EXPANDING RICE MARKETS IN THE EAST AFRICAN COMMUNITY - Kilimo Trust
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EXPANDING RICE MARKETS IN THE EAST AFRICAN COMMUNITY
EXPANDING RICE MARKETS IN THE EAST AFRICAN COMMUNITY Compiled by Funded by
About this report This report is an updated version of ‘The Expanding of Rice Markets in East Africa’ report published in 2013. The main objective is to adduce the developments in the EAC rice sector between 2014 and 2017. Acknowledgement The authors would like to thank the organizations, private companies and individuals who provided data and information that was used to develop this report. Kilimo Trust would also like to thank GIZ and BMGF for funding this study through the CARI project. Disclaimer The views and conclusions contained in this report are entirely those of the authors and do not necessarily reflect the policy and views of Kilimo Trust, BMGF or GIZ. Citation © Kilimo Trust, 2018
EXECUTIVE SUMMARY
R
ice is the second most important staple in the East Africa Community
(EAC). The consumption of rice in the region has grown at a rate
of 5% over the last ten years (2006-2016) to 3 million MT. The
production also increased at a rate of 11 % over this time, mainly due to
growth in area under production, and not productivity. The deficit in rice
supply was 863,000 MT in 2016 up from 387,000 MT in 2006. The
deficit in rice supply is met through imports from Pakistan, India, Vietnam
and Thailand. The import bill for rice in 2016 was approximately USD222
million in comparison to USD107 million in 2006. There is potential in
the EAC region for import substitution by increasing production of rice
and sequentially unlocking opportunities for local rice farmers in the EAC
regional market.
Rice production in the EAC is characterized by low productivity currently at an average of
3 MT/ha compared to a potential of 10 MT/ha. This is mainly due to use of low yielding
rice varieties, unreliable seed and input supply systems, pests and diseases, poor water
management, limited use of time and labour saving technologies for both on and off-farm
operations that exacerbate crop losses. Rice production in the EAC is also mainly under
rain-fed systems that have lately been hit by long droughts, as a result of climate change.
The other factors that affect the rice value chain are limited financing, unreliable markets,
lack of real-time market information and high costs of transport. Unresolved Non-tariff
barriers to trade and limited integration of the East African Community also limit intra-
regional trade in rice.
i
ii
The high cost of production of rice in the EAC region causes
its low competitiveness in the regional and local markets.
Generally in the EAC, locally produced rice is also of poorer
quality compared to imported rice, levitating consumer
preferences for imported rice, except in Tanzania where
locally produced rice is most preferred. This study also
shows that rice farmers do not grow rice varieties that
are preferred and consumed in key rice markets in urban
areas. Approximately 60% of the rice produced in the
EAC is sold, and 40% retained for food and seed. Farmers
who grow rice in irrigated systems are also more likely to
sell unprocessed rice (paddy) to traders or processors in
the EAC region.
The current rice market is projected to grow to 8.3
million MT in 2030 due to urbanization, population
growth, changing consumer preferences and economic
development. This requires urgent and practical reforms
in the rice value chain in the EAC to match consumer
demands.
The potential of the rice value chain can be unlocked
by breeding and promoting high yielding rice varieties
with traits that consumers demand. The area under rice
cultivation is also threatened by population pressure;
therefore rice intensification should be promoted.
Integrated crop management and efficient use of water
must be supported to increase productivity. Investment in
irrigation infrastructure is critical to boost production and
mitigate losses due to weather variations. Mechanization
of on and off-farm operations is also necessary to
improve quality of rice and raise efficiency of operations.
Mechanization also creates jobs in the rice value chain,
especially the youth for operation of equipment and
provision of hire services, and promotes value addition.
Appropriate post-harvest technologies to preserve quality
of the rice crop and adoption of suitable packaging can
improve marketability and attractiveness of locally
produced rice in the EAC. Rice from local farmers in the
EAC countries can then ably reach shelves in shops and
iii
supermarkets across the region un-adulterated. The scale of operations of actors in the rice value chain is limited by access to appropriate financing. Most businesses involved in the rice trade cannot raise enough capital to participate in the regional market. This report recommends continued lobbying for vertical integration of the rice value chain in EAC countries to ease movement of inputs and stimulate collective marketing. The continued organization and formalization of value chain actors will make it easier for banks to design appropriate finance and asset financing packages for actors in the rice value chain. To further encourage participation of local producers in the regional market, the iv
implementation and harmonization of the regional trade policies is mandatory
as is investment in regional infrastructure, such as the One Stop Border points
and regional transport network.
The interventions in the rice value chain in the EAC
community necessitate matching investment in research,
irrigation, input supply, market assessment, training of
value chain actors, popularizing the EAC common market,
and continued lobbying of governments, donors and
private sector to harmonize trade and agricultural policies
to boost the agricultural sector in the EAC.
