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Technical note: Analysis of price incentives for rice in Uganda for the time period 2005–2013
April, 2014
Technical note: Analysis of price incentives for rice in Uganda for the time period 2005–2013
April, 2014
This technical note is a product of the Monitoring and Analysing Food and Agricultural Policies (MAFAP) programme. It may be updated as new data becomes available.
MAFAP is implemented by the Food and Agriculture Organization of the United Nations (FAO) in collaboration with the Organisation for Economic Co-operation and Development (OECD) and national partners in participating countries. It is financially supported by the Bill and Melinda Gates Foundation, the United States Agency for International Development (USAID) and FAO.
The analysis presented in this document is the result of partnerships established in the context of the MAFAP programme with National Agricultural Research Organisation
This technical note was prepared by Mohamed Ahmed of FAO with support and contributions from Stephen Ojangole of NARO.
For more information: www.fao.org/in-action/mafap
Recommended citation: FAO. 2014. Analysis of price incentives for rice in Uganda. Technical notes series, MAFAP, by Ahmed, M., Ojangole, S. and Xenakis, M., Rome.
The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not mentioned.
The views expressed in this information product are those of the author(s) and do not necessarily reflect the views or policies of FAO.
© FAO, 2014
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CONTENTS CONTENTS ............................................................................................................................................... iv
SUMMARY OF THE NOTE .......................................................................................................................... v
COMMODITY CONTEXT .................................................................................................................... v
DRIVING FACTORS ........................................................................................................................... vi
RECOMMENDATIONS ...................................................................................................................... vi
1. PURPOSE OF THE NOTE ................................................................................................................... 1
2. COMMODITY CONTEXT ................................................................................................................... 2
PRODUCTION ....................................................................................................................................... 2
CONSUMPTION/UTILIZATION ............................................................................................................. 4
MARKETING AND TRADE ..................................................................................................................... 5
DESCRIPTION OF THE VALUE CHAIN ................................................................................................... 7
POLICY DECISIONS AND MEASURES .................................................................................................... 9
3. METHODOLOGY ......................................................................................................................... 11
4. DATA REQUIREMENTS AND CALCULATION OF INDICATORS ........................................................ 15
TRADE STATUS OF THE PRODUCT ..................................................................................................... 15
MARKET PATHWAY ANALYSED .......................................................................................................... 15
BENCHMARK PRICES .......................................................................................................................... 16
DOMESTIC PRICES ............................................................................................................................. 16
EXCHANGE RATES .............................................................................................................................. 17
ACCESS COSTS ................................................................................................................................... 17
BUDGET AND OTHER TRANSFERS ..................................................................................................... 19
QUALITY AND QUANTITY ADJUSTMENTS .......................................................................................... 20
DATA OVERVIEW ............................................................................................................................... 20
SUMMARY OF INDICATORS ............................................................................................................... 22
5. RESULTS AND INTERPRETATION .................................................................................................... 25
6. CONCLUSION AND RECOMMENDATIONS ..................................................................................... 31
Main Message ................................................................................................................................... 31
Recommendations ............................................................................................................................ 31
Limitations ......................................................................................................................................... 32
Further Insights ................................................................................................................................. 32
BIBLIOGRAPHY ....................................................................................................................................... 33
ANNEX I: Data and calculations used in the analysis ............................................................................ 34
SUMMARY OF THE NOTE Product: Rice Period analysed: 2005 – 2013 Trade status: Import in all years
COMMODITY CONTEXT
Rice production has increased successfully in the past nine years (2005 – 2013) due to many factors including the promotion of upland rice resulting in upland rice being grown on a wider scale.
Rice has become a major food security crop as well as a cash crop in a number of districts in Uganda and its cultivation is increasing, especially with the introduction of upland varieties;
The production deficit is met through imports. Uganda imports rice mainly from Viet Nam, Pakistan and Tanzania;
The most important policy measure affecting rice markets in Uganda is the East African Community (EAC) common external tariff (CET). This CET on rice is set at 75 percent ad-valorem duty or USD 200 per tonne, whichever is higher on rice imported from outside the region.
Observed and Adjusted Nominal Rate of Protection at Farm Gate for Rice in Uganda, 2005-2013 ( percent)
• The observed Nominal Rate of Protection (NRP, green bar) in the graph above measures the effect of policy distortions and overall market performance on price incentives for producers. The adjusted NRP (blue bar) captures the same elements as the observed NRP in addition to any market distortions resulting from inefficiencies in the commodity’s value.
• The estimated nominal rates of protection for rice in Uganda indicate substantial incentives to producers. This support is due in part to adoption of the common external tariff on rice imports from mainly Asian countries. The level of protection has exceeded the tariff
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significantly over the past three years due to market inefficiencies and non-competitive pricing structures as well as the opportunities for informal, cross-border trade with neighbouring countries particularly the emerging market of South Sudan.
DRIVING FACTORS
The East African Community (EAC) common external tariff (CET) set at 75 percent ad-valorem duty or USD 200 per tonne is the major driving factor for the positive and significant protection for rice producers in Uganda. Additionally, market imbalances have provided further protection for farmers. Beside the tariff, domestic price hikes prevailed during 2011-2013 is another major driving factor. These price hikes may have been caused by seasonal supply shortage of rice in rural markets.
RECOMMENDATIONS • As the domestic prices of rice are persistently above equivalent world prices as a result of the
protectionist trade policy, a balance between consumer welfare and producer incentives needs to be maintained. Alternatives to provide incentives to producers may be considered.
• for rice to be competitive in the long-run, when the country is expected to become self-sufficient, incentives to producers must come from productivity-increasing technological changes rather than tariffs. There is a high potential for increased rice yields through the adoption of better agronomic practices such as: improving upon high-yielding seeds, fertilizer application, and modern irrigation systems.
• Given the high marketing costs, an improvement in rural infrastructure to reduce transportation cost and improve farmers’ access to markets needs to be considered. Low-cost and efficient transportation not only raises producers’ price of output but also reduces the cost of inputs.
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1. PURPOSE OF THE NOTE This technical note measures, analyses and interprets price incentives for rice in Uganda over the period 2005 to 2013
For this purpose, yearly averages of domestic farm gate and wholesale prices are compared with reference prices calculated on the basis of the price of the commodity in the international market. The price gaps between reference prices and domestic prices along the commodity’s value chain indicate the extent to which incentives (positive gaps) or disincentives (negative gaps) were present at the farm gate and wholesale level. The price gaps are expressed in relative terms as a percentage of the reference price, referred to as the Nominal Rate of Protection (NRP). These key indicators are used by MAFAP to assess the effects of policy and market performance on prices.
This technical note begins with a review of the commodity’s production, consumption/utilization, marketing and trade, value chain and policy context (Chapter 2). It also provides a detailed description of how key data elements were obtained and indicators were calculated (Chapter 3). The indicators were then interpreted in light of existing policies and market characteristics (Chapter 4). Finally, the note concludes with main messages, key policy recommendations and limitations of the analysis and areas identified for further research to improve the analysis (Chapter 5).
