RICE INDUSTRY IN KWARA STATE OF NIGERIA: AN ECONOMIC ANALYSIS

Abstract

The objective of the study is, broadly, to examine the structure and performance of rice production and processing enterprise in Kwara state with a view to identifying possible ways of transforming the industry. The study also aims at identifying and evaluating some of the factors determining the level of marketed surplus and consumption of rice. The analytical tools employed are mostly a combination of farm record analysis and Statistical regression/production function techniques. Most of the survey data were collected during the 1977/78 crop season from 230 farming units, 20 rice mills, 50 rice parboilers and 183 rice consumers in Kwara state. Chapter I deals with the general introduction, problem Situation, objectives and methodology, followed by literature review in Chapter II. Chapter III is devoted to an analysis of resource Situation in rice production while Chapter IV deals with resource productivity and resource-use efficiency in rice farming. The structure and economic performance of rice processing industry is analysed in Chapter V; the Chapter also examines the least-cost milling facilities in Kwara state. Chapter VI is devoted to the analysis of the marketed surplus and home consumption of rice while in Chapter VII, the functional relationship between the quantity of rice consumed and selected variables are examined and some consumption elasticities are computed. The findings are summarised in Chapter VIII. The analysis of resource Situation showed, among other things, that Capital is the most limiting factor in Kwara state peasant rice production. It was shown further that while non-institutional sources of credit play a dominant role in peasant rice production, the role of institutional sources is almost nil. The costs and returns analysis showed that, within the limits imposed by the quality of data, an average rice farmer was making a quite satisfactory performance. With an average paddy rice yield of 1,506.9 kg. per hectare, and an estimated cost of £1205.8 per hectare, the net revenue accrueing to an average farmer was estimated at £1251.6 per hectare. In all the areas under study, the land variable alone accounted for over 70% of the variability in the aggregate production of rice, showing clearly that land is the most crucial determinant of rice production in Kwara state. On the whole, only few significant inefficiencies in resource' use were observed, implying that a mere re-allocation of resources may not have any appreciable effect on aggregate rice output. The study also revealed constant returns to scale on both large and small rice farms, and rejected the hypothesis of inverse relationship between output and farm size in paddy rice farming. The analysis of rice processing Operation revealed that rice processing units were making satisfactory performance in spite of the rather high processing costs, the estimated net returns being N7.96 and N51.5 per ton for parboiling and milling units respectively. It was further shown that small rice mills are the least-cost milling facilities in Kwara State. The emphasis on the marketed surplus study was both on the conceptual framework of the models and of the numerical results, The study showed that the allocation of rice output between market sales and home consumptions were both sensitive to price changes. Total price elasticity of marketed surplus ranged from 0.90 to 1.91 while that of home consumption elasticity fell in the range of -0.27 to -1.6. Output elasticity of marketed surplus ranged from 0.64 to 2.5. It was further shown that volume of production was more significant than family size and producer price in their influence on the marketed surplus of rice. With regards to rice consumption by non-rice producing households, the result showed that while family size and income are positively and significantly correlated with the consumption of rice, education appears to be an insignificant Variable. Household size elasticities ranged from 0.46 - 0.58 while income elasticities of rice consumption fell in the range of 0.02to 0.38. The result also points to the conclusion that, at present, consumers' preference for imported rice is rather strong, owing largely to the relatively high cooking quality of this commodity vis-a-vis that of the locally produced rice. Suggested policy measures include the development of irrigation facilities in the state, the expansion of farmers' credit base, selective mechanisation of rice farming operations, the use of modern rice mills in rice processing, a vigorous use of price instrument for the purpose of increasing the marketed surplus of rice in Kwara state and the removal of marketing bottlenecks, not only to facilitate efficient distribution of rice, but also to ensure that farmers are aware of the existing market conditions.