Upgrading the rice value chain in Africa

Increasing domestic rice production on its own may not be enough to tilt the balance toward self-sufficiency. For example, Senegal boosted domestic production in 2008 in response to the crisis, but according to AfricaRice former agricultural economist Demont (2013)*, “when rice farmers [brought] the rice surplus generated by the program to market, the market was temporarily flooded as there was no commensurate increase in demand for local rice, resulting in a steep decline of prices.” This story is likely to be repeated elsewhere on the continent, especially in coastal countries that import large quantities of rice and whose urban populations have become accustomed to the quality attributes of imported rice.

AfricaRice consequently added its voice to those of the World Bank, United Nations Conference on Trade and Development (UNCTAD) and FAO in the call to widen investment to cover the whole value chain rather than simply focusing on production. Upgrading the whole value chain requires value-adding investments as well as investments in production.

AfricaRice has analyzed rice production chains in Senegal to determine the sequence of investments required for value-adding before tackling productivity. This analysis provides a model for other countries, especially those with import-biased markets.

In brief, coastal countries — where consumers favor imported rice — need to make their local rice look like the imported brands through quality-upgrading, branding and labeling. Meanwhile, coastal countries in which consumers favor local rice need to focus on maintaining the competitiveness of local rice on the local market (where it has to compete with better quality imports).

Conversely, landlocked countries that are somewhat shielded from import bias due to natural barriers are encouraged to invest in their internal marketing infrastructure, simultaneously shifting supply, adding value and maintaining demand for local rice. These countries may also benefit from a regional value-chain approach to rice development and will therefore need to focus on value-chain upgrading (promoting trade, increasing coordination among stakeholders, providing marketing credit and developing export strategies).

Despite the poor image of local rice, further research confirmed that urban consumers were willing to pay a premium (even above the price of their currently preferred imported rice brands) for high-quality local rice. In terms of marketing, a key factor in import-biased countries seems to be making sure that local rice is packaged so that it blends in with imported brands on the shelf in urban markets. However, the appearance, grade, cooking characteristics and aroma then have to live up to the expectation of the branding—poor-quality rice masquerading as a high-quality product would only further undermine confidence in local rice.

The overall conclusion is that more resources need to be directed toward value-chain upgrading to add value to domestic rice production such that poor rice farmers have access to the large urban markets that are currently mainly served by Asian exporters. At the same time, however, the local rice needs to remain affordable for rural and urban consumers, particularly the poor.

* Demont M. 2013. Reversing urban bias in African rice markets: A review of 19 national rice development strategies. Global Food Security, 2: 172–181.