targeted key endogenous variables In the relevant scenarios base level Import restriction Technology change Tariff rates Low Medium High 50% 100% 200% 400% Yield growth rate, Level of yield for non1.91 t/ha 1.96 t/ha 2.01 t/ha 2.06 t/ha non-competitive competitive local rice (mt/ha) varieties Yield growth Level of yield for competitive 1.91 t/ha 2.16 t/ha 2.46 t/ha 2.82 t/ha rate, competitive local rice (mt/ha) varieties Area growth rate, non- Area of non-competitive local 97.1% 94.9% 91.8% 85.1% competitive varieties rice in total rice area (%) in total rice area Area growth Area of competitive local rice 2.9% 5.1% 8.2% 14.9% rate, competitive in total rice area (%) varieties in total rice area Market Market margins improvement INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 70% 60% 50% 40% Page 32
    33. 33. ..technical change is the driving force for much of the growth % Change in Yield 26.4% 24.0% Minimum % Change in Area Minimum 20.5% Increased 27.4% 20.4% Accelerated Increased Accelerated 11.4% 9.8% 4.4% 3.7% 0.5% 1.4% -1.2% -2.6% -3.9% 14.3% 11.9% 7.7% 5.7% 5.4% 1.9% 3.9% 2.0% S4 - Import S1 S2 - Market S3 Restrictions Technology Improvement Combined S1 Change & S2 S4 - Import S1 S2 - Market S3 Restrictions - Technology Improvement Combined S1 Change & S2 • Even with modest improvements in rice productivity and market efficiency, rice production can increase significantly, particularly when yield increases for more competitive varieties • Under import restrictions alone (i.e. with no technology change), average rice yields actually fall given area expansion onto lands less suitable for rice and displacing other crops • When growth is centered on technology change, the increase in rice production will not come at a cost of reducing production of other crops Source: Nigeria EMM model simulation result Page 33
    34. 34. Changes in relative rice prices (% change from base year) % change in relative producer price from the base Minimum Increased Accelerated 8.2% 0.1% 16.5% 9.6% 7.8% 4.4% 2.0% 4.7% 2.4% S1 - Technology Change S2 - Market Improvement 6.9% 4.5% -1.2% S4 - Import Restrictions S3 - Combined S1 & S2 % change in relative consumer price from the base 163.7% Minimum Increased Accelerated 69.8% 23.1% 0.2% 0.1% -0.6% S4 - Import Restrictions -1.2% -2.2%-3.1% -1.0%-2.4%-5.3% S1 - Technology Change S2 - Market Improvement S3 - Combined S1 & S2

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