Economic Analysis Of Irrigated Rice Production

1.0 Introduction

1.1 Background to the Study

Rice has been an important food for most people in sub-Saharan Africa particularly West Africa where the consumption of cereals mainly sorghum and millet has decreased while that of rice has increased as a result of shift in consumers’ preference, urbanization and increase in population. Rice is notably palatable and can digest easily (Cadoni and Angelucci, 2013). It is grown approximately on 3.7 million hectares of land in Nigeria, covering 10.6% of the 35 million hectares of land under cultivation, out of a total arable land area of 70 million hectares (Cadoni and Angelucci, 2013). Where 77% of the farmed area of rice is rain-fed, of which 47% is lowland and 30 percent upland (Cadoni and Angelucci, 2013). The range of grown varieties is diverse and includes both local (such as Dias, Santana, Ashawa, Yarsawaba, and Yarkuwa) and enhanced varieties of traditional African rice (such as NERICA) (Bayou 2009).

In Nigeria, demand for rice had been increasing at a much faster rate than in any other African countries since mid-1970 (FAO, 2001). Nigeria consumes 50 percent of the total 10 million metric tons of rice for which only 3 million metric tons is produced in Africa (Oryza marked report – Nigeria, 2004). Furthermore, during the 1960s, Nigeria had the lowest per capita annual consumption of rice in the West Africa sub region with an annual average of 3kg. Since then, Nigeria per capital consumption levels have grown significantly at 7.3 percent per annum (PCU, 2002). Consequently, per capital consumption during the 1980s average 18kg and reached 22kg in 1995 to 2000. In an apparent move to respond to the increase in per capita consumption of rice, local production increased at an average of 9.3 percent per annum.

These increases have been traced to vast increase in rice area totaling an annual average of 7.9 percent and to a lesser extent through increase in rice yield of 1.4 percent per annum. In spite of this, the production increase was not sufficient to match the consumption increase. In a bid to address the demand-supply gap, government, at various times, has come up with different policies and programmes. It is observed that those policies have not been consistent (Ogundele and Okoruwa, 2004). The erratic policies reflected the dilemma of securing cheap rice for consumers and a fair price for the producers.

Nigeria is the largest producer of rice in West Africa and the second largest behind Egypt in Africa. Rice is cultivated in upland and swamp ecosystems in Nigeria. Upland rice accounts for about 30-35% of total rice while swamp rice accounts for about 25% of rice production in the country with yields as high as 2 to 8 tonnes/hectare (Idiong, 2006). Its production in the country rose from 2.4 million metric tonnes in 1994, to 3.9 million metric tonnes in 2005 (CBN 2006). In spite of the increase in production of about 1.8 percent, the demand for rice surpasses supply (Adeoye 2003; Ojehomon et al., 2004). Consequently, the country has been importing to bridge the supply-demand gap. Considering its vast agricultural land and suitable ecology, Nigeria is endowed to produce enough rice to satisfy domestic demand and has the potential to export to other countries (Babafada, 2003). However, domestic rice production has not increased sufficiently to meet the increased demand despite the various policy measures put in place to facilitate production. FAO (2004) estimates indicated that Nigerian rice import increased from 2,630 metric tonnes in 1970 to 1.876 million metric tonnes in 2002. Total import also stood at 1.9 million tonnes in 2003 (GAIN 2004). Today rice is cultivated in virtually all the agro-ecological zones in Nigeria. Despite this, area
cultivated to rice appears small. Estimate of locally produced rice for year 2002 was 2.9 million tonnes (FAOSTAT 2003). Also, only about 6.7% of the 25 million hectares of land cultivated to various food crops was cultivated to rice between 2000 and 2002 (Osiname 2002).

1.2 Problem Statement

Despite recorded increase in rice production over the years, the demand for the commodity in Nigeria outstripped it supply. For example, Paddy rice production had increased between 2001 and 2006 from 2.75 million to 4.0 million tonnes, followed by a decline in 2007 to 3.5 million tonnes and a positive peak in 2008 was witnessed in which the output was estimated at 4.3 million tonnes. From 2008 to 2010 production statistics showed a decreasing trend in production from 4.3 to 3.5 million tonnes (FAOSTAT, 2012). On the other hand, the consumption pattern keep increasing from 3.05 million in 2001 to 5.95 million tonnes in 2012 (IRRI, 2013). This shows a wide gap between production and consumption of the commodity.

This phenomenon led various governments to come up with policies and programmes that would ensure efficient bridging of the gap. However, the policies were erratic and so unable to achieve the designed goals and objectives of increasing rice production in particular, and achieving agricultural growth and equity in general. Existing low level of productivity in food grain production reflect low level of technical, allocative and economic efficiencies. Therefore, increasing agricultural growth is an indication of appreciable growth in agricultural production process that is linked to farm profit (Ogundari, 2006).

The demand for rice in Nigeria as at 2011 was estimated at 19.2 million tonnes against the production level of 4.5 million tonnes (CBN, 2012). This has created a demand production gap of about 14.7 million tonnes to be met. Diagne et al. (2011) in their work on historic opportunities for rice growers in Nigeria stated that less than 10% of the 3.4 million hectares of irrigated land that could be used for irrigated rice production in Nigeria are currently cultivated. Rice yields in irrigated areas are between 3 and 3.5 tonnes/per hectare, which are much lower than the potential yields estimated at between 7 and 9 tonnes/per hectare (Diagne et al., 2011).This study seeks to provide answers to the following research questions:

What are the socio-economic characteristics of irrigated rice producers?

What are the levels of inputs and output in irrigated rice production?

What is the technical relationship between inputs and output in irrigated rice production?

Are resources efficiently utilized in irrigated rice production?

Is irrigated rice production profitable?

What are the constraints associated with irrigated rice production in the study area?

1.3 Objectives of the Study

The broad objective of the study was to evaluate the economics of irrigated rice production in Kura Local Government Area of Kano State.

The specific objectives were to:

Describe the socio economic characteristics of irrigated rice producers in the study area;

Determine the input and output levels in irrigated rice production;

Determine the technical relationship between inputs and output in irrigated rice production;

Determine whether or not resources are efficiently utilized in irrigated rice production;

Determine costs and returns in irrigated rice production; and

Identify the constraints associated with irrigated rice production in the study area.

1.4 Hypothesis

The following hypothesis was tested:

There is no significant relationship between farmers’ socio-economic characteristics with their output in irrigated rice production in the study area

1.5 Justification of the Study

Rice is one of the few crops recommended for rapid production expansion in Nigeria. Various studies have revealed that rice can be produced in all States of Nigeria (Hardcastle, 1959; Davis, 1962; Blackenburg, 1971; Filani, 1980). Although the bulk of rice in Nigeria is produced in swamp and upland areas, potentials exist for increased output through irrigation (Davis, 1962; Colin, 1965; Adeniyi, 1986).

The provision of adequate food for the rapidly growing population also requires that irrigated rice production be expanded. This will depend, to some extent, on determining the production function for irrigated rice production, the efficiency of resource use in irrigated rice production and the constraints associated with irrigated rice production. Policy makers will also find the results of the research useful in policy formulation. Furthermore, the study will help to add to the wealth of knowledge in the area of income generation on farming.