111
Rice Value Chain Analysis In Kano River Irrigation Project (KRIP) Kano State,
Nigeria
Isma'ila Y. Ilu
NAERLS/ABU ZARIA
ismaeelu2000@yahoo.com (+2348037038580)
Nigerian Journal of Agricultural Extension, Vol. 21, Number 2, June 2020
ABSTRACT
Nigeria adopted the Value chain development approach to curtail the menace of poverty. The general
objective of the study is to identify the value creation and its distribution among the major actors in the
rice value chain. Specifically, the study mapped out the flow of rice along the rice value chain and
estimated the costs, margins and value added by major actors. The study was conducted in Kano River
Irrigation Project in Kano State. Primary and secondary data were collected between 2014/2015 and
2015/2016 growing seasons. Data was analyzed using commodity chain analysis. The flow of rice
along the value chain was estimated and mapped. Small scale famers who constituted more than 99 %
of the farming population, contributed about 94 percent of the production. An estimated 189,630 tons
of paddy was produced. More than 80 % is sold for cash. Less than 10 percent consumed at home. The
bulk of the paddy is sold to the wholesalers through commission agents and rural assemblers. But more
than 70 percent is sold as milled rice. A total of N75,000 was expended per hectare of rice, equivalent to
N23 per kilogram of paddy. The total revenue is N200,000 out of which N120,000 was realized as profit.
The marketers' net margin is N50 per Kilogram sold. About N300 was spent on parboiling a bag of
paddy. They make a profit of N50. Millers use either electric-powered or diesel-powered mills. Variable
cost constituted more than 97 percent of the total cost of milling in. The total value added per one
kilogram of paddy by farmers, paddy wholesalers, parboilers and millers were N 20.81. Farmers
contributed N11.33, marketers N 5.3, parboilers N 1.67, and millers N 6.5. It is recommended that
access to production and processing technologies should be improved. Mechanization should also be
introduced to improve efficiency.
Key words: Value Chain, Value Added, KRIP, Mapping, small scale farmers, Rice.
INTRODUCTION
Nigeria, with an estimated population of over 190
million people is the largest black nation on earth
(World Bank, 2015). It constitutes about one fifth
of the total population of Sub-Saharan Africa. It is
richly endowed with vast human, physical, and
natural resources. The population is not only
large, but vibrant, active, and talented. It has a
wide range of climate, vegetation, and soil
conditions suitable for diverse agricultural
2
production. It has a total land area of 923,770 km ,
out of which 13,000 km2 is water. Forty-four
percent is permanent pasture, 33 percent arable
crop, 12 percent forest and woodland, 3 percent
permanent crop (Library of Congress, 2008).
Nigeria is the major exporter of petroleum in
Africa and the sixth in the world.
However, despite the oil riches, agriculture
remains the major employer, providing more than
75 percent of the rural economic activities
(FMARD, 2012). Before the advent of oil,
Agriculture was the springboard of Nigeria's
economic development from 1900 to 1960s. It
contributed more than 60 percent to the GDP.
Nigeria was the leading exporter of cotton,
groundnut, cocoa, rubber, and oil palm. With the
emergence of oil revenue in the seventies,
additional impetus was given to the development
of the manufacturing sector, which grew at a very
rapid rate of 15 percent per annum. Within the
same period, export of petroleum has gained
momentum and started to replace exportagriculture as a source of government revenue.
Thus, in the 1970s, three leading sectors emerged:
Agriculture, Manufacturing and Petroleum.
Despite its displacement by petroleum,
agriculture remained the most important sector in
the economy due to the following reasons: First,
petroleum export remained the exclusive
preserve of government, as its main source of
income. Secondly, the manufacturing sector
contributes little to the economy, as more than 70
percent of the proceeds, were sent abroad as factor
payment (Manyong et al., 2005).