The results and recommendations presented in this analysis of price incentives can be used by stakeholders involved in policy-making for the food and agriculture sector. They can also serve as input for evidence-based policy dialogue at the national, regional or international level.
This technical note should not be interpreted as an in-depth value chain analysis or detailed description of the commodity’s production, consumption/utilization, marketing and trade or policy context. All information related to these areas is presented merely to provide background on the commodity under review, help understand major trends and facilitate the interpretation of the indicators.
All information in this technical note is subject to review and validation.
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2. COMMODITY CONTEXT Rice was introduced in Uganda by Indian traders as early as 1904 but did not gain popularity until the late 1940s (Wilfred, 2006). During the initial years, Indian traders imported paddy rice and milled it using traditional Indian stone mills. Low input production made rice nearly inaccessible to indigenous communities; its consumption was limited to the top earning class. After the 1940s, rice cultivation started taking root at subsistence level by a few farmers sourcing seeds from Tanzania (Tanganyika), where rice growing was more developed than in Uganda. Rice production in Uganda increased during the 1950s, mostly aimed at feeding schools, prisons, hospitals and the World War II veterans. Today rice has become a major food security crop as well as a cash crop in a number of districts in Uganda and its cultivation is increasing, especially with the introduction of upland varieties.
PRODUCTION Rice is grown throughout Uganda but largely in the Eastern and Western Uganda due to the availability of lowlands with high moisture contents throughout the growing season. Major rice growing districts include Apac, Pallisa, Lira, Tororo, Kamwenga, Bugiri, Jinga and Iganga (Figure 1). Other producing districts include Amuru, Gulu Kitgum, and Pader in Eastern and Northern Uganda, and Hoima, Kibaale, Masindi, Kabarole, Runkungiri, and Kanugu in Western Uganda.
Figure 1: Major rice producing areas in Uganda
Source: FIT Uganda (2012)
Nearly 80 percent of rice farmers in Uganda are small scale farmers working plots of less than two hectares. This type of farming is characterized by the prevalent use of basic agricultural technologies such as rudimentary tools, little or no fertilizer use, little or no irrigation systems, accompanied by poor water management practices (MAAIF, 2007). Around 5 percent of farmers are large scale, being
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defined as having plots over six hectares. Among these large scale farmers, rice plots average over 1,000 Ha (Gitau, et al., 2011).
In 2003, the Government of Uganda introduced NERICA, a high yielding upland variety, as one of the strategies to eradicate poverty and increase food security. NERICA yields 2.5 tonnes per hectare under low input and up to 5.0 tonnes per Ha under high input production system (PMA, 2009). Uganda has fully embraced NERICA rice production. Kijima et al. (2008) indicates that although NERICA was developed as a stress tolerant variety, it was still susceptible to drought in Uganda. The use of chemical fertilizers was shown to significantly enhance production, although over two thirds of farmers did not apply chemical fertilizer (Gitau et al., 2011).
Rice production has increased significantly over the past nine years due to many factors including the promotion of upland rice resulting in upland rice being grown on a wider scale1. Area under upland rice production in Uganda constitutes 71 percent of total land use for rice. (Gitau et al., 2011). Since the introduction of NERICA, rice production has risen both in acreage and in the volume of production (Figure 2). From 1990 to 2010, rice production and area increased at an annual growth rate of 4.02 and 3.71 percent, respectively. Most of the growth in production was the result of the area expansion rather than an increase in yield as annual growth rate of yield was limited (0.3 percent). According to WARDA (2007) most of the increases in rice production come from extensive rather than intensive farming activities.
Uganda’s rice cultivated area and production have almost doubled since 2000 (Table 1). Cultivated area expanded from 72,000 ha in 2000 to about 113 000 ha in 2006 reaching 128,000 ha in 2008. However, it decline to 86,000 ha in 2009 and increased again to 95,000 ha in 2013 (Table 1). Production has increased by almost 39 percent since 2005. Rice production has increased from 153 000 tonnes in 2005 to 213,772 tonnes in 2013, thus increasing productivity from 1.5 tonnes/ha in 2005 to 2.3 tonnes in 2013 (Table 1).
Between 2005 and 2013 there has been an increase of nearly 40 percent in rice production (Table 1). High rice prices have driven more investment into the sector but unfortunately capital investment has been largely limited to land expansion rather than productivity improvement through improved technologies (i.e. fertilizer, machinery, improved irrigation). Between 2009 and 2013, area expansion increased by 9,000 ha, but yields average only 2.41 tonnes per hectare, representing the lower bound of NERICA rice yield potential.
1 The global increase in rice prices transmitted to farmers is another important factor.
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Table 1: Cultivated area, production, productivity of unmilled rice in Uganda (2000-2010) Production (Paddy) Area Harvested Yield2
Years\Units Tonnes Hectares Tonnes/Ha 2005 153,000 102,000 1.500 2006 154,000 113,000 1.363 2007 162,000 119,000 1.361 2008 177,857 128,000 1.390 2009 205,765 86,000 2.393 2010 218,111 87,000 2.507 2011 233,000 90,000 2.589 2012 212,286 92,000 2.307 2013 213,772 95,000 2.250
Source: PMA (2009), MAAIF (2011), FAOSTAT.
Figure 2: Rice area, production and productivity trends in Uganda (1993-2012)
Note: Units are per tonne of unmilled paddy rice
Source: PMA (2009), MAAIF (2011), FAOSTAT (2014).
CONSUMPTION/UTILIZATION Currently, rice has become a major food security crop as well as a cash crop in a number of districts in Uganda and its cultivation is increasing, especially with the introduction of upland varieties. Much of the demand for rice comes from the urban markets that look for quality rice that competes with imported rice. Unlike most of the food crops grown to satisfy household consumption and food security requirements, rice is consumed more in urban areas, where it is one of the major food staples at homes, schools, hospitals and the army.
2 Changes in area harvested and yields from years 2005 – 2008 result from different data collecting measures, and do not reflect accurate changes in either metric. It is assumed that from 2005 – 2008 yields were around 2.3 Tonnes/Ha.
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The demand for rice in Uganda has risen greatly during the period of 2005 – 2013 with a peak consumption of over 205,000 metric tonnes in 2011 (Figure 3). This drastic increase in not only due to population growth, but is also attributed to urbanisation and income growth, and rice’s versatile culinary applications (Nakaweesi 2012). Since domestic production is still below the demand, Uganda may continue to be a net importer of rice in short to medium term.
Figure 3: Rice production, exports, imports and consumption in Uganda (2005-2013)
Source: FAOSTAT (2014), UN Comtrade
MARKETING AND TRADE The producer market is dominated by farmers who consume 40 percent of their produced rice, either as seed or food, and barter trade with neighbours (PMA, 2009). The remaining 60 percent is sold directly to middle men or milled by farmers and then sold to traders or consumers. The major domestic market for rice is Kampala (PMA, 2009).