v
TABLE OF CONTENTS
EXECUTIVE SUMMARY...................................................................................................... i
LIST OF FIGURES............................................................................................................... vii
LIST OF TABLES................................................................................................................ viii
LIST OF ACRONYMS AND ABBREVIATIONS................................................................. ix
1. INTRODUCTION.................................................................................................................... 1
2. DEMAND................................................................................................................................ 5
2.1. Demand trends and characteristics........................................................................... 6
2.2. Demand drivers.............................................................................................................. 8
2.2.1. Aroma............................................................................................................................. 8
2.2.2. Origin of rice.................................................................................................................. 8
2.2.3. Price of rice.................................................................................................................... 8
2.2.4. Grading of rice.............................................................................................................. 8
2.2.5. Packaging....................................................................................................................... 9
2.3. Utilization of rice by-products................................................................................... 10
3. SUPPLY...................................................................................................................................13
3.1. Key Characteristics and Trends..................................................................................14
3.2. Factors affecting rice supply in the EAC.................................................................. 22
3.2.1. Production and land tenure systems....................................................................22
3.2.2. Supply of water...........................................................................................................23
3.2.3. Use of improved seed varieties..............................................................................25
3.2.4. Seed supply systems................................................................................................26
3.2.5. Fertilizer use................................................................................................................27
3.2.6. Biotic factors................................................................................................................27
3.2.7. Access to Appropriate Financing..........................................................................28
3.2.8. Time and labour saving technologies..................................................................29
3.2.9. Unreliable policy environment.............................................................................. 30
4. TRADE................................................................................................................................... 33
4.1. Domestic Trade.............................................................................................................34
4.1.1. Description of Domestic markets for rice......................................................... 34
4.2. Regional Trade............................................................................................................... 37
4.2.1. Main trade flows........................................................................................................37
4.2.2. Rice exports from the EAC......................................................................................39
4.2.3. Rice imports in the EAC.......................................................................................... 40
4.2.4. Drivers of regional trade in rice............................................................................. 42
4.2.5. Barriers to trade in the EAC................................................................................... 44
5. PRICES...................................................................................................................................49
6. RICE SECTOR TRAJECTORY............................................................................................. 55
7. CONCLUSION AND RECOMMENDATIONS................................................................. 73
8. REFERENCES......................................................................................................................... 75
viLIST OF FIGURES
Figure 1: Milled rice consumption in the EAC................................................................................6
Figure 2: Milled rice consumption per capita in the EAC........................................................... 7
Figure 3: Paddy rice production in the EAC.................................................................................. 14
Figure 4: Paddy rice production in selected countries.............................................................. 14
Figure 5: Milled rice production in the EAC................................................................................. 15
Figure 6: Milled rice production for selected EAC countries................................................... 15
Figure 7: Area under rice production in the EAC........................................................................ 16
Figure 8: Rice Productivity in the EAC........................................................................................... 18
Figure 9: Map showing areas suitable for rice production (a) for lowland rice and (b) up
land rice.................................................................................................................................................. 20
Figure 10: Demand Vs supply of rice in the EAC....................................................................... 20
Figure 11: Rice imports in the EAC................................................................................................... 21
Figure 12: Forms of Imported rice products in the EAC............................................................ 21
Figure 13: Value of rice imports in the EAC..................................................................................22
Figure 14: Structure and Quantity flow of the Rwandan rice value chain in MT...............35
Figure 15: Regional rice trade in the EAC...................................................................................... 38
Figure 16: Volume of rice exported from the EAC..................................................................... 39
Figure 17: Value of rice exports from the EAC............................................................................ 39
Figure 18: Rice products exported from the EAC.......................................................................40
Figure 19: Sources of rice imports into the EAC.......................................................................... 41
Figure 20: Rice re-exports in the EAC........................................................................................... 42
Figure 21: Calendar for rice harvesting seasons in the EAC................................................... 43
Figure 22: Value chain costs for rice in Tanzania vs Pakistan................................................. 44
Figure 23: Producer price trends for paddy rice......................................................................... 50
Figure 24: Rice export prices in USD/MT.................................................................................... 50
Figure 25: Wholesale prices of rice in the EAC............................................................................51
Figure 26: Price trends across major markets in the EAC.........................................................51
Figure 27: Average wholesale prices for milled rice in the EAC.............................................52
Figure 28: Average wholesale prices of the main rice varieties in Uganda.........................52
Figure 29: Projected Milled rice production in the EAC........................................................... 58
Figure 30: Projected Milled rice consumption in the EAC...................................................... 59
viiLIST OF TABLES Table 1: Specification of rice grades preferred by consumers in the EAC............................ 10 Table 2: Total Area (Ha) under rice production in the EAC in 2016...................................... 18 Table 3: Periods of rice purchase in the EAC................................................................................32 Table 4: Effect of NTBs on the time (Hours) taken in a one way trip by rice processors...... 34 Table 5: CET on rice in the EAC..................................................................................................................... 34 Table 6: SWOT analysis of rice sector in the EAC...................................................................... 41 Table 7: Proposed Interventions for the rice sector in the EAC region................................ 42 Table 8: Ongoing interventions in the rice sector in the EAC................................................. 44 viii
LIST OF ACRONYMS AND ABBREVIATIONS
ACTESA Alliance for Commodity Trade in Eastern & Southern Africa
CARD Coalition for Africa Rice Development
CARI Competitive African Rice Initiative
CET Common External Tariff
EAAPP East African Agricultural Productivity Programme
EAC East African Community
EAGC East African Grain Council
EASCOM Eastern Africa Seed Committee
EATIH East Africa Trade and Investment Hub
FAO Food and Agriculture Organization
FAPDA Food and Agriculture Policy Decision Analysis
FSNWG Food Security and Nutrition Working Group
IFDC International Fertilizer Development Centre
IRRI International Rice Research Institute
JAICAF Japan Association for International collaboration of Agriculture
and Forestry
JICA Japan International Cooperation Agency
KNBS Kenya National Bureau of Statistics
kWh Kilowatt hour
MAS Market Analysis Subgroup
MT Metric Tonnes
NARO National Agricultural Research Organization
NERICA New Rice for Africa
NGOs Non-Governmental Organizations
NISR National Institute of Statistics Rwanda
OECD Organization for Economic Co-operation and Development
RCT Rice Council of Tanzania
RECTS Regional Electronic Cargo Tracking System
RUDI Rural Urban Development Initiatives
SADC Southern Africa Development Community
SAGCOT Southern Agricultural Growth Corridor of Tanzania
SCF Smallholder Crop Finance
SRI System of Rice Intensification
SSA Sub-Saharan Africa
TMEA TradeMark East Africa
UAE United Arab Emirates
UBOS Uganda Burueau of Statistics
USA United States of America
USAID United States Agency for International Development
USD United States Dollar
USDA United States Department of Agriculture
ixx
1
INTRODUCTION
The total rice harvested area in SSA
is also expected to expand by
1.8% per year, reaching 13.7
million
hectares by 2026
1R
ice (Oryza sativa L.) is a staple food for nearly half of the World’s total population. Rice
is also the World’s second most important cereal after maize. There are generally
three forms of rice, namely brown rice, white rice and parboiled rice (Research and
Markets, 2017). Rice can be grown both in dry and wet conditions over a wide range of
latitudes and across a wide range of soil, climatic, and hydrological conditions; primarily,
it is grown in the humid and sub humid tropics and subtropics (Singh & Singh, 2017). Asia
produces 90 %1 of the world’s paddy rice followed by Africa. The global consumption of
rice was approximately 508 million MT in 2017 and is expected to reach 560 million MT
by 2026 (OECD/FAO, 2017). China is also expected to be the largest rice importer in
2026/27 followed by Sub-Saharan Africa (SSA) (USDA, 2017).
Across Sub-Saharan Africa, rice is increasingly becoming an important food and cash
crop. The annual rice consumption averaged about 26 million MT between 2012 and
2014 and is expected to increase to about 38 million MT by 2024(OECD/FAO, 2015).
That is a massive 45% consumption increase within 10 years (OECD/FAO, 2015).