Nigeria's dependence on oil export made the
economy vulnerable to shocks generated by
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Rice Value Chain Analysis In Kano River Irrigation Project (KRIP) Kano State, Nigeria
international oil prices. The collapse of oil prices
of the 1980s was the beginning of Nigeria's
economic problems. The economy, which was
weakened by corruption and mismanagement,
sunk into recession (Alkali, 1997). Nigeria's food
import bill rose steadily from N2 billion in 1980s
to N7 billion in 1990s. In 2010, the imports bill of
Wheat, Rice, Sugar and Fish put together, had
reached N1.31trillion (FMARD, 2011). Nigeria
accounts for nearly a quarter of sub-Saharan
Africa's poor (IFAD, 2009). Poverty alleviation
and curbing youth unemployment became part of
Nigeria's economic development efforts. Several
interventions were initiated and implemented.
The cumulative effect of which led to an
impressive economic growth of about 6.9 percent
and an agricultural growth of 8.2 percent
(FMAWR, 2008), but failed to reduce poverty and
youth unemployment to any appreciable level. By
2010, poverty was by any measure, more severe
and devastating than it was thirty years ago (NBS,
2012).
This led the Federal Ministry of Agriculture and
Rural Development to adopt the value chain
approach as the operational strategy for the
implementation of the agricultural transformation
agenda (ATA) (FMARD, 2011). The value chain
approach has gained tremendous acclaim as a tool
for addressing poverty problems in developing
economies. It does this by focussing on major
constraints and opportunities faced not only by
farmers, but also by processors, traders and other
business operators at multiple levels and points
along the value chain. The process not only
include more actors, but it also covers wider range
of activities such as, facilitating access to inputs,
strengthening the delivery of business and
financial services, enabling the flow of
information, and facilitating leveraging to highervalue markets. The cumulative effect of the
activities collectively leads to the creation of more
jobs and more income. The value chain approach
can contribute to pro-poor initiatives and better
linking of small businesses with the market.
Increasingly, it is being used to guide and drive
high-impact and sustainable initiatives focused
on improving productivity, competitiveness,
entrepreneurship, and the growth of small and
medium enterprises (Webber and Lebaste
(2010)).
Rice is a gradually becoming a staple crop in
Nigeria. Rice consumption has increased
significantly over the last decade (6.5 % per
annum) and the level of consumption has now
reached 6 million metric tons per annum with a
market value of $3.6bn (FMARD, 2012).
Furthermore, FMARD (2012) noted that rice has
become a staple food of choice in both urban and
rural areas accounting for more than 20% of all
meals consumed per week by a typical household.
Nigeria growing demand for rice, is projected to
reach 36 million tons by 2050. Rice has the
potential for income and employment generation
in Nigeria given that it can be grown in all
ecologies of Nigeria. The total rice industry,
imports, and domestic production is valued at
about $5 billion, with nearly $4 billion accruing
inside Nigeria. About 2.5-3.0 million MT of rice is
imported. Nigeria accounts for roughly 6 percent
of the global rice trade. There is therefore a
significant rice market in Nigeria, as rice is rapidly
becoming the preferred staple food in the urban
areas, due to its ease and short time of preparation.
These rice attributes appealed to the everincreasing working women that are drawn into
cities by rapid urbanization. As a result of which
the annual per capita rice consumption exceeds 47
kg/capita (USAID, 2009).
A major attraction of the value chain approach is
its extended focus on all actors in the chain, rather
than a segment of it. The approach takes
cognisance of the extended networks of actors,
activities, interactions, and interdependence. The
value Links manual classified value chain
stakeholders into three categories (Figure 1),
value chain actors, supporters, and promoters.
Actors are at the micro level and the center of the
chain activities. They take risk of ownership of the
commodity in question. Supporters provide
essential services needed for the successful
business operation of actors. but they do not take
control and own the commodity. They at the meso
level, guaranteeing an enabling environment for
businesses to get established and flourish. The
third is the macro level, called the promoters. This
the policy level which guarantees an enabling
environment for the actors and supporters to
undertake business activities.