Most Ugandan millers do not have de-stoners, and this contributes to poor quality of local rice and hence its rejection by the top segment of the Ugandan market (super markets in Kampala). Despite the lower quality and high costs, local rice still has a significant market share. The Ugandan market is more responsive to prices than to quality and this enables local millers to sell their rice even when the quality is poor (PMA, 2009).
Trading of rice in Uganda is completely under the private sector. Most of the trading is done by middlemen who buy threshed rice from the farmers at the farm. The price of farm gate paddy rice can vary greatly depending on demand and supply, quality, and market information available to both buyer and seller. Rice is usually packed in 50 and 100 kg bags. Some medium and large scale processors however process, package and brand their rice thereby fetching higher market prices.
Figure 3 shows Uganda’s national production and consumption of rice for the period 2000-2013. Throughout this period, Uganda is a net importer of rice. Rice imports have significantly increased from 50,000 tonnes in 2005 to 120,000 tonnes in 2013 (Index mundi, 2014) due to the increase in
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demand in the country. However, Uganda is reportedly also exporting increasing quantities of rice mainly to neighbouring countries (Figure 3). The increase in imports in recent years seems to be offset partly by steady exports of 40,000 tonnes. In contrast to other countries, 40 percent of sub-Saharan Africa’s (SSA) demand for rice is met by imports (Mohapatra, 2009).
Historically the largest trading import partners with Uganda have been Viet Nam, Pakistan, and Tanzania, but recently Kenya has also contributed relatively significant share of imports related to the rest of the world (Figure 4a). Additional rice trade with Kenya is likely through informal, cross-border trade. This increase in Kenya’ share can be explained by the lower tariff rate on rice imports in Kenya since mid-2010.
Rice imports from Viet Nam in 2005-2006 were significant representing more than 55 percent of total rice imports for Uganda (Figure 4a). However, rice imports from Viet Nam fluctuated considerably since then (Figure 4b). In 2013 Viet Nam was the source country of less than 1 percent of all imported rice in Uganda. Pakistan has largely remained the main rice exporter to Uganda. With initial share of less than 20 per cent in 2005, it has nearly taken over the entire import market with over 88 percent in 2013 (Figure 4a). The shift in trade partnership is driven by the lower CIF price of Pakistan rice as compared to Viet Nam (Figure 4b).
Tanzania has remained steady in its trading partnership with Uganda providing over 23 percent of Ugnada rice imports between the years 2007 – 2011, but this share declined considerably 2012-2013 to 8.5 and 7.2 percent, respectively (Figure 4a). The CIF prices of Tanzania are significantly lower than the other trading partners (Figure 4b). However, Tanzania’s rice surplus to export is limited and its trade policies were unstable with export ban placed from time to time, thus only limited quantities are available for import.
It is important to note is that export and import statistics presented may include rice being imported for re-export to neighbouring countries. Thus, it should not be assumed that rice exports were of national origin, nor that imported rice will strictly remain within the confines of the State.
Of the total milled rice that Uganda imports annually, 45 percent is classified as “broken rice”, due to its low cost (Wilfred, 2006). However, based on data from UBoS in 2014, this percentage is currently significantly higher as broken rice accounts for 64 percent of the imported rice in 2013. Though such broken rice grain is (in Asian countries) normally turned into instant noodles and snacks, in Uganda it is used as direct human food. This shift in type of rice imported may be due to the high domestic prices of high quality rice.
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Figure 4a: Percentage share of rice imports into Uganda (2005 – 2013)
Figure 4b. CIF Prices from different Exporting Countries (2005 – 2013)
Source: data compiled from UN Comtrade
DESCRIPTION OF THE VALUE CHAIN Figure 5 depicts the typical supply chain of rice in Uganda. The rice marketing chain can be categorized in three levels. The primary stage involves farmers selling to village traders, millers or milling their rice at a fee for either sale, own consumption or for planting seed. The secondary stage consists of millers and urban traders, while the tertiary stage consists of urban wholesalers, importers and consumers. The tertiary stage also consists of rural or travelling consumers who buy from roadside markets and urban traders. Different market outlets charge a variety of prices, which differ a lot depending on processing, quantities offered, distances, and other factors (Wilfred, 2006). These factors tend to constrain efficient market exchanges among rice market participants.
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The primary stage of marketing involves transactions and negotiations between the farmers with either rural traders or processor agents. Most often, farmers with small acreages (usually less than 0.5 ha) sell paddy rice to either rural traders or processors’ agents who collect it from their farm stead, while farmers with landholdings of more than 0.5 ha transport the paddy to the mills and mill the paddy prior to actual sale (Wilfred, 2006). This stage is characterized by minimal competition.
At the secondary stage of marketing, processing takes place. All rice millers are private businesses, and all milled rice is bulked in 100 kg sacks. Apart from milling for their own businesses, millers also offer milling services to traders and farmers. Rice mills are most often located in trading centres of the main rice growing districts. The mills are also marketing centres where negotiations and deals are concluded between rural, traders’ processors and urban traders. This stage involves mainly assembling of milled rice and storage as well as selling of processors to the urban traders. Large scale farmers often prefer to absorb transport costs to milling centres and pay for milling charges prior to selling their rice. Also, rural traders who collect threshed rice from farmers typically mill it prior to actual sale to urban traders.
The tertiary stage involves large-scale urban traders who are mainly wholesalers and importers who either purchase the milled rice from the processors and farmers on one hand, or import it. These traders are mainly based in Kampala while a few are from other urban centres. Apart from actual purchase of the milled rice these urban traders often engage in rice cleaning, consolidation and bulking. It is after this process that milled rice is passed to retailers for sale to consumers.
Processing
Moisture content of paddy is important from the time it is harvested (at between 20-24 percent) until it is milled. Open sun drying was the traditional rice drying method. In large scale rice production units such as those at Olweny, Doho and Kibimba rice schemes, drying facilities are used. Although the open-sun drying method increases the percentage of broken grains during milling, it is inexpensive and will therefore continue to be a major drying procedure in Uganda for some time to come.
Using open sun drying, the crop is manually raked several times a day to ensure uniform drying. Paddy should be dried soon to prevent deterioration, however not too fast to result in the development of internal cracks which would cause serious breakage of the grain during milling.
The basic objective of a rice milling system is to remove the husk and the bran layers, and produce an edible, white rice kernel that appeals to the customer: is sufficiently milled with maximum total milled rice recovery out of paddy, with a minimum of broken kernels and free of husks, stones, and other non-grain materials. Rice farmers have rapidly moved into using motorized commercial mills for their better operations and efficiency. In such mills, husk and bran are removed separately and brown rice is produced as an intermediate product. This is further polished to obtain white rice with bye products discharged through separate outlets of the machine. In highly efficient milling machine, 26 percent of the yield will be broken rice, with the remaining 39 percent whole head rice, 11 percent bran, and 24 percent husks.