The per capita rice consumption in Sub-Saharan Africa also averaged 25.6 kg between
2012 to 2014 and is expected to increase to 28.6 kg in 2024 (OECD/FAO, 2015). This
consumption rate is only second to Mexico at a global scale. The total rice harvested area
in SSA is also expected to expand by 1.8 % per year, reaching 13.7 million hectares by
2026 (Nigatu, Hansen, Childs, & Seeley, 2017). However the rice yields in SSA are the
lowest in the world, with an average of 2.2 MT/ha compared to the world average of 4.4
MT/ha (Nigatu, Hansen, Childs, & Seeley, 2017; USDA, 2017).
1
Authors calculation based on data from FAO 2017
2In the East African Community (EAC), rice is the second most important staple food,
behind maize. Consumption is expected to increase by 54 % in 2020, due to population
growth, urbanization, changing consumer preferences and economic development
(Kilimo Trust, 2017A). However none of the EAC countries is self-sufficient in rice
production and deficits are covered through imports. This is mainly due to low yields that
are compounded by a number of factors such as low fertilizer use, limited use of time and
labour saving technologies, high on and off-farm crop losses, competitive imports and
effects of climate change.
Rice production in the EAC is dominated by smallholder farmers with an average land
size of 0.26-2 ha. The current production of rice in the EAC does not meet the demand,
and thus supplemented with imports. Rice imports mainly from Asia, have tripled over
the last ten years to meet rice demands in the EAC. This clearly shows a gap in the local
production and marketing of rice in the EAC that needs to be addressed expeditiously.
The opportunity for smallholder, middle and commercial rice farmers to substantially
increase their incomes by trading in the regional market definitely exists. The growth in
rice volumes from Asia is also projected to slow down in the near future due to limited
potential for expansion of plantations (IGC, 2015). This report therefore assesses the
current market requirements for rice in the region to encourage definitive investment,
policy directions and specific interventions for different stakeholders in the rice value
chain to effectively and sustainably address market needs.
34
2
DEMAND
The consumption of rice in the EAC has
been steadily growing over the past
10 years at an average rate of 8%
52.1. Demand trends and characteristics
The consumption of rice in the EAC has been steadily growing over the past 10 years at
an average rate of 8% as shown in Figure 1. The growth in consumption is mainly driven
by an expanding middle class, rapidly growing population, and increased consumption
by producers (Kilimo Trust, 2017; Mhando, 2016). Tanzania is the region’s largest rice
consuming market, followed by Kenya, Uganda, Rwanda and Burundi.
Milled rice consumption in the EAC (2006-2016)
3500
3000
Milled rice consumption ('000 MT)
2500
EAC
2000 Burundi*
1500 Kenya
Rwanda*
1000 Tanzania
500 Uganda
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Year
Figure 1: Milled rice consumption in the EAC. (Source: USDA, 2018; *Author computations based on data from IRRI,
2018; FAO, 2017; ITC, 2018; USDA 2018)
Tanzania and Rwanda had the highest average annual growth in rice consumption of
10% for the period 2006 - 2016. In Burundi, the rice consumption increased by 60 %
between 2015 and 2016. This is because rice has become an important staple in Burundi
in the recent years due to rapid urbanization, refugee repatriation, and high quantities
demanded by boarding schools, the army and police (Nyamweru, 2017).
Tanzania also has the highest per capita rice consumption in the region as shown in Figure
2. Rice is the second most important staple, after maize in Tanzania and it is the leading
commercial food crop (Lazaro, 2016).
6Rice is consumed mainly by individual households in urban areas and to a small extent,
institutions such as schools and hospitals. For example most Kenyans living in the rural
areas consume limited quantities of rice, but it forms an important diet for the majority
of urban dwellers. The annual consumption of rice also is increasing at a rate of 12% as
compared to 4% for wheat and 1% maize, which is the main staple food (Obura, Ombok,
& Omugah, 2017). With the exception of Tanzania, urban consumers prefer imported
rice to locally produced rice due to real or perceived better culinary qualities. Urban
consumers are also willing to pay more for branded, clean and well packaged rice unlike
rural consumers (Kilimo Trust, 2017A).
The main areas of rice consumption in the EAC are Nairobi and its environs in Kenya, Dar-
es-salaam, Morogoro, Mbeya, Tabora, Mwanza in Tanzania, urban areas in Uganda and
Rwanda (Kilimo Trust, 2017A).
Milled rice consumption per capita in 2016 (kg/year)
36.9
13.8
7.6
5.7 5.5
Burundi Kenya Rwanda Tanzania Uganda
Figure 2: Milled rice consumption per capita in the EAC. (Source: Author computations from ITC, 2018; World Bank,
2018; USDA 2018; FAO, 2017)
72.2. Demand drivers
2.2.1. Aroma
The urban consumers in Uganda prefer rice varieties that
are aromatic, non-sticking, whole grained and white. The
urban consumers in Rwanda also prefer aromatic and
long grain rice. They spend more on imported rice from
Thailand, Pakistan and Tanzania than local long grain rice
(Kilimo Trust, 2017A). Consumers in Tanzania prefer local
aromatic rice varieties (Achandi & Mujawamamariya,
2016). The main varieties consumed are Pishori in Kenya,
Pakistan in Rwanda, Supa in Tanzania and Uganda for
Urban consumers while Kaiso is preferred by low income
consumers (Kilimo Trust, 2017; Ayoki, 2012).
2.2.2. Origin of rice
The region of origin of rice is also a major determinant
in consumer purchasing decisions. In Tanzania, rice from
Kyela is most preferred followed by Mbeya and Morogoro.
In Rwanda, Kigoli, Basmati and aromatic rice varieties from
Tanzania are most preferred (Kilimo Trust, 2017A).
2.2.3. Price of rice
Rice markets in the EAC are mostly more responsive to
price than quality. Millers and traders take advantage of
this demand and blend aromatic and non-aromatic rice to
lower the price of purely aromatic varieties (Kilimo Trust,
2017A).
2.2.4. Grading of rice
The EAC developed milled rice specification (EAS 128:2011)
to promote good agricultural practices that enhance wider
market access and prevent technical barriers to trade
(EAC, 2011). The milled rice grains for human consumption
are graded as Grade 1, Grade 2 and Grade 3 or otherwise
be regarded unfit for human consumption. A summary of
the grades preferred by consumers in the EAC is shown in
Table 1. Consumers in Kenya are the most specific about
the grade of rice they consume (Kilimo Trust, 2017A). In
June 2017, there were claims of plastic rice on the Kenyan
8market sold by a local processor. The Kenyan Bureau of Standards proficiently responded
to the claims by testing the rice against the EAC standards and cleared the company of
any wrongdoing (Njanja, 2017; Tubei, 2017;Owino, 2017). The stakeholders in the rice
sector and rice consumers are now being sensitized on the importance of grain standards.
