Supply Response of Rice and Implications for
Food Security Policy: A Case of Mwea
Irrigation Scheme in Kenya
B.J.K Maina, ...
Why Rice? Why care?
 Rice

is the 3rd most
important staple food in
Kenya after maize and
wheat
 Its rate of consumption...
The policy side, what we think










Staple foods: Maize is
considered as the strategic grain
for Kenya, wheat an...
Study area, Materials and Methods
Study

objective: to establish the determinants
that influence rice supply and their si...
Models specifications
 Nerlovian

1977)

model for an annual crop (Askari and Cummings,
……………..…(a)
…………………………(b)
…………………...
Data analysis, results &
interpretations
Regression

analysis -OLS method
Normality (Shapiro-Wilk and graphical
tests) a...
Summary Statistics
Variable
Rice Supply (MT)
Input costs (Kshs)
Acreage
Import price (Kshs)

Mean- Total Mean- NIB Mean-No...
Conclusions
local

rice supplies are affected by own prices &
import prices- imported rice is relatively cheaper
that loc...
What Policy makers should do
Development

of policy guidelines for packaging,
marketing and linkage to suppliers so as to...
THANK YOU
ACKNOWLEDGEMENTS
AfricaRice
Co-authors
University
Agricom

of Nairobi

Consultants, Ltd. Nairobi
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Th4_Supply Response of Rice and Implications for Food Security Policy:

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3rd Africa Rice Congress
Theme 4: Rice policy for food security through smallholder and agribusiness development
Mini symposium2: Policy and price transmission mechanisms affecting rice sector development in Africa
Author: Maina et al.

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  • Th4_Supply Response of Rice and Implications for Food Security Policy:

    1. 1. Supply Response of Rice and Implications for Food Security Policy: A Case of Mwea Irrigation Scheme in Kenya B.J.K Maina, C.W. Kabuti and R. Chepchirchir      
    2. 2. Why Rice? Why care?  Rice is the 3rd most important staple food in Kenya after maize and wheat  Its rate of consumption has been growing rapidly and it is likely to overtake wheat over time.  95% is grown under irrigation in paddy schemes managed by NIB  Kenya has a potential to produce 400,000 ha (rain fed) &11,000 ha (irrigated).  Btwn 2007-2010, Kenya’s rice production ranged between 45,000 and 50,000 MT, against a consumption of over 210,000 MT (now 70k vs 300k)  BUT consumption averages btwn 180,000 - 250,000 MT  Balance is imported- mainly Pakistan- at a preferential rate of 35%.  Urban dd increasing by 12% annually  Urbanization is increasing by 4.2% - population growth is 3%
    3. 3. The policy side, what we think      Staple foods: Maize is considered as the strategic grain for Kenya, wheat and wheat products also important But Kenya has been exposed to food insecurity severally- weather risks(drought) What we need: To diversify to more strategic grains to cushion the nation against such risks Best option: Rice has been considered as a close substitute for maize but also as a high value crop which if produced in surplus could be exported Policy Action Concentration on price policies to accelerate rice production The problem  Rice production in Kenya has been on a steady decline – Kenya still food insecure & at risk  Population & urbanization are increasing – more food demand – more risks  Price policies alone cannot (have not) encouraged supply Proposal  Need to explore other nonprice incentives for rice farmers to increase their production and subsequent supply
    4. 4. Study area, Materials and Methods Study objective: to establish the determinants that influence rice supply and their significance Study area: Mwea Irrigation Scheme; the biggest rice producer in Kenya Data & Sources: Time series production and supply data from 1988 to 2007- from MIS, surrounding outgrowers, MRM &MRGMM Independent variables: rice prices, water availability, rainfall, civil unrest, presence of NIB and real GDP The model specification: Regression analysis methods - Nerlovian model (1958) on supply response
    5. 5. Models specifications  Nerlovian 1977) model for an annual crop (Askari and Cummings, ……………..…(a) …………………………(b) ………………………...(c  Zt = other observed, exogenous factors affecting supply at time t are given by the expression  Model was a combination of expectation and adjustment lag variables.  Modified the equation by adopting rice supplies as the dependent variable instead of acreage  
    6. 6. Data analysis, results & interpretations Regression analysis -OLS method Normality (Shapiro-Wilk and graphical tests) and stationarity tests (ADF) were carried out to ensure accuracy of the data values of the coefficients in a log-log model were directly interpreted as a measure the respective elasticities.  Elasticities of the individual variables in the model indicated the respective responses to rice supply
    7. 7. Summary Statistics Variable Rice Supply (MT) Input costs (Kshs) Acreage Import price (Kshs) Mean- Total Mean- NIB Mean-No NIB 9,276 12,560 1,614 12,616 14,056 9,256 11,301 14,515 3,803 17 15 22 Water supply (M3/ha) Price local rice (Kshs) Real GDP (Kshs) Rainfall (mm/yr) 5 20 691,805 988 6 18 652,412 977 2 26 783,723 1,014 Elasticities 0.3503 0.8213 0.6463 -0.2762 1.7880 -0.9646 0.4695 Regression Results •GDP, domestic price, import price, acreage, rainfall & presence of NIB were statistically significant •Water, input costs and civil unrest were not significant •Significant variables explain 97.9% of the variability in rice supply (R2 = 0.9796)
    8. 8. Conclusions local rice supplies are affected by own prices & import prices- imported rice is relatively cheaper that locally produced rice As the GDP improves importers get more of the relatively cheaper rice grains and the local farmers supply less since the prices are forced to match those of imports The presence of NIB is significant in provision of necessary infrastructures and water for irrigation Though water and input costs were not found to have any significance in influencing rice supplies, they are economically important in determining the amounts of rice that goes to the market
    9. 9. What Policy makers should do Development of policy guidelines for packaging, marketing and linkage to suppliers so as to trigger demand for locally produced rice Need to monitor rice imports to protect the local farmers to safeguard their livelihoods – Argument for rice to be included in the list of sensitive products Consider subsidizing farm inputs which would ensure local rice production increases in addition to becoming more globally competitive Ensure that the scheme be continually managed by the NIB but prices be determined by the market forces of demand and supply
    10. 10. THANK YOU ACKNOWLEDGEMENTS AfricaRice Co-authors University Agricom of Nairobi Consultants, Ltd. Nairobi

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