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Figure 5: Value Chain of Rice in Uganda
* Red lines indicate patterns where farmers and rural traders collect rice, pay for milling services, and then independently remarket the rice to vendors on the top (tertiary) level of the value chain.
Source: Adapted from PMA (2009)
POLICY DECISIONS AND MEASURES The Uganda National Rice Development strategy (NRDS) lays out Uganda’s strategy for promotion of rice production between 2009/10 - 2017/18 with the aim of increasing household food security and reduce household poverty through increased production of high quality rice (MAAIF, 2009). The major strategies identified include strengthening the institutional framework; research, technology dissemination and capacity building; production, multiplication and dissemination of certified seed; improve irrigation and water management; increase utilization of agro-inputs and sustainable soil management; post-harvest handling, processing and marketing; mechanization; access to agricultural finance; and, policy development. NRDS aims to more than tripling rice production in Uganda from about 165 000 tonnes to an anticipated 334 250 tonnes in 2013 and later to an anticipated 499 200 tonnes in 2018. The 2013 target was far from being achieved with actual production of 213,000 tonnes. MAAIF will take the lead in coordination, monitoring and evaluation of efforts in the implementation of the NRDS.
The most important policy measure affecting rice markets in Uganda is the East African Community (EAC) common external tariff (CET) launched in 2005. This CET on rice is set at 75 percent ad-valorem duty or USD 200 per tonne, whichever is higher on rice imported from outside the region (PMA,
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2009). The CET was signed and the duty was charged to all rice imports in Uganda starting in 2005 - present. Before CET, the tariff on rice imports was 25 percent in Uganda, 37.75 percent in Kenya and 27.75 percent in Tanzania.
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3. METHODOLOGY MAFAP methodology seeks to measure price incentives for producers and other marketing agents in key agricultural value chains. The analysis is based on the comparison between observed domestic prices and constructed reference prices. Reference prices are calculated from the international price of the product at the country’s border, where the product enters the country (if imported) or exits the country (if exported). This price is considered the benchmark price free of influence from domestic policies and markets. MAFAP estimates two types of reference prices – observed and adjusted. Observed reference prices are those that producers and other marketing agents could receive if the effects of distortions from domestic market and trade policies, as well as overall market performance, were removed. Adjusted reference prices are the same as observed reference prices, but also exclude the effects of any additional distortions from domestic exchange rate policies, structural inefficiencies in the commodity’s value chain, and imperfect functioning and non-competitive pricing in international markets.
MAFAP’s price incentives analysis is based on the law of one price, which is the economic theory that there is only one prevailing price for each product in a perfectly competitive market. This law only applies in the case of homogeneous goods, if information is correct and free, and if transaction costs are zero. Thus, this analysis was conducted for goods that are either perfectly homogeneous or perfect substitutes in the local market in terms of quality, or, failing that, are simply comparable goods. Indicators calculated from reference and domestic prices will, therefore, reveal whether domestic prices represent support (incentives) or a tax (disincentives) to various agents in the value chain.
Domestic prices are compared to reference prices at two specific locations along commodity value chains – the farm gate (usually the main production area for the product) and the point of competition (usually the main wholesale market where the domestic product competes with the internationally traded product). The approach for comparing prices at each location is summarized below, using an imported commodity as an example. In this situation, the country is importing a commodity that arrives in the port at the benchmark price (usually the unit value CIF price at the port of entry). In the domestic market, we observe the price of the same commodity at the point of competition, which is in this case the wholesale market, and at the farm gate. We also have information on observed access costs, which are all the costs associated with bringing the commodity to market, such as costs for processing, storage, handling, transport and the different margins applied by marketing agents in the value chain. These include access costs between the border and wholesale, as well as between the farm gate and wholesale.
The benchmark price is made comparable to the domestic price at wholesale by adding the access costs between the border and wholesale, resulting in the observed reference price at wholesale. This takes into account all the costs incurred by importers and other agents to bring the commodity to market, which in effect, raises the price of the commodity. The reference price at wholesale is further made comparable to the domestic price at the farm gate by deducting the access costs between the farm gate and wholesale, resulting in the observed reference price at farm gate. This takes into account all the costs incurred by farmers and other agents to bring the commodity from the farm to the wholesale market. Mathematically, the equations for calculating the observed reference prices at wholesale (𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ) and farm gate �𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜� for an imported commodity are as follows:
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𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ = 𝑅𝑅𝑏𝑏 + 𝐴𝐴𝐴𝐴𝑜𝑜𝑜𝑜ℎ
𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜 = 𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ − 𝐴𝐴𝐴𝐴𝑜𝑜𝑜𝑜𝑜𝑜
where 𝐴𝐴𝐴𝐴𝑜𝑜𝑜𝑜ℎ are the observed access costs from the border to wholesale, including handling costs at the border, transport costs from the border to the wholesale market, profit margins and all observed taxes and levies, except tariffs, and 𝑅𝑅𝑏𝑏 is the benchmark price. 𝐴𝐴𝐴𝐴𝑜𝑜𝑜𝑜𝑜𝑜 are the observed access costs from the farm gate to wholesale, including handling costs at the farm, transport costs from farm to wholesale market, processing, profit margins and all observed taxes and levies.
The same steps described above can be taken a second time using benchmark prices and access costs that have been adjusted to eliminate market distortions due to exchange rate misalignments, structural inefficiencies in the commodity’s value chain 3 and imperfect functioning and non-competitive pricing in international markets, where possible and relevant. The adjusted benchmark prices and access costs are then used to generate a second set of adjusted reference prices, in addition to the first set of observed reference prices calculated.
For exported commodities, a slightly different approach is used. In this case, the border is generally considered the point of competition (wholesale), and the unit value FOB price for the commodity is normally taken as the benchmark price. Furthermore, observed and adjusted reference prices at wholesale are obtained by subtracting, rather than adding, the access costs between the border and wholesale. Mathematically, the equations for calculating the observed reference prices at wholesale (𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ) and farm gate �𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜� for an exported commodity are as follows:
𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ = 𝑅𝑅𝑏𝑏 − 𝐴𝐴𝐴𝐴𝑜𝑜𝑜𝑜ℎ
𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜 = 𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ − 𝐴𝐴𝐴𝐴𝑜𝑜𝑜𝑜𝑜𝑜
After observed and adjusted reference prices are calculated for the commodity, they are subtracted from the domestic prices at each point in the value chain to obtain the observed and adjusted price gaps at wholesale and farm gate. Observed price gaps capture the effect of distortions from trade and market policies directly influencing the price of the commodity in domestic markets (e.g. price ceilings and tariffs), as well as overall market performance. Adjusted price gaps capture the same as the observed, in addition to the effect of any distortions from domestic exchange rate policies, structural inefficiencies in the commodity’s value chain, and imperfect functioning and non-competitive pricing in international markets. Mathematically, the equations for calculating the observed price gaps at wholesale (𝑅𝑅𝑃𝑃𝑜𝑜𝑜𝑜ℎ) and farm gate �𝑅𝑅𝑃𝑃𝑜𝑜𝑜𝑜𝑜𝑜� are as follows:
𝑅𝑅𝑃𝑃𝑜𝑜𝑜𝑜ℎ = 𝑅𝑅𝑜𝑜ℎ − 𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ
𝑅𝑅𝑃𝑃𝑜𝑜𝑜𝑜𝑜𝑜 = 𝑅𝑅𝑜𝑜𝑜𝑜 − 𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜
where 𝑅𝑅𝑜𝑜𝑜𝑜 is the domestic price at farm gate, 𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜 is the observed reference price at farm gate, 𝑅𝑅𝑜𝑜ℎ is the domestic price at wholesale, and 𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ is the observed reference price at wholesale.