There is also emphasis on enforcement by the country specific Bureau of Standards to
ensure compliance to the harmonized standards . The East Africa Grain Council (EAGC)
and USAID-East Afica Trade and Investment Hub (EATIH) have been at the forefront of
supporting the development and implementation of grain standards for staple foods in
the EAC.
Table 1: Specification of rice grades preferred by consumers in the EAC
Quality
Parameters No White Level of
Whole Disease Well
Country foreign in Aromatic broken Moisture content
Grains Free Dried
Grades matter colour grain
Grade 1 “Well dried”
Kenya
Grade 2
Grade 1
Rwanda
25%
Grade 2 EAC Standards
broken
Foreign Matter
Grade 1
content
Moisture
Tanzania “some Broken
“a bit Content
Grade 2 foreign Organic Inorganic
broken”
matter”
Grade 1 Grade 1 5% 13% 0.1% 0.1%
Uganda “not so “a little
Grade 2 Grade 2 7% 13% 0.2% 0.1%
white” broken”
Source: (Kilimo Trust, 2017A)
2.2.5. Packaging
Packaging of rice is important to rice consumers in Kenya and Tanzania. However, most
consumers in the EAC market purchase rice from open markets, guided by:
i. Aroma
ii. Geographical area of production
iii. Wholeness of grains
iv. Translucence of the grains (Kilimo Trust, 2017A)
Packaged rice is usually sold in 1kg, 2kg, 5kg and 10kg bags for individual consumers who
buy rice in small quantities on demand; while majority of rice is sold in 25kg, 50kg and
100kg bags in the open market (Kilimo Trust, 2017A).
9Milled, broken and brown rice are the main rice products consumed across the EAC. Value added products such as rice crackers, noodles, rice wine, rice oil, instant rice meals, rice batter, rice flour, rice germ, fortified milled rice products have very limited or no market in the EAC (Mtaki, 2017; Kilimo Trust (a), 2017). The most common snacks created from rice, ‘vitumbua’ are a favorite in Tanzania and consumed by both rural and urban populations. 2.3. Utilization of rice by-products The potential for utilization of rice by-products such as rice husks, hulls, and straws is largely unexploited in the EAC. However, STRAWTEC Rwanda utilizes rice straws to make straw panels for the construction industry (Kabeja, 2016). Rice husks are also used for manufacture of briquettes for domestic and industrial cooking and heating. Rice bran is one of the most highly demanded rice by-products for manufacture of livestock, poultry, pig and fish feeds in the EAC. Rice bran is a great ingredient in food formulation because it contains 15-18% protein, 14-18% oil, and 30-40% digestible carbohydrates (Ruiz, 2016). The animal feeds processors in the EAC are however unable to procure the required volumes of rice bran (on average 41% and 36% deficit in Kenya and Tanzania respectively) due to limited supply of raw materials for manufacture of animal feed (Kilimo Trust, 2017 B). Broken rice is also used in the brewery industry as an ‘adjunct’ grain to make beers lighter and produce a dry clean taste (Eddings, 2018). The EAC Customs Management Act allows the manufacturers to import broken rice for the brewery industry at a duty rate of 0% under the Duty Remissions Scheme (EAC, 2017A).SKOL Brewery limited in Rwanda imported 1500 MT of broken rice for beer production under this scheme. Rice is also a main ingredient in Congolese beer and it is mainly imported from Tanzania (Rikolto VECO, 2017). Broken rice is also used in the confectionary industry in the EAC to make doughnut cakes (Vitumbua), rice cake (Mkate wa Sinia), and as a substitute for wheat. 10
In Tanzania, Kilombero Plantations Limited (KPL) has a gasification plant that utilizes rice
husks to generate electricity which is supplied to the farm and mill, and the surplus sold
to TANESCO for 15 US$ct/kWh (Klaus, 2017). Kimolo Super Rice (KSR) in Dodoma gives
the husk to brick builders, who use it to fortify locally manufactured clay bricks while
Raphael Group Limited (RGL) in Mbeya sells the husk to Lafarge Cement factory (not on
a regular basis) and dumps the husk or burns it once in a while. Mamboleo Farm Limited
(MFL) has a locally built gasifier and is experimenting with production of stones from
ash, as well as ash for cement substitution (Klaus, 2017). MFL also uses the rice husk for
manure. Tanzania Brewery Limited also uses rice husks as fuel for boilers (Makoye, 2015).
Stabilized rice bran for poultry feeds
1112
3
SUPPLY
Paddy rice production across the EAC
was approximately
3.6 million MT in 2016.
Tanzania produced 2.9 million MT,
accounting for
83% of the regional production.
Uganda - 7%
Burundi - 4%
Kenya - 3%
Rwanda - 3%
133.1 Key Characteristics and Trends
Paddy rice production across the EAC was approximately 3.6
million MT in 2016. Tanzania produced 2.9 million MT, accounting
for 83% of the regional production. This was followed by Uganda
(7%), Burundi (4%), Kenya (3%) and Rwanda (3%). The paddy
rice production trends across the EAC are shown in Figure 3.
Paddy rice production in the EAC
4,000
3,500
Quantity ('000 MT)
3,000
2,500
2,000
1,500
1,000
500
-
Year
EAC Burundi Kenya
Rwanda Tanzania Uganda
Figure 3: Paddy rice production in the EAC. (Source: FAO, 2017)
The production of paddy in Rwanda declined in 2014 due to
deficient rains and constraints in availability of inputs (FAO, 2015).
The production of paddy rice in Burundi also increased by twofold
between 2015 and 2016 as shown in Figure 4. Paddy production in
Kenya in 2016 was also depressed by insufficient water supplies for
irrigation due to prolonged drought (FAO, 2017).
Paddy rice production in selected EAC countries
300
250
Quantity ('000 MT)
200
Burundi
150
Kenya
100 Rwanda
50 Uganda
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Year
Figure 4: Paddy rice production in selected countries. (Source: FAO, 2017)
14The milled rice production trends are shown in Figure 5. Burundi had the highest average
annual growth rate for milled rice production between 2006 and 2016 attributed to
the bumper harvest between 2015 and 2016. Figure 6 shows the trend of milled rice
production for Burundi, Kenya, Rwanda and Uganda. The milled rice production in Kenya
decreased by 22% from 2015 – 2016. This was due to severe drought experienced by the
country at that time.