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Nigerian Journal of Agricultural Extension, Vol, 21, Number 2, June 2020
Infrastructure: Roads, Electricity, Water
Producer Association Activities
Advocacy, Joint Marketing
Trade Promotions,
Fairs etc
INPUTS
PROVISION
Legal Framework: Laws, Taxes etc.
PRODUCTION
PROCESSING
Business Development
Support Services
TRADING
CONSUMPTION
MICRO
Public
Research
Information
Public
Extension
Collaboration
Promotion
Projects
MESO
Political Framework and Reforms
Financial support and Safety Nets
MACRO
Figure 1: Value Chain Actors, Supporters and Promoters
Source: Adapted from Value Links ( GTZ, 2007)
The major challenge of the value chain approach
is that it is knowledge-driven, and highly
dependent on the regular flow of information
among stakeholders. Its success depends on the
quantum and the rate of generation and
dissemination of appropriate information. This
challenge is further compounded, where the skills
of implementers and their support institutions are
tilted towards the production-oriented approach.
Whereas, the value chain is a market-oriented
approach and a strategic network of independent
organizations and businesses, who recognize their
mutual need for one another, to work together to
identify strategic objectives and are willing to
share the associated risks and benefits, and will
invest time, energy, and resources to make the
relationship work (Amanor-Boadu, 2009).
The process involves high level of trust between
parties to the alliance. There is no room for an
adversarial attitude toward suppliers or buyers.
Competition for prices and more advantageous
delivery conditions is not among actors within the
alliance, but rather with other producers,
processors, or distributors outside the value chain.
Meyer-Stamer and Waltering (2007) used the
“value chain metaphor” to illustrate the difference
between the supply push and the value chain
approaches. They pointed out that the chain is a
relatively flexible structure, which changes its
form frequently without changing the basic
structure. One fundamental physical feature of a
chain is that it is impossible to move it by pushing
it. The only way to move a chain is by pulling it.
Therefore, in a situation where most of the chain
actors, their supporters and promoters only know
how to “push” rather than “pull” then the result
can easily be predicted. The “chain” will remain
stacked and entangled in one place. To avoid such
situation, it is important to educate and impart the
necessary information needed by the value chain
actors and stakeholders to survive in the demand
driven environment. Such information can be
generated through empirical studies such as this
one. The general objective of the study is to
identify the value creation and its distribution
among the major actors in the rice value chain.
The specific objectives are to:
i.
Identify and map out the flow of rice along
the rice value chain.
ii.
Estimate the costs, margins and value added by
major actors in the chain.
METHODOLOGY
The study was carried out in Kano River Irrigation
0
0
Project located between latitudes 13 N and 11 S
0
0
and longitude 8 W and 10 E in Kano State. It has
an area of 20,760km2, with an average annual
rainfall is 700mm, and a mean daily maximum
and minimum temperatures of 350and 190 Celsius,
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Rice Value Chain Analysis In Kano River Irrigation Project (KRIP) Kano State, Nigeria
respectively. Kano River Irrigation Project
(KRIP) has potential for irrigating 62,000
hectares of land, but only the first phase (KRIP1),
with an irrigable area of 25,606 ha, has been
completed. This area covered Kura, Bunkure and
Garun mallam local government areas, and is
known for rice activities and is referred to as
Kura-Kano rice corridor (PropCom 2007).
A total of six rice value chain actors; input dealers,
producers, traders, processors (par boilers and
millers) marketers and consumers were involved
in the study. A combination of stratified and
probability random sampling techniques were
used to select respondents. A total of 10 input
suppliers, 550 rice farmers, 20 paddy traders, 20
parboilers, 10 millers, 3 milled rice whole sellers,
30 milled rice retailers, 50 individual and 10
institutional consumers were selected. Data
collection, including the reconnaissance survey
was carried out in 2014/2015 and 2015/2016
growing seasons. Primary and secondary data
were used in the study. A combination of
qualitative and quantitative techniques was used
to collect the relevant data. Key informant
interview, focus group discussion, and structured
questionnaires were used. The analytical
techniques employed include descriptive
statistics, budgeting technique and commodity
chain analysis. Net farm income is estimated
using equation 1 (Castle et-al (1987)
estimate the flow of rice from the point of
production through the major actors to the
consumer. It was also used to estimate the value
added by major actors. The functional analysis is
used to identify actors, sub-actors and the
activities they carry out along the value chain.