3 Structural inefficiencies in commodity value chains may include government taxes and fees (excluding fees for services), high transportation and processing costs, high profit margins captured by various marketing agents, bribes and other non-tariff barriers.
12
A positive price gap, resulting when the domestic price exceeds the reference price, means that the policy environment and market functioning as a whole generate incentives (support) to producers or wholesalers. For an imported commodity this could be due to distortions such as the existence of an import tariff. On the other hand, if the reference price exceeds the domestic price, resulting in a negative price gap, this means that the policy environment and market functioning as a whole generate disincentives (taxes) to producers or wholesalers. For an imported commodity this could be due to distortions such as a price ceiling established by the government to keep domestic prices low.
In general, price gaps provide an absolute measure of the market price incentives (or disincentives) that producers and wholesalers face. Therefore, price gaps at wholesale and farm gate are divided by their corresponding reference price and expressed as a ratio, referred to as the Nominal Rate of Protection (NRP), which can be compared between years, commodities, and countries.
The Observed Nominal Rates of Protection at the farm gate (𝑁𝑁𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜) and wholesale (𝑁𝑁𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ) are defined by the following equations:
𝑁𝑁𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜 =𝑅𝑅𝑃𝑃𝑜𝑜𝑜𝑜𝑜𝑜𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜
; 𝑁𝑁𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ =𝑅𝑅𝑃𝑃𝑜𝑜𝑜𝑜ℎ𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ
where 𝑅𝑅𝑃𝑃𝑜𝑜𝑜𝑜𝑜𝑜 is the observed price gap at farm gate, 𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜𝑜𝑜 is the observed reference price at the farm gate, 𝑅𝑅𝑃𝑃𝑜𝑜𝑜𝑜ℎis the observed price gap at wholesale and 𝑅𝑅𝑅𝑅𝑜𝑜𝑜𝑜ℎ is the observed reference price at wholesale.
Similarly, the Adjusted Nominal Rates of Protection at the farm gate (𝑁𝑁𝑅𝑅𝑅𝑅𝑎𝑎𝑜𝑜𝑜𝑜) and wholesale (𝑁𝑁𝑅𝑅𝑅𝑅𝑎𝑎𝑜𝑜ℎ) are defined by the following equations:
𝑁𝑁𝑅𝑅𝑅𝑅𝑎𝑎𝑜𝑜𝑜𝑜 =𝑅𝑅𝑃𝑃𝑎𝑎𝑜𝑜𝑜𝑜𝑅𝑅𝑅𝑅𝑎𝑎𝑜𝑜𝑜𝑜
; 𝑁𝑁𝑅𝑅𝑅𝑅𝑎𝑎𝑜𝑜ℎ =𝑅𝑅𝑃𝑃𝑎𝑎𝑜𝑜ℎ𝑅𝑅𝑅𝑅𝑎𝑎𝑜𝑜ℎ
where 𝑅𝑅𝑃𝑃𝑎𝑎𝑜𝑜𝑜𝑜 is the adjusted price gap at farm gate, 𝑅𝑅𝑅𝑅𝑎𝑎𝑜𝑜𝑜𝑜 is the adjusted reference price at the farm gate, 𝑅𝑅𝑃𝑃𝑎𝑎𝑜𝑜ℎis the adjusted price gap at wholesale and 𝑅𝑅𝑅𝑅𝑎𝑎𝑜𝑜ℎ is the adjusted reference price at wholesale.
If public expenditure allocated to the commodity is added to the price gap at farm gate when calculating the ratios, the Nominal Rate of Assistance (NRA) is generated. This indicator summarizes the incentives (or disincentives) due to policies, market performance and public expenditure.4 Mathematically, the Nominal Rate of Assistance is defined by the following equation:
𝑁𝑁𝑅𝑅𝐴𝐴 =𝑅𝑅𝑃𝑃𝑎𝑎𝑜𝑜𝑜𝑜 + 𝑅𝑅𝑃𝑃𝑐𝑐𝑐𝑐𝑐𝑐
𝑅𝑅𝑅𝑅𝑎𝑎𝑜𝑜𝑜𝑜
where PEcsp is commodity-specific public expenditure that has been identified and measured as monetary units per tonne.
4 The NRA indicator was not calculated for any of the commodities analyzed because of insufficient data on public expenditure. However, it will be developed in the forthcoming reports, as the public expenditure analysis is improved and better data are made available.
13
Finally, MAFAP methodology estimates the Market Development Gap (MDG), which is the portion of the price gap that can be attributed to “excessive” or inefficient access costs within a given value chain, exchange rate misalignments, and imperfect functioning of international markets. “Excessive” access costs may result from factors such as poor infrastructure, high processing costs due to obsolete technology, government taxes and fees (excluding fees for services), high profit margins captured by various marketing agents, bribes and other non-tariff barriers. Therefore, the total MDG at farm gate is comprised of three components – gaps due to “excessive” access costs, the exchange rate policy gap and the international market gap. When added together, these components are equivalent to the difference between the observed and adjusted price gaps at farm gate.
Similar to the price gaps calculated, the MDG is an absolute measure, which is also expressed as a ratio to allow for comparison between years, commodities, and countries. This relative indicator of the total MDG affecting farmers is derived by calculating the ratio between the total MDG at farm gate and the adjusted reference price at farm gate as follows:
𝑀𝑀𝑀𝑀𝑃𝑃𝑜𝑜𝑜𝑜 = (𝐴𝐴𝐴𝐴𝐴𝐴𝑤𝑤ℎ+𝐴𝐴𝐴𝐴𝐴𝐴𝑓𝑓𝑓𝑓+𝐸𝐸𝐸𝐸𝐸𝐸𝐴𝐴+𝐼𝐼𝐼𝐼𝐴𝐴)𝑅𝑅𝐸𝐸𝑎𝑎𝑓𝑓𝑓𝑓
where ACGwh is the access cost gap at wholesale defined as the difference between observed and adjusted access costs at wholesale, ACGfg is the access cost gap at farm gate defined as the difference between observed and adjusted access costs at the farm gate, ERPG is the exchange rate policy gap, and IMG is the international market gap.