Milled rice production in the EAC
2400
2200
2000
Quantity ('000 MT)
1800
1600 EAC
1400
1200 Burundi*
1000 Kenya
800
600 Rwanda*
400 Tanzania
200
0 Uganda
Years
Figure 5: Milled rice production in the EAC. (Source: FAO, 2017; USDA, 2017; *Author computations based on data from
FAO, 2017 and conversion ratio of 0.65 for paddy milled equivalent)
Milled rice production for selected EAC countries
180
160
Quantity ('000 MT)
140
120
100 Burundi*
80
60 Kenya
40 Rwanda*
20 Uganda
0
Year
Figure 6: Milled rice production among low producers in the EAC. (Source: FAO, 2017; USDA, 2017; *Author computations
based on data from FAO, 2017 and conversion ratio of 0.65 for paddy milled equivalent)
15The area under production of rice in the EAC has also steadily expanded over the last 10
years as shown in Figure 7. Tanzania accounts for 84% of the total area under rice production
in the EAC. The area under rice production increased on average by 16% between 2006
and 2016 in Burundi, 10% in Tanzania and Rwanda and 4% in Kenya. Rice in Burundi is
mainly produced under irrigation schemes in Imbo (Bubanza, Cibitoke), Moso (Ruyigi) and
Bugesera (Kirundo, Muyinga) (Ndayiragije, Mkezabahizi, Ndimubandi, & Kabogoye, 2017).
In Uganda, the area under rice cultivation decreased by 1% for the same period, due to
the 33% decline in rice acreage in 2009. The 33% decline was reported in the census of
Agriculture 2008/09 (UBOS, 2010), but it was attributed to a statistical error because the
area under rice production expanded rapidly in the 2000s during the promotion of NERICA
rice (Kikuchi, Kijima, Haneishi, & Tsuboi, 2014;JAICAF, 2010)
Area under rice production in the EAC
1,600,000
1,400,000
1,200,000
1,000,000
Area (Ha)
800,000
600,000
400,000
200,000
-
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Burundi Kenya Rwanda Tanzania Uganda
Figure 7: Area under rice production in the EAC. (Source: FAO, 2017)
The trend of rice productivity in the EAC is shown in Figure 8. Rice growing conditions
are favorable in Rwanda and it has been reported that farmers achieve yields of about 5.5
MT/ha (Ghins & Pauw, 2017). However in 2014, the rice yields dropped to 3 MT/ha from
5.3 MT/ha in 2013. This was due to deficient rains and constraints in availability of inputs
(FAO, 2015). The average yield of rice in Tanzania and Uganda is 2.2. MT/ha, the lowest
in the EAC region. The rice yields in Burundi increased by 100 % between 2015 and 2016
due to the promotion and adoption of high yielding rice varieties and rice irrigation (IRRI,
2017).
1617
The low rice yields reported at National level for Sub-Saharan countries do not differentiate
production systems and their share of harvested area (Tanaka, et al., 2017). According
to their study, (Tanaka, et al., 2017) established that rice yields in irrigated lowlands
(IL), rain-fed uplands (RU) and rain-fed lowlands (RL) in SSA are comparable to yields
achieved in similar production systems in South East and South Asia. The low national
yield in SSA is therefore attributed to a large share of RL (32 %), and RU (28 %) which
give lower rice yields. However breeding programs in the EAC have been focused on
higher yields for many years. The current challenges faced by farmers require breeding
programs to include many other attributes such as as weed competitiveness, disease and
parasitic weed resistance, climate irregularities and grain quality including aroma, milling
and cooking quality (Nhamo, Rodenburg, Zenna, Makombe, & Luzi-Kihupi, 2014).
AreaRice
underproductivity
rice production
in theinEAC
the EAC
7
6
Yield (MT/ha)
5 EAC
4 Burundi
3 Kenya
2 Rwanda
1 Tanzania
0 Uganda
Potential
Year
Figure 8: Rice Productivity in the EAC . (Source: FAO, 2017)
2
2
Under optimum conditions, the potential rice yield ranges from 4-6 MT/ha for Upland and 6-10 MT/ha for lowland irrigated
ecosystems of cultivation. The yield also depends on the rice variety and management level (Ngailo J. , Mwakasendo,
Kisandu, Mlowe, & Tippe, 2016)
18The main rice production areas across the EAC are Morogoro, Tabora, Mbeya, Mwanza,
Shinyanga and Arusha Regions in Tanzania; Pallisa, Iganga, Soroti, Hoima, and Amuru
districts in Uganda; the Marshlands of Rwangingo, Rusizi, Kayonza, Kirehe, Gasabo and
Huye districts in Rwanda; Bujumbura, Bubanza, Kirundo, Karuzi, and Gitega provinces
in Burundi; Mwea irrigation scheme, Bunyala, Tana delta, Msambweni and Ahero, West
Kano, Migori and Kuria in Kenya (Obura, Ombok, & Omugah, 2017; UBOS, 2017; NISR,
2017; Kilimo Trust,2017). The suitability of land for production of upland and low land rice
across the EAC is shown in Figure 9.
The demand for rice in the EAC outweighs the supply as shown in Figure 10. In 2016, the
total rice supply deficit across the EAC was 863,000 MT; with Kenya experiencing the
worst deficit of 600,000 MT. Burundi was the only country that had a surplus of 35,000
MT of rice in 2016. The deficit in the EAC states is usually covered through imports from
Thailand, India, Pakistan, and Vietnam.
19a b
Figure 9: Map showing areas suitable for rice production (a) for lowland rice and (b) up land rice.
(Source: Kilimo Trust, 2016)
Surplus/Deficit of rice supply in the EAC
100
Surplus/deficit ('000 MT)
0
-100
-200 Burundi*
-300 Kenya
-400 Rwanda*
-500 Tanzania
-600 Uganda
-700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Year
Figure 10: Demand Vs supply of rice in the EAC. (Source: Authors computations based on data from FAO, 2017 and
USDA, 2017)
20The trend of rice imports in the EAC is shown in Figure 11. Kenya notably has the highest
rice imports in the region; accounting for 71% of the total imports in the EAC in 2016.
Tanzania had the least imports in the same year, accounting for only 0.1% of the total rice
imports in the EAC.