This is used to draw the commodity flow chart.
The financial analysis estimates the value added
by each agent along the chain. The value added is
defined as the wealth created by the actor, minus
the wealth created by other actors, referred to as
intermediate inputs. It is estimated using equation
2 (FAO (2005):
Where: VA = value added during the accounting
period.
Y = the value of the output produced during the
accounting period
II = the value of intermediate inputs used
Alternatively, the value added can be estimated
from the following identity (3):
RESULTS AND DISCUSSIONS
Flow of Rice along the Value Chain
A total of 35, 627 farmers, 25 irrigation sectors
and 30 Water User Association (WUA) were
identified in the study area. There are two types of
farmers, small and large scale. Small scale famers
constituted more than 99 percent and contribute
about 94 percent of rice produced. Large scale
Where: NFI = Net Farm Income; GFI=Gross farmers constituted less than one percent of the
Farm Income, TVC=Total Variable Cost, farming population but contributed more than 6
TFC=Total Fixed Cost :
percent of the total rice output in the area (table 1).
An estimated 189,630 tons of paddy is produced
The commodity chain analysis “filière” is used to by small- and large-scale farmers in KRIP.
Source: Survey data 2015
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The household production and utilization of rice
was estimated based on information obtained
from the small-scale farmers. Such information
was not available from the large-scale farmers. It
was estimated that on the average, a small-holder
farmer in Kano River Irrigation Project produced
about 43 bags (75kg) of paddy. About fifty percent
(20 bags) is sold immediately to raise cash needed
to pay debts and take care of pressing family
needs. Fifteen bags are kept for sale later. Four
bags are given out as gift, three bags were
consumed, and one bag was stored as next year's
seed (Table 2).
Table 2: Household Flow of Rice in KRIP
Source and Flow of Paddy
Quantity of paddy sold
Quantity reserved for sale later
Quantity given as gift and or alms
Quantity consumed at home
Quantity reserved as seed
Average Quantity of paddy produced
Flow of Paddy
Bags
20
15
4
3
1
43
%
46.51
34.88
9.30
6.98
2.33
100.00
Source: Survey data 2015
Information in tables 1 and 2 was used to estimate
the flow of paddy in KRIP (Table 3). Out of the
estimated 189,630 tons of paddy produced, about
80 percent was sold to raise needed income.
About 50 percent was sold immediately after
harvest and the remaining 30 percent, was sold
later in the year, close the planting season, to
finance the following year's rice crop. About two
percent of the production was kept as seed. Less
than 10 percent of the total rice output is utilized
in the house for consumption. In view of the
foregoing, it can safely be concluded that rice is a
cash crop in the study area.
Table 3: Flow of Paddy in KRIP
Source and Flow of Paddy
Quantity of paddy sold after harvest
Quantity of paddy reserved for sale later
Quantity of paddy given as gift and or alms
Quantity of paddy consumed at home
Quantity of paddy reserved as seed
Quantity of paddy produced
Flow of Paddy
%
Tons
89,126
47
66,371
35
17,067
9
13,274
7
3,792
2
189,630
100
Source: Survey data 2015
The physical flow of paddy and milled rice from
farmers through different channels via various
actors to the consumers is mapped in figure 4.1.
The major actors considered in drawing up the
value chain map were, farmers, paddy and milled
rice marketers, processors, and consumers.
Farmers obtained inputs, seed, fertilizer,
pesticides, water and labour from different input
providers and used their knowledge and
managerial skills to produce paddy. An estimated
189,630tons of paddy was produced and injected
into the chain. The bulk of the paddy is sold to
wholesalers through commission agents and rural
assemblers. The major difference between the
rural assemblers and commission agents lies in
the ownership of the commodity. Commission
agents do not take ownership of the commodity
and as such bear minimal risk. Rural assemblers,
on the other hand, purchase and own the
commodity and bear the risk of ownership.