A more detailed description of the methodology applied in this analysis is available on MAFAP’s website at www.fao.org/in-action/mafap
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4. DATA REQUIREMENTS AND CALCULATION OF INDICATORS To calculate MAFAP’s price incentives indicators, several types of data are needed. This section presents the data that was obtained and methodological decisions that were taken in this analysis.
TRADE STATUS OF THE PRODUCT Uganda is a net importer of rice. Figure 6 shows the trade balance of rice in Uganda from 2005 – 2013. Trade balance of rice is quite variable over time due to fluctuation of the domestic production, the carry-over inventories and the trends in export/re-export to neighbouring countries. During the nine year period, Uganda was a net importer of rice in all years with a negative trade balance of -45,000 metric tonnes of rice on average annually. In 2011 and 2012 the rice trade balance became more negative as there were local supply shortages of domestic rice. In 2012 the trade balance reached -62,671 metric tonnes of milled rice.
Figure 6: Rice Trade Balance (2005-2013)
Source: UN Comtrade (2013)
MARKET PATHWAY ANALYSED The pathway considered in the analysis follows very closely the flow of commodity along the value chain. Lango and Acholi, two major production locations, were considered as representative of the rice producing areas in Uganda. Paddy (un-milled) rice, produced and marketed by producers, is milled, traded and transported to reach major wholesale markets in urban centres. Kampala is considered the point of competition as it represents the major wholesale market and consumption centre for milled rice and it is also the first point for imported rice. The analysis covers the period of 2005-2013.
average: -45,341
-70,000
-60,000
-50,000
-40,000
-30,000
-20,000
-10,000
02005 2006 2007 2008 2009 2010 2011 2012 2013
Met
ric T
onne
s of R
ice
15
BENCHMARK PRICES Observed
The benchmark price is the basis for calculating a reference price to determine whether rice producers receive market incentives. Since Uganda is a net importer of rice during the 2005 -2013 time period, the benchmark price considered is the average CIF prices of the two major types of imported rice, namely milled and semi-milled and broken rice. Table 2 presents the CIF price series of rice over the period of 2005-2013. This data is obtained from the records UN Comtrade, International Trade Statistics Database.
Table 2: Average CIF price (landing price) of rice imports to Uganda (2005-2013)
Source: UN Comtrade (2014), Author’s calculations
Adjusted
There is no need to use an adjusted benchmark price as the observed benchmark price accurately reflects the opportunity cost of rice imports.
DOMESTIC PRICES Observed prices at point of competition
Given that Kampala wholesale market is considered at the point of competition in this analysis, average wholesale price of rice in this market is used as the observed, domestic, price at the point of competition. Wholesale price of rice at Kampala market, reported by Regional Agricultural Trade Integration Network (RATIN) for 2005-13 is available and is used (Table 3). Wholesale prices of rice increased progressively since 2005 eventually tripling in 2013. Domestic wholesale prices of rice in Uganda fluctuate with changes in the world market prices of the commodity and the progressive devaluation of the local currency, among other demand and supply factors.
Observed prices at farm gate
Farm gate or producers’ prices of food commodities are not currently available from official sources in Uganda. In the case of paddy rice, producers’ prices are obtained from the annual reports of Uganda Cooperative Alliance in several producing districts of rice (Table 3). The farmgate prices increased steadily since 2005 due in part to the implementation of the external tariff and the price increase of rice in the world markets.
Year 2005 2006 2007 2008 2009 2010 2011 2012 2013
Value in USD
17,454,261 13,419,619 19,125,551 21,315,448 33,248,204 29,898,258 37,074,736 59,089,460 55,412,088
MT of Rice
62,142 48,349 70,479 59,988 80,063 77,193 92,837 133,963 115,635
CIF 280.88 277.56 271.37 355.33 415.28 387.32 399.35 441.09 479.20
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Table 3: Farm gate and wholesale prices of rice and market exchange rate in Uganda (2005-2013) Wholesale prices of
milled rice (USh/tonne)
Farm gate prices of paddy rice
(USh/tonne)
Exchange rate (USh/USD)
2005 911,701 300,000 1,781 2006 1,168,467 375,000 1,831 2007 1,054,632 500,000 1,723 2008 1,772,616 650,923 1,720 2009 1,776,887 815,750 2,020 2010 1,817,717 955,500 2,178 2011 2,166,887 1,435,416 2,410 2012 3,058,142 1,573,000 2,527 2013 2,914,775 1,443,000 2,584
Source: RATIN (2014), UCA (2006-2013), IMF (2013)
EXCHANGE RATES Observed exchange rate
The exchange rate between the Ugandan shilling and US dollars has been taken from the IMF database on exchange rates (Table 3). The average of the exchange rate for each year has been calculated from the monthly data reported in that database. These represent the observed exchange rate.
Adjusted exchange rate
Uganda has embraced liberal market policies and has a floating exchange rate. Thus, reported exchange rates are assumed to be real exchange rates with marginal misalignment.
ACCESS COSTS Observed access costs
Access costs between the farm gate and the wholesale market and between the wholesale market and the country’s border are needed to compute the observed reference prices at these respective points along the value chain.
Border to the point of competition
Observed access costs between the border, port of Mombasa, and Kampala wholesale market are obtained from recent estimates reported by Nathan Associates Inc. (2011) and Shippers Council of Eastern Africa (2013). According to Nathan Associates (2011), the cost of rice imports to Uganda through Mombasa port in Kenya in 2010 consists of port charges for transit goods (US $12.38 per tonne), freight forwarding cost (US $ 12.50 per tonne), extra inventory costs (US $25.88 per tonne) and road transportation from Mombasa to Kampala (US $87.46 per tonne). That is, the total access cost of rice imports in 2010 amounts to US $138.21 (or USh 339,033) per tonne. This compares favourably with the reported access for imports in Uganda reported by the World Bank (2011, 2012, and 2013). According to the latter, the average costs of imports in Uganda for 2010 to 2013 are US $122.5, $125.6 and $134.0 per tonne of rice, respectively. In addition, Shippers Council of Eastern Africa (2013) reported an average transportation cost from Mombasa to Kampala of US $ 111.55 per tonne for 2011 and US $98.43 for 2012. Land transportation cost from the port to Kampala represents the major component of the access costs from the border to the point of competition.
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The above information is used to construct the access costs from the border, Mombasa, to the point of competition, Kampala. Cost estimates reported by Nathan Associates (2011) were used for the entire period of analysis (2005-2013) except for the transportation costs from Mombasa to Kampala for 2011-2013 where the estimates reported in Shippers Council of Eastern Africa (2013) were used. The estimated observed access costs amount to US $138.21 per tonne for the period of 2005-2010, US $ 162.30 in 2011, and US $ 149.18 per tonne in 2012 and 2013.