Rice imports in the EAC
800
700
600
Quantity ('000MT)
EAC
500
Burundi
400
Kenya
300
Rwanda
200
Tanzania
100
Uganda
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Year
Figure 11: Rice imports in the EAC. (Source: ITC, 2017 and KNBS, 2017)
The main imported rice products are shown in Figure 12. Burundi primarily imports husked
or brown rice, which makes up 93% of its total rice imports. The brown rice imported into
Burundi is obtained from Tanzania, India and UAE. Rwanda largely imports broken rice
that constitutes 81 % of its total rice imports. The broken rice is sourced from Pakistan,
Thailand and Tanzania. Tanzania and Kenya mainly import semi-milled or wholly milled
rice. The main source of semi-milled or wholly milled rice imports in Tanzania in 2016
was USA, India, UAE, and South Africa.
Forms of rice products imported in 2016
100 Semi-milled or wholly
milled rice, whether or not
80
polished or glazed
Percentage
60 Rice in the husk, "paddy"
or rough
40
Husked or brown rice
20
Broken rice
0
Burundi Kenya* Rwanda Tanzania Uganda
Countries
Figure 12: Forms of Imported rice products in the EAC. (Source: ITC, 2017; * Only 2014 Data available for Kenya)
21The value of rice imports in the EAC also doubled between 2006 and 2016 from USD107
million to USD222 million as shown in Figure 13.
Value of rice imports in the EAC
350,000
300,000
Amount('000 USD)
250,000
EAC
200,000
Burundi
150,000
Kenya*
100,000 Rwanda
50,000 Tanzania
0 Uganda
Year
Figure 13: Value of rice imports in the EAC. (Source: ITC, 2017; * Author’s calculation for 2015 and 2016 values based on
data from (KNBS, 2017))
3.2. Factors affecting rice supply in the EAC
The key factors that affect rice supply are production and land tenure systems, seed and
other agricultural supply systems, access to appropriate financing, access to time and
labour saving technologies and climate related challenges.
3.2.1. Production and land tenure systems
Rice production in the EAC is dominated largely by smallholder farmers (SHFs) producing
90% of all rice. There are approximately 1.1 million SHFs in Tanzania, 300,000 in Kenya,
96,000 in Uganda, and 94,275 in Rwanda (Herrmann, 2017; Obura, Ombok, & Omugah,
2017; MAAIF, 2016; NISR, 2011). Rice production in Burundi is also dominated by SHFs,
although their number still remains unverified to date. The SHFs usually have small plots
ranging from as small as 0.1-2.5 ha and rely on rain-fed systems to produce paddy. A
few also have access to supplementary irrigation in government constructed schemes
in areas such as Mbeya and Shinyanga in Tanzania, Mwea in Kenya, Lira and Iganga in
Uganda and in over 29 rice schemes in Rwanda. The total area under rice cultivation and
average yield in the EAC is shown in Table 2.
22Table 2: Total Area (Ha) under rice production in the EAC in 2016
Tanzania Uganda Kenya Rwanda Burundi Total EAC
Area Harvested (Ha) 1,231,110 97,544 29,337 33,430 63,751 1,455,172
Yield (MT/ha) 2.4 2.5 4 3.3 2.3 2.9
Source: FAO, 2017.
The land tenure characteristics across the EAC affect investments and land management
in production of rice. Land is continually subdivided into smaller units for inheritance
according to cultural norms, making production units smaller and uneconomical,
hindering profitable use and adoption of improved technologies and inputs. The rampant
land title alterations, especially in Uganda have resulted into land conflicts which inhibit
development activities on plots of land (Nakawuka, Langan, Schmitter, & Barron, 2017).
Productivity is further threatened by declining soil fertility.
3.2.2. Supply of water
The rice in the EAC is typically grown under rain-fed conditions except for Kenya where
80% of the rice is produced under irrigation schemes and only 20% is under rain-fed
conditions (Mann, 2017). The irrigation schemes are managed by the state owned
National Irrigation Board (NIB). The country however continues to face rice deficits
due to harsh climatic conditions and supplements local production with imports from
23Pakistan, Vietnam, Thailand and India (Obura, Ombok, & Omugah, 2017). The risks and
vulnerabilities of climate change are now noticeable in many other regions in the EAC,
for example in Uganda, there was a recorded 40 -55% reduction in cumulative rains for
the October-December 2016 rainy season, resulting in crop yield reductions (Nakawuka,
Langan, Schmitter, & Barron, 2017). The rice ecologies are prone to drought, especially
upland rice farming areas, where the poorest rice farmers are located. The low land rice
ecologies also have challenges of water control and weed management (Seck, Tollens,
Wopereis, Diagne, & Bamba, 2010). In Tanzania, for example, 74% of the land for
rice is rain-fed, 20% is occupied by small-scale improved schemes and only 6% under
commercial large farms (Makundi, 2017). The constraints to smallholder irrigation in East
Africa are:
i. Insecurity of land tenure, poor or inadequate irrigation infrastructure.
ii. Limited awareness and access to irrigation technologies.
iii. Maintenance and repair problems of irrigation technologies and access to spare
parts.
iv. Unreliable markets for produce.
v. Irrigated crops like rice are very susceptible to pests and diseases, which lower
yields, and yet the prices of pesticides are high due to their low availability, hence
most smallholder rice farmers have not transitioned to commercial rice farming
where irrigation is a necessity.
vi. Limited access to credit and financial services to cover the high initial investment
in irrigation technologies.
vii. Overdependence on governments, NGOs and donors for irrigation technologies
(Nakawuka, Langan, Schmitter, & Barron, 2017).
243.2.3. Use of improved seed varieties
There are several varieties of rice seed on the EAC market, both local and improved
seed. Farmers however tend to prefer the traditional/local low yielding varieties of rice
in the EAC to improved varieties with a yield potential of 7 MT/ha under optimum field
management (Ngailo, Mwakasendo, & Kisandu, 2016).
In Tanzania, nine rice varieties are planted by farmers in the Lake zone, ten in the Southern
Highlands zone, and thirteen varieties in the Eastern zones. The rice varieties mostly
cultivated by farmers in the Lake zone are SARO 5, Bulungwa, Sukari, Supa and Kalamata.