Majority of the paddy is moved to the processors
and some moved out of the project area as paddy.
But more than 70 percent of the rice is sold as
milled rice in the study area.
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Rice Value Chain Analysis In Kano River Irrigation Project (KRIP) Kano State, Nigeria
Cost, Returns and Value Added
This section examined the costs incurred, returns
received and value added by major actors along
the rice value chain. The major actors considered
are, farmers, paddy rice traders, parboilers,
millers, and milled rice marketers.
Farmers
Costs, returns and value added by farmers in
producing paddy are shown in table 4. A total of N
75,000 was expended per hectare, equivalent to
about N23 per kilogram of paddy produced.
About 50 percent of the total cost of production,
was expended on purchases of material inputs
such as seeds, fertilizer, and pesticides. Fertilizer
was the single most important contributor to the
total cost. It contributed about 30 percent of the
total cost. It is followed by seed, herbicides, and
insecticide. Labour charges: harvesting, land
preparation, planting and weeding constituted
less than half of the total cost of production.
Depreciation constituted about 2 percent of the
total cost of production. This is an indication that
farmers are still using traditional tools and
equipment. But the fact that labour constituted
less than half of the total cost is an indication that
rice production in the area is gradually moving
away from the traditional, low-input strategy
where labour is substituted for inputs. Nigerian
rice farmers are known to have adopted the lowinput strategy to agriculture, with minimum input
requirements and low output (IFAD 2009,
USAID 2009, Cadoni and Angelucci 2013). As a
result of the low-input strategy, Nigeria rice
productivity is among the lowest within
neighbouring countries (USAID 2009).
However, despite the low productivity, rice
production in the study area was profitable. The
total revenue from one hectare of rice production
was about N200,000 out of which N120,000 was
realized as profit. The net-return of a kilogram of
paddy was about N37. A kilogram of paddy was
sold at about N 60. This finding is like that of
Islam and Ahmed (2010) in Adamawa state and
Tinsleey (2012) in Sokoto state. In Adamawa
state, farmers made between N75,000 to
N110,000 profit per hectare of rice. The value
added by rice farmers is N159,000. The value
added is mainly composed of return to
management, which constituted more than 75
percent. This followed by payment for labour and
depreciation (Table 4.3).
Paddy Marketers
The costs incurred and revenue received by paddy
marketers for assembling paddy and making it
available to other chain actors are shown in table
4.4. The costs items include cost of acquisition of
paddy, cost of storage, transportation, loading and
off-loading, union dues and local government
taxes. Paddy assemblers move from one
production cluster to another buying paddy in
small quantities, which is sorted, cleaned, rebagged and stored till the next market day. Paddy
is stored on the average for a period of five days.
Bagging is usually associated with some cleaning,
winnowing, cost of propylene bag, bagging and
sewing.
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Nigerian Journal of Agricultural Extension, Vol, 21, Number 2, June 2020
Other costs incurred by the marketers include
taxes levied by the local government authorities,
called local government revenue, union dues and
commission for agents and the so-called
temporary storage levy. Despite all these costs,
paddy marketing was found to be a profitable
undertaking in the study area. The marketer can
make up to gross margin of N400 and net margin
of N50 per every bag and Kilogram sold,
respectively. This finding is like that of NRDS,
(2009) and Cadoni and Angelucci (2013).