Farm gate to point of competition
The estimation of the access costs from the farm gate to wholesale markets is based on marketing costs reported in two studies: the Upland Rice Subsector study conducted by FIT Uganda (2006) and by the value chain analysis of rice in Acholi and Lango production regions undertaken by PMA (2009). These costs include transportation from the farm gate to milling centres, milling costs, local taxes and municipal dues, costs of loading/unloading and transportation to Kampala and wholesale margin of profit. The observed access costs between the farm gate and wholesale markets in Kampala are presented in Table 4. For 2006, access costs between farm gate to wholesale markets are estimated at USh 232,000 per tonne of paddy rice with transportation costs represent 11 percent and profit margin as high as 65 per cent of total access costs. For 2008, access costs between farm gate to wholesale markets are estimated at USh 266,601 per tonne of paddy rice. Transportation costs represent 19 percent of total access costs. In the case of rice, traders’ and wholesale margins are substantial and amounts to USh 122,100 per tonne of paddy rice equivalent or 37.4 percent of the observed access cost. According to these estimates, the total access cost has increased significantly in 2008 compared to 2006 (Table 4) with an observed decline in traders’ margin and an increase in transportation and milling cost.
The estimated access costs in 2006 as presented in Table 4 are used to estimate access costs for 2005 by adjusting for inflation using the Consumer Price Index, CPI, (2006=100). Similarly, the access costs reported for 2008 are used to estimate the access costs for 2009-2013 by adjusting for inflation using CPI (2008=100). This implies that access costs in real terms did not change over the period of analysis and only affected by inflation reflected in the CPI. The estimated observed access costs for the entire 2005 – 2013 period are presented in Table 5.
Table 4. Access costs from the farm gate to the point of competition of paddy rice in Uganda Source FIT Uganda (2006) PMA (2009) USh per tonne USh per tonne Year data collected 2006 2008 Transport to milling Paddy 10,000 30,600 Milling Paddy 30,000 105,140 Packaging and handling Paddy 6,000 15,600 Municipal dues and taxes Paddy 20,400 20,400 Traders' margin Paddy equiv. 95,600 74,000 Transport to Kampala Paddy equiv. 15,000 31,850 Wholesale margin of profit Paddy equiv. 55,000 48,100 Total access cost Paddy equiv. 232,000 325,690
Source: Compiled from FIT Uganda (2006) and PMA (2009).
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Adjusted access costs
Border to point of competition
As explained above, the access costs from the border (Mombasa port) to the point of competition (Kampala wholesale market) consist only of financial costs and do not include any taxes, levies or profit margin. Therefore, no adjustment is necessary. Consequently, the observed and adjusted access costs for this segment of the value chain are the same.
Table 5. Estimated observed access costs from the farm gate to the point of competition of paddy rice in Uganda (2005-2013)
Source: Authors’ estimation from data in Table 4.
Farm gate to point of competition
To estimate the adjusted access costs, the estimates of observed access costs were adjusted to exclude direct taxes (cess) and adjust traders’ profit margin to 10 per cent of the investment cost (farm gate price plus marketing costs). The municipal dues and taxes are small fraction of the access costs and represent only slight adjustments to access cost of rice in Uganda. However, adjusting the profit margin reduced the access costs significantly. The estimated adjusted access costs for the entire 2005 – 2013 period are presented in Table 6.
Table 6. Estimated Adjusted access costs from the farm gate to the point of competition of paddy rice in Uganda (2005-2013)
Cost Item 2005 2006 2007 2008 2009 2010 2011 2012 2013
Milling 28,866 30,000 31,821 105,140 118,827 123,568 146,636 167,201 176,343
Packaging 5,773 6,000 6,364 15,600 17,631 18,334 21,757 24,808 26,165
Transport to urban centre
9,622 10,000 10,607 30,600 34,584 35,963 42,677 48,662 51,323
Trader's margin 32,897 48,188 43,817 83,411 91,164 85,338 105,311 132,310 95,846
Transport to Kampala 14,433 15,000 15,911 31,850 35,996 37,433 44,420 50,650 53,419
Total 91,590 109,188 108,521 266,601 298,202 300,637 360,801 423,631 403,096
Source: Author’s estimation from data in Table 4.
BUDGET AND OTHER TRANSFERS The government of Uganda transfers fund directly (irrigation infrastructure) to rice interventions as rice is one of the priority commodities. At the same time, rice is one of the commodities under the East African Agricultural Productivity Project, funded by the World Bank. However, public support to rice exclusively cannot be identified in public expenditure analysis. The attribution of expenditure allocated rice within the groups of commodities that may include rice (such as in research and
Cost Item 2005 2006 2007 2008 2009 2010 2011 2012 2013
Milling 28,866 30,000 31,821 105,140 118,827 123,568 146,636 167,201 176,343
Packaging 5,773 6,000 6,364 15,600 17,631 18,334 21,757 24,808 26,165
Transport to urban centre 9,622 10,000 10,607 30,600 34,584 35,963 42,677 48,662 51,323
Municipal dues and taxes 20,400 20,400 20,400 20,400 20,400 20,400 20,400 20,400 20,400
Trader's margin 91,985 95,600 101,404 74,000 83,633 86,970 103,206 117,680 124,114
Transport to Kampala 14,433 15,000 15,911 31,850 35,996 37,433 44,420 50,650 53,419
Wholesale Margin 52,920 55,000 58,339 48,100 54,362 56,531 67,084 76,492 80,674
Total Access Cost 223,999 232,000 244,847 325,690 365,433 379,200 446,180 505,893 532,438
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extension) cannot be made. Consequently, these budget transfers are excluded from the analysis in this report.
QUALITY AND QUANTITY ADJUSTMENTS Benchmark and wholesale prices and access costs are based on milled rice while paddy rice is traded at the farm gate. A quantity conversion factor at of 0.65 (ratio of milled rice to paddy) is used to standardize the comparison of reference price and farm gate price. Uganda rice is assumed to have the same quality as that of imported rice and therefore no quality adjustment is needed.
DATA OVERVIEW Sources of the data variables used in the analysis of the policy and market indicators of rice at the household and wholesale levels are summarized in Table 7. Table 8 presents the data used in the calculation of the indicators as described above. The data and the computation of the various indicators is presented in Annex I (all values in Table 8 and Annex I are truncated at the decimal).
Table 7: Data sources and methodological decisions data Description
Observed Adjusted Benchmark price Comtrade data used to calculate CIF N.A. Domestic price at point of competition (auction)
Annual average wholesale prices in Kampala reported by RATIN (2014) (see Table 3).
N.A.
Domestic price at the farm gate
Farm gate prices of paddy rice in several producing districts were obtained from the annual reports of UCA (see Table 3) except in 2008 (from PMA, 2009) and in 2005 (from FIT Uganda, 2006).
N.A.