Other varieties are Lubunatela, Lugata, Furaha and Sokotu. SARO 5 is the only improved
variety planted by 27% farmers of Irienyi irrigation system. Farmers at Shishiyu do not
plant SARO 5 because it grows to a short height in the field, therefore fear of losses in
case of floods and they do not like its taste. Also, in the Southern Highlands, SARO5
was the only improved variety grown by 28% and 25% of farmers in Mbarali and Kyela
respectively. The local varieties grown include Kilombero, Morogoro, Zambia, India
rangimkia, Fayadume, Mwasungo, Supa, Mwendambio and a mixture of several varieties.
Kilombero, India rangimkia and Zambia are the top local varieties grown by majority
of households in the Southern Highlands. In the Eastern zone, about 89% and 76% of
the farmers in Mvomelo and Kilombero, respectively, use SARO 5 variety. This shows
that the Eastern zone has the highest adoption of improved varieties compared to other
zones. The local rice varieties grown by farmers in Eastern zone are Kaulimawangu, Super
Mbeya, Super Zanzibar, Super Shinyanga, Mbawambili, Udongowa Songea, Msukuma,
Zambia, Jaribu, Kula na Bwana, India, Kalimata and Sengo. Kaulimawangu, Super Mbeya,
Super Zanzibar are the most grown local varieties in the Eastern zone. Kaulimawangu,
25Super Mbeya, Super Zanzibar are the most grown local varieties in the Eastern Zone (Nkuba, et al., 2016). The main varieties of rice grown in Burundi are V14 (Maregete), V18 (Umuzambiya), IR series (77713 (Vuninzara), 79511 (Gwizumwimbu)) Tox, V46 (Kigori), L18, FAC series (57 (Mpagatebe), 441, 56, 906, 908, 430), V56427 (Kabuye)), Tokombana, and Yunnan 3 (Liu, et al., 2015; IRRI, 2011; Nizigiyimana, 1995). The main rice varieties grown in Rwanda are Basmati 370, Kigoli, 370, Nerica 9, TOX 4331-WAT 91-3-1-1-1 (Gakire), TOX 4331- WAT 86-3-4-2-1(Intsinzi), and WAT 1395-B-24-2 (Tsindagirabigega), Kavamahanga, WAT 1395-B-24-2, Zhong Geng, Yun Keng, Yun Yin ( (Nabahungu & Visser, 2011; Africa Rice Center, 2005). The main varieites of rice grown in Uganda are Nerica series (4, 1, and 10), WITA9, TDX 305 (Supa), K85 (Kaiso), Sindano, IR 64 (Super America), K98 (Super China), Kibuyu,NamChe, and Benenego (Kilimo Trust, 2012). The Advanced Rice Varieites for Africa (ARICA) 4 and 5 series were also released in Uganda (Atera, Onyancha, & Majiwa, 2018). There are several rice cultivars available for upland and irrigated conditions in Kenya. These include Basmati 217, Basmati 370, Sindano, ITA310 and BW196, NERICA series (1, 4, 10, and 11). There are also new potential hybrid varieties under testing; Arize Tej Gold, Arize 6444 Gold and IR 2793 (Atera, Onyancha, & Majiwa, 2018). 3.2.4. Seed supply systems The use of improved seed across the EAC is characteristically low. In Tanzania, the region’s largest rice producer, only 13% farmers used improved rice varieties (Isinika & Msuya, 2016). A study of the seed supply system in Eastern Uganda, the main rice growing region in Uganda showed that there is a 90% deficit in seed supply. The rice seed producers manufacture ten varieties demanded for by seed companies and foundation seed by IFDC and NARO but none produces the two main varieties grown by farmers (Supa and Kaiso). The seed producers also have contractual agreements with seed companies; hence farmer seed needs are not prioritized. The seed companies then regrettably distribute the seed to other regions and export considerable volumes to South Sudan, Kenya, Zambia and Djibouti (Odokonyero, Barungi, & Mbowa, 2016). Most of the farmers (74%) in Eastern Uganda also still grow local rice varieties despite apparent success of Nerica promotion 26
(Barungi & Odokonyero, 2016). The main rice variety grown across the EAC is Nerica.
3.2.5. Fertilizer use
Smallholder farmers across the EAC have severe financial constraints and investment
in fertilizer use competes with other uses of available finance (Cyamweshi, Kayumba, &
Nabahungu, 2017). The average fertilizer used in paddy rice production in the EAC is 13
kg/ha in comparison with 100 kg/ha in Asia. In Uganda, for example, 82% of rice growing
households in Uganda do not apply fertilizers (Barungi & Odokonyero, 2016). Fertilizer
subsidy can contribute to increased rice yields, if properly designed and implemented
(Saito, Dieng, Toure, Somado, & Wopereis, 2015). Rwanda for example has the highest
rice yield in the region and fertilizers are sold at a subsidized price to farmers’ cooperatives
through a voucher system (Nkurunziza, 2015). The fertilizers are also imported by three
licensed private companies, Importation Distribution Fertilizer (IDF) Co Ltd, Alfred
Nkubiri and Sons, and One Acre Fund which guarantees quality and reliability of supply.
In Tanzania, unavailability of fertilizers at village level is a major constraint mentioned by
farmers. In the Eastern zone, approximately 50% of the farmers use fertilizers. Farmers
from Erienyi irrigated scheme apply urea fertilizer obtained at village level under an input
voucher system, or obtained from an extension agent, primary society or town markets of
Tarime and Musoma. They use on average 36.2 kg of urea per household, with a 1 to 100
kg range. None of the farmers from the rain-fed system apply chemical fertilizers for rice
cultivation (Nkuba, et al., 2016).
3.2.6. Biotic factors
The occurrence of pests and diseases in rice production in the EAC affects yields and
subsequent adoption of improved inputs (fertilizers, improved seeds and time and labour
saving technologies). Rice is usually attacked by pests such as snails, worms, rats and
quelaquela birds and diseases particularly the rice yellow mottle virus and rice blast
fungus. Rice blast, for example, which causes more than 30% yield reductions, affects
54% of the cultivated rice area in Uganda and the severities are recorded in the main rice
producing districts of Bugiri, Butaleja, Mbale and Lira (Onaga & Asea, 2016).