Table 4: Cost, Returns and Value added by farmers in Paddy Production
Cost and Returns
A
Cost
1 Materials
i
Seeds
ii
fertilizer
iii
Herbicides
iv
Insecticides
v
Irrigation Water
vi
Empty sacks
Sub-total
2 Labour Charges
i
land preparation
ii
Planting
iii
Weeding
iv
Herbicide application
v
Insecticide application
vi
Fertilizer application
vii
Irrigation
iix
Harvesting
ix
Bagging
x
Transportation
Sub-total
3 Depreciation
4 Total Cost
B Returns
1 Average output
2 Survey
price data
N/kg
Source:
2015
3 Total Revenue
4 Net Revenue
C Value Added
1 Intermediate Consumption
2 Total Value Added
N/ha
Farmer Cost
N/Kg
5,300
22,500
3,500
2,500
1,500
1,200
36,500
1.64
6.98
1.09
0.78
0.47
0.37
11.33
7.07
30.02
4.67
3.34
0.77
1.00
48.70
10,500
3,500
2,500
2,500
1,500
2,500
1,500
8,500
1,500
2,500
37,000
1,450
74,950
3.26
1.09
0.78
0.78
0.47
0.78
0.47
2.64
0.47
0.78
11.48
0.45
23.26
14.01
4.67
3.34
3.34
2.00
3.34
2.00
11.34
2.00
3.34
49.37
1.93
100.00
3,222
60.67
195,479
120,529
1.00
60.67
60.67
37.41
36,500
158,979
11.33
49.34
%
Rice Value Chain Analysis In Kano River Irrigation Project (KRIP) Kano State, Nigeria
118
Table 5: Marketing Cost of a bag and Kilogram of paddy
No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Items of Cost and Returns
Purchase price of paddy
Storage cost of paddy
Bagging
Transportation cost
Loading and off-loading cost
LGA Tax
Union fees
Middlemen charges
Temporary market storage
Total Marketing cost
Purchase price of paddy
Selling price of paddy
Gross Marketing Margin
Net Marketing Margin
Value added
N/Bag
4,550.00
50.00
100.00
100.00
30.00
20.00
15.00
25.00
10.00
4,900.00
4,550.00
4,950.00
400.00
50.00
400
N/Kg
60.67
0.67
1.33
1.33
0.40
0.27
0.20
0.33
0.13
65.33
60.67
66.00
5.33
0.67
5.33
%
92.86
1.02
2.04
2.04
0.61
0.41
0.31
0.51
0.20
100.00
Source: Survey data 2015
Parboilers
Parboilers in the survey area, unlike marketers,
were mainly service providers. They do not take
ownership of the rice. They parboil paddy for fee,
which constitute the major portion of their
revenue. However, there were a few of them that
purchase paddy, processed, and sell milled rice.
The costs and returns of parboiling in the survey
area is presented in table 4.5 The items of cost
include variable inputs and fixed inputs. The
variable inputs include water, fuel wood and
labour. The fixed inputs are depreciation of
parboiling equipment and tools. They include,
drums, washing basins and bowls, sieves, drying
mats, brooms, and sticks. There was total absence
of drying slabs, either owned by the community or
by individuals.
About N300 was spent on parboiling a bag of
paddy. The revenue realised from the operation
was N350, thus about N50 was realised as profit.
Variable cost constituted the major component of
the total cost of parboiling. The cost of wood and
water were the two most important costs items in
the parboiling business. The fixed cost component
constituted less than 6 percent of the total cost.
However, parboiling is the riskiest business along
the rice value chain. The parboilers run the risk of
over-cooking the paddy, especially where drums
without a false bottom are used. Overcooked and
unevenly dried, soggy grains get more easily
damaged and broken in the milling process. This
type of rice is not accepted by clients and where
this kind of damage happened, the parboiler had to
refund the cost of the paddy back to the client. It is
worthy to note that majority of the parboilers are
women. They are the most vulnerable among the
rice value actors. Their value added to the chain is
N 75 per bag and N 1.7 per kilogram.
Propcom (2007) found similar result in the study
area. It was reported that, some interventions were
carried out in the survey area by Propcom. The
capacity of the parboilers was built and were
assisted to form business groups and associations.
Parboilers started to get at least N8 more per kg of
improved quality local rice. It was also found that,
where the parboilers extended their services to
include trading, in addition to owning the rice, it
stretched their range of activities and profitability.
