Examining Supply and Demand Trends for Local Rice (Oryza sativa L.) in Niger and Benue States, Nigeria (1980-2016)
Abstract: This study investigates the supply response and demand for local rice (Oryza sativa L.) in Niger and Benue States. The objectives include characterizing the socio-economic profile of local rice consumers, analyzing local rice supply trends, and assessing the responsiveness of local rice to price and non-price factors. Additionally, the research examines the impact of local rice characteristics on its price and identifies the factors hindering the purchase of locally produced rice in Niger and Benue States.
A multi-stage sampling technique was employed to gather data from 281 producers and consumers of local rice. Socio-economic characteristics were described using primary data, while an exponential growth model was used to estimate the production growth of local rice in Niger and Benue States from 1980 to 2016, based on secondary data. The Vector Autoregressive model (VAR) was used to identify local rice production variables that Granger cause local rice supply, and an ARDL model was employed to detect structural breaks.
Furthermore, the LA/Almost Ideal Demand System (LA/AIDS) was utilized to estimate the expenditure share, price elasticity, cross elasticity, and income elasticity of short and long local rice grains. The study also employed a hedonic model and Kendall’s coefficient of concordance to determine the effect of local rice characteristics on its price and the factors inhibiting its consumption, respectively.
The results revealed a mean age of 45, 47, and 46 for respondents in Niger, Benue States, and combined. Mean annual incomes were N414,489 and N452,000 for Niger and Benue States, respectively. The local rice production growth in Niger and Benue States from 1980 to 2016 was 1.90% and 1.36%. Granger causality was found between local rice production and certain variables like area, yield, price, fertilizer, and rainfall, accounting for 96% of local rice production.
The LA/Almost Ideal Demand System analysis indicated that local rice is a normal good and has expenditure inelasticity. Moreover, short and long local rice grains were found to be substitutes. The study revealed significant negative coefficients for the price of short grain rice and significant positive coefficients for the substitute long grain rice, influencing the expenditure share of short grain rice. Similarly, the price of long grain rice had a significantly negative coefficient, while the substitute short grain rice had a significantly positive coefficient, impacting the expenditure share of long grain rice.
The hedonic model analysis demonstrated the significance of attributes such as stone-free, whiteness, aroma, cohesion, and taste in influencing the price of local rice. Lack of these characteristics resulted in lower market prices for local rice. Additionally, the Kendall’s coefficient of concordance revealed a 62% agreement among respondents regarding inhibiting factors of local rice, with the presence of foreign materials ranked as the most significant hindrance.
Examining Supply and Demand Trends for Local Rice (Oryza sativa L.) in Niger and Benue States, Nigeria (1980-2016)