27Parasitic weeds also pose a threat to the rain-fed rice production in the EAC. The most common weeds are Striga asiatica, S. aspera and S. hermonthica in rain-fed uplands, and Rhamphicarpa fistulosa in rain-fed lowlands (Rodenburg, Demont, Zwart, & Bastiaans, 2016).The known hot spots for parasitic weed infestation in rice for Striga aspera and S. hermonthica is Southern Tanzania; for Striga asiatica is Eastern Uganda and Southern Tanzania, and Southern Tanzania for R. fistulosa (Rodenburg, Demont, Zwart, & Bastiaans, 2016).Parasitic weeds have been reported to have caused up to 59% and 61% rice yield losses in Kenya and Tanzania, and yet the hot spots of these occurrences have the poorest rice farmers (Rodenburg, Demont, Zwart, & Bastiaans, 2016). The physical losses caused by parasitic weeds in 2016 were estimated at 20,000 MT (8.1 million USD) and 17,000 MT (6.81 million USD) in Tanzania and Uganda respectively (Rodenburg, Demont, Zwart, & Bastiaans, 2016). 3.2.7. Access to Appropriate Financing Access to credit significantly affects farmers use and adoption of agricultural inputs such as fertilizers and improved seed. Farmers across the EAC have limited access to credit for a number of reasons that include high interest rates, lack of collateral, risky nature of agriculture in the region, fear of loss of property, lengthy procedure of processing loans and little or no knowledge on existence of credit facilities. In Tanzania, interventions by CARI have been successful in training rice farmers in financial literacy. For example, 2000 smallholder rice farmers benefited from access to finance, trainings and guaranteed market for their paddy through Small Holder Crop Finance (SCF) consortium led by Kilombero Plantations Limited in Kilombero district (Kilimo Trust, 2016). Through the SCF consortium, 478 smallholder rice farmers were able to secure agricultural loans of up to USD 29,000 to finance inputs for 386 hectares. The Shinyanga rice for competitive markets (SHYRICE) consortium also links smallholder farmers with NMB Bank Foundation to provide financial literacy training for farmers. NMB trained 250 farmer representatives who in turn trained 1,500 fellow farmers; out of which 500 were able to access input loans from the bank (Kilimo Trust, 2016). SHYRICE has also succeeded in providing agro input credit, extension services and assured market for farmers. The consortium also works closely with Musoma Food Company Limited (MFCL) that is able to access improved quality rice from the farmers (Kilimo Trust, 2016). In Uganda, for example, most smallholder farmers are not exposed to, and do not use formal financial services such as bank accounts, nonbank financial institutions (NBFIs), or microfinance institutions (MFIs). A similar trend was noted among smallholder farmers in Tanzania (Anderson, Marita, & Musiime, 2016). Majority of smallholder farmers have never been in a bank (Anderson, Learch, & Gardner, 2016), so do not have knowledge of financial services at their disposal. Other actors along the value chain like millers, agro-input dealers, and traders usually get loans from commercial banks (Barungi & Odokonyero, 2016). However, Banks in Uganda, like Finance Trust Bank offer 28
agro-production, processing, marketing and investment loans to individuals and groups
engaged in agriculture (Finance Trust Bank, 2018). These products, however, need to be
advertised and marketed more to capture farmer interests and successful adoption.
Rice farmers in Rwanda have successfully accessed loans through cooperatives. The rice
farmers in the COOPRIKA- CYUNUZI cooperative for example receive loans to acquire
inputs, and the cooperative procures inputs at a subsidy from the government (Kopparthi
& Kwizera, 2016). There is however no formal financing for field operations like rice
nurseries establishment and maintenance, plowing, pudding, fertilizers and chemicals
application, irrigation, weeding and birds guarding. Farmers usually obtain the money
from group savings commonly called “ibimina” in rural areas or relatives to cover field
operation costs (Kopparthi & Kwizera, 2016). The cooperative also acquired a loan
and funding from the government and financial institutions to invest in post-harvest
equipment and marketing of paddy rice. In Rwanda therefore, MFIs and SACCOs are the
largest loans providers in the primary production, while commercial banks are interested
in Post-Harvest investments and products marketing financing (Kopparthi & Kwizera,
2016).
3.2.8. Time and labour saving technologies
There is still low utilization of time and labour saving technologies for both on-farm
and off-farm rice operations across the EAC. This greatly affects supply of rice in the
region because it generates low efficiency of operations which affects quality of rice, high
post-harvest losses and high labour requirements to complete tasks such as weeding,
transplanting and harvesting. In Kenya, the post-harvest losses account for 15 – 50% of
the market value of production (Atera, Onyancha, & Majiwa, 2018).
29For rice ecosystems in Tanzania, the level of mechanization of farm operations is low. 88.5% of the rice farmers in the Lake zone use ox-plough for ploughing, 8.5% use the hand hoe, and only 3% use a tractor. In the Eastern zone, 69% of the farmers use a hand hoe for ploughing, 23.8 % use tractors and 7.1 % use power tillers. In the Lake zone, weeding is entirely by the hand hoe, while in the Southern highlands, 55% use hand hoes, followed by a combination of hand hoe and herbicide (35%), Herbicides (6.2%), Push- weeder and herbicides (3.8%). In Eastern zone, weeding is 85.7% by hand hoe, 11.9% by herbicides and 2.4% by push-weeder. In the Lake zone, farmers neither own nor use the use of power tillers, ox-cultivator, push-weeder and herbicides. This implies that in the Lake zone, there is low mechanization in planting and weeding operations compared to the other two zones. In all zones, the harvesting operation is done entirely by hand using sickles/slashers, knives and beating with poles (Nkuba, et al., 2016). The most widely adopted and successful technology is milling, though it is highly inefficient. In Rwanda, rice mills utilize less than 35% of their capacity mainly due to shortage of rice (Nkurunziza, 2015). The shortage can also be attributed to the low price millers offer farmers. In Rwanda, the ‘illegal’ processors without licenses are blamed for proliferation of poor quality rice on the market. The farmers however say licensed processors pay less for produce compared to unregistered dealers (Tumwebaze, 2016). In Kenya, many small private millers do not have good quality milling equipment, have poor handling and storage facilities, which lead to high levels of broken grains and increased foreign matter in milled rice. The poor quality rice produced is a barrier to competitiveness and constraint to expansion of traders’ activities (Atera, Onyancha, & Majiwa, 2018). This in turn demoralizes farmers, who have no incentive to boost production or improve quality of their produce. 3.2.9. Unreliable policy environment The inefficient rice marketing chain across the EAC impacts supply of the commodity in the region. Price fluctuations and volatility in the market often hinder investments in the commodity value chain, affecting overall productivity and development of infrastructure. Prices for locally produced rice in Uganda for example are driven low by CET at 35% instead of 75% in the Kenyan market, which in turn encourages smuggling and discourages local production volumes (MoFPED, 2015). 30
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