The parboilers were able to get on an average N
27,000 of profit per month from the trading
compared to only N 3,000 per month from
contract parboiling.
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Nigerian Journal of Agricultural Extension, Vol, 21, Number 2, June 2020
Table 4.6:C
osts and Returns of Parboiling a bag of Paddy
No
Items of Cost and Returns
1
Cost
2
4
5
Variable costs
i
Fuel wood
ii W ater
iii labour
iv Total Variable cost
Fixed cost
i
Depreciation of Equipment
ii Total Fixed cost
Total cost
Revenue
6
7
8
i
Parboiling fee
ii Total Revenue
Gross M argin
Net M argin
Value Added
3
N/Bag
N/Kg
%
150
100
25
275
2.00
1.33
0.33
3.67
51.28
34.19
8.55
94.02
17.5
17.5
292.5
0.23
0.23
3.90
5.98
5.98
100.00
350
350
75
57.5
75
4.67
4.67
1.33
1.1
1.67
Source: Survey data 2015
Table 4.7: Cost and Returns of Milling (N/I00kg milled rice)
N0
1.0
1.1
1.2
1.3
2.0
3.0
4.0
Cost and Returns
Variable costs
Material input
i Diesel
ii Electricity
iii Water
iv Lubricants
v
Spare parts
vi
Sub-Total
Labour Charges
i Machine operator
ii Operator assistant
iii Winnowing and cleaning
iv
Sub-Total
Total Variable cost
Fixed cost
i
Depreciation on building
ii
Depreciation on equipment
iii
Total Fixed cost
Total cost
Revenue
Diesel Mills
N/I00kg
%
Electric Mills
N/I00kg
120.00
0.00
5.00
3.00
3.50
131.50
64.52
0.00
2.69
1.61
1.88
70.70
0.00
4.50
5.00
3.00
2.00
14.50
0.00
7.06
1.92
4.71
3.14
16.84
35.00
15.00
2.50
52.50
184.00
18.82
8.06
1.34
28.23
98.92
35.00
10.00
2.50
47.50
62.00
54.95
15.70
3.92
74.57
97.33
0.50
1.50
2.00
186.00
0.27
0.81
1.08
100.00
0.50
1.20
1.70
63.70
0.78
1.88
2.67
100.00
i
Fees receive from Milling
350.00
260.00
ii
Sales of rice husk
5.00
5.00
5.0
Total Revenue
355.00
265.00
6.0
7.0
8.0
Gross Return
Net profit
Value added
171.00
169.00
223.50
203.00
201.30
250.50
Source: Survey data 2015
120
Rice Value Chain Analysis In Kano River Irrigation Project (KRIP) Kano State, Nigeria
Millers
The cost of rice milling is composed of both
variable and fixed costs. The variable cost items
are electricity or diesel, water, lubricants, cost of
maintenance, spare parts and labour. Fixed cost
are depreciation charges on machines and
equipment. The cost and return of producing one
bag of milled rice is presented in table 4.6.
Variable cost constituted more than 97 percent of
the total cost of milling in electric and dieselpowered mills. In diesel powered mills cost of
diesel constituted more than 60 percent of the
total cost. The total cost of milling was higher for
the diesel-powered machines, so also is the fee
charged for milling. Even though the revenue
obtained under the diesel-powered mills were
higher than the electric powered, the cost of
operation was also much higher and as such the
profit margin was higher under the electric
powered mill. The value addition was also higher
under the electric powered mills. Hence the need
for constant electric supply in rice processing clusters.
CONCLUSION AND RECOMMENDATIONS
The study was conducted in Kano River Irrigation
Project located between latitudes 130 N and 110 S
0
0
and longitude 8 W and 10 E in Kano State.
Primary and secondary data were between
2014/2015 and 2015/2016 growing seasons.
Focus group discussion, key informant interview
and structured questionnaires were used to collect
the data, which was analyzed using descriptive
statistics, farm budgeting and commodity chain
analysis. The flow of rice along the value chain
was estimated and mapped. Small scale famers
who constituted more than 99 percent of the
farming population, contributed about 94 percent
of the production. An estimated 189,630 tons of
paddy was produced in the study area. More than
80 percent is sold to raise needed income. About
50 percent is sold immediately after harvest and
the remaining 30 percent is sold later in the year,
to finance next year's rice crop. About two percent
of the production is kept as seed. Less than 10
percent of the total rice output is utilized in the
house for consumption. The bulk of the paddy is
sold to the wholesalers through commission
agents and rural assemblers. But more than 70
percent is sold as milled rice.
A total of N75,000 was expended per hectare of
rice, equivalent to N23 per kilogram of paddy.
Material inputs such as seeds, fertilizer and
pesticides constituted about 49 percent of the total
cost of production. Fertilizer alone, contributed
about 30 percent of the total cost. Labour for
harvesting, land preparation, planting and
weeding constituted 49 percent. Depreciation
constituted less than 2 per cent of the cost. Rice
production was profitable. The total revenue is
N200,000 out of which N120,000 was realized as
profit. The net-return of a kilogram of paddy was
about N37:00. Paddy marketing was found to be a
profitable undertaking in the study area. The
marketers' net margin is N50 per Kilogram sold.
Parboilers in the survey area were mainly service
providers. They parboil paddy for fee. About
N300 was spent on parboiling a bag of paddy. The
revenue realized from the operation was N350.
About N50 was realized as profit.
Millers use either electric-powered or dieselpowered mills. The variable cost consisted of
electricity or diesel, water, lubricants, cost of
maintenance and spare parts and labour provided
by mill operators and other assistants. Fixed cost
is the depreciation charges on buildings,
machines, and equipment. Variable cost
constituted more than 97 percent of the total cost
of milling in. In diesel powered mills cost of
diesel constituted more than 60 percent of the
total cost of operation. The total value added per
one kilogram of paddy by farmers, paddy
wholesalers, parboilers and millers were N 20.81.
Farmers contributed N11.33, marketers N 5.3,
parboilers N 1.67, and millers N 6.5.
RECOMMENDATIONS
I.
Rice value chain actors' access to
technology should be enhanced to
improve productivity and increase
profitability of the operations. This could
be done through public-private
partnership, where actors' business
development association can play a
leading role in sourcing and
disseminating relevant technologies from
public institutions.
ii.
Rice activities along the chain are labour
intensive, thus labour charges represent a
high proportion of the cost of operation of
most of the actors. In addition to the high
of labour, there is a scarcity of labour at
peak periods, especially for farmers.
Improving labour productivity through
mechanization and improved
management practices is recommended.
iii.
Majority of the farmers have adopted the
use of external inputs such as fertilizer,
seed, and herbicides but the returns
obtained from the use of the inputs was
Nigerian Journal of Agricultural Extension, Vol, 21, Number 2, June 2020
very low as indicated by the low yield.
There is substantial scope for increasing
yields and enhancing input use efficiency.
There is the need for improved access to
extension services and in particular the
need for training on best practices in rice
production and processing.
The local government councils and
community leaders should jointly initiate
adult literacy programs to assist women
acquire some form of education to allow
them to lead an enlightened and educated
life. Thereafter improved parboiling
practices and business arrangements
should be introduced to them.
Rice milling in Nigeria is a cottage
industry, dominated by medium size
workshops. The millers should be
introduced to joint-venture projects,
where resources are pooled to acquire
large processing plants managed jointly
as a corporation or cooperative. This
would lead to improved efficiency,
reduced cost, and improved earnings. It
will also release labour to other
industries.
Marketers should also be facilitated to
reap the benefit of their business
associations. This could be arranged by
development agents and NGOs to
encourage joint marketing activities and
ownership of common assets, such as
drying slabs and warehouses. This would
improve quality, lead to economy of scale
and improved earnings.
Depreciation constituted less than 2 per
cent of the cost of rice production in the
area. Access to credit for acquisition of
assets such as machinery and appropriate
equipment should be improved.
121
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