Exchange rate Annual average of exchange rate as reported by IMF (2014) (See Table 3)
NA
Access cost from border to point of competition
Observed access costs between border (Mombasa port) and Kampala wholesale market are obtained from recent estimates reported Nathan Associates Inc. (2011) and Shippers Council of Eastern Africa (2013) estimated at US $ 138.21 to 162 per ton.
No adjustment is needed, i.e., set equal to observed access costs.
Access costs from farm gate to the point of competition
Extrapolated from marketing costs reported in two studies: the Upland Rice Subsector study conducted by FIT Uganda (2006) and the the value chain analysis of rice in Acholi and Lango production regions undertaken by PMA (2009), (see Table 4 and 5).
The observed access costs of Table 5 were adjusted by eliminating municipal due and adjusting the traders’ margins to 10 percent of investment costs(see Table 6)
Quantity conversion factor
The ratio of milled rice produced from baddy rice of 0.65 is used.
The ratio of milled rice produced from baddy rice of 0.65 is used
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Table 8. The data used in the analysis of price incentives of rice in Uganda (2005-2013) Year 2005 2006 2007 2008 2009 2010 2011 2012 2013
trade status m m m m m m m m mDATA Unit Symbol food security y y y y y y y y y
Benchmark priceObserved USD/Tonne Pb(int$) 281 278 271 355 415 387 399 441 479 Adjusted USD/Tonne Pba 281 278 271 355 415 387 399 441 479
Exchange rateObserved USh/USD ERo 1,781 1,831 1,720 2,030 2,178 2,453 2,313 2,527 2,584 Adjusted USh/USD ERa 1,781 1,831 1,720 2,030 2,178 2,453 2,313 2,527 2,584
Access costs border - point of competitionObserved USh/Tonne ACowh 246,103 253,122 237,780 280,630 300,957 339,033 375,332 377,036 385,484 Adjusted USh/Tonne ACawh 246,103 253,122 237,780 280,630 300,957 339,033 375,332 377,036 385,484
Domestic price at point of competition USh/Tonne Pdwh 911,701 1,168,467 1,054,632 1,772,616 1,776,887 1,817,717 2,166,887 3,058,142 2,914,775 Access costs point of competition - farm gate
Observed USh/Tonne ACofg 223,999 232,000 244,847 325,690 365,433 379,200 446,180 505,893 532,438 Adjusted USh/Tonne ACafg 91,590 109,188 108,521 266,601 298,202 300,637 360,801 423,631 403,096
Domestic price at farm gate USh/Tonne Pdfg 300,000 375,000 500,000 650,923 815,750 955,500 1,435,417 1,573,000 1,443,000 Externalities associated w ith production USh/Tonne E - - - - - - - - - Budget and other product related transfers USh/Tonne BOT - - - - - - - - - Quantity conversion factor (border - point of competition) Fraction QTwh 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Quality conversion factor (border - point of competition) Fraction QLwh 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Quantity conversion factor (point of competition - farm gate) Fraction QTfg 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 Quality conversion factor (point of competition - farm gate) Fraction QLfg 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
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SUMMARY OF INDICATORS Table 9. MAFAP Price Gaps for Rice in Uganda, 2005-2013
Trade status
Observed price gap at point of competition
Adjusted price gap at point of competition
Observed price gap at farm gate
Adjusted price gap at farm gate
USh per Tonne of milled rice USh /Tonne of milled rice USh /Tonne of
unmilled rice USh /Tonne of unmilled rice
2005 m 165,453 165,453 38,938 -93,470
2006 m 407,014 407,014 112,055 -10,757
2007 m 349,981 349,981 286,824 150,498
2008 m 770,495 770,495 325,234 266,146
2009 m 571,645 571,645 397,776 330,545
2010 m 528,564 528,564 496,750 418,187
2011 m 868,018 868,018 1,037,331 951,953
2012 m 1,566,301 1,566,301 1,109,197 1,026,935
2013 m 1,291,029 1,291,029 920,003 790,661
Source: MAFAP (2014)
Table 10. MAFAP Nominal Rates of Protection and Assistance Rice in Uganda, ( percent), 2005-2013
Trade status
Observed nominal rate of protection at point of competition
Adjusted nominal rate of protection at point of competition
Observed nominal rate of protection at farm gate
Adjusted nominal rate of protection at farm gate
Observed nominal rate of assistance at farm gate
Adjusted nominal rate of assistance
at
Unit percent percent percent percent percent percent
2005 m 22 22 15 -24 15 -24
2006 m 53 53 43 -3 43 -3
2007 m 50 50 135 43 135 43
2008 m 77 77 100 69 100 69
2009 m 47 47 95 68 95 68
2010 m 41 41 108 78 108 78
2011 m 67 67 261 197 261 197
2012 m 105 105 239 188 239 188
2013 m 80 80 176 121 176 121
Source: MAFAP (2014)
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Table 11. MAFAP Market Development Gap for Rice in Uganda, 2005 – 2013
Access costs gap to farm gate
Total market development gap
Market development gap as share of farm gate price
Market development as share of adjusted reference price at farm gate
Unit USh/tonne of unmilled Rice
USh/tonne of unmilled Rice percent percent
2005 -132,408 -132,408 -44 -34
2006 -122,812 -122,812 -33 -32
2007 -136,326 -136,326 -27 -39
2008 -59,089 -59,089 -9 -15
2009 -67,231 -67,231 -8 -14
2010 -78,563 -78,563 -8 -15
2011 -85,378 -85,378 -6 -18
2012 -82,262 -82,262 -5 -15
2013 -129,342 -129,342 -9 -20
Source: MAFAP (2014)
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5. RESULTS AND INTERPRETATION Price gaps are market price differentials between the commodity’s domestic and reference price in each respective year. More conceptually, they provide an absolute measure of price incentives or disincentives that rice producers face. The estimated price gaps at both market levels are summarized in Table 9. The price gaps are also expressed as a percentage of the reference prices, yielding the nominal rates of protection (NRPs) presented in Table 10.
Indicators at the point of competition
For rice during 2005 – 2013, there were no taxes or excessive fees, other than the import duty, from the border to the point of competition. Thus, the adjusted and observed access costs, and consequently, price gaps, are all equal (Table 9). The price gap for rice at the wholesale market ranged from USh 165,453 in 2005 to 1,566,301 in 2012 per tonne of milled rice. The nominal rate of protection ranges from a minimum of 22 percent in 2005, and a maximum of 105 percent in 2012, averaging 60 percent. These indicators suggest the wholesale market receives significant protection, mainly through trade policies. The nominal rate of protection is consistent with CET tariff on rice except in 2005 when Uganda began to apply CET. That is, the tariff seems to be the major deriving factor and cause of the protection at the point of competition.
The East African Community (EAC) common external tariff (CET) is the most important policy measure affecting rice markets in Uganda. The CET on rice is set as a 75 percent ad-valorem duty or USD 200 per tonne, whichever is higher on rice imported from outside the region (PMA, 2009). During the years of this analysis, 2005 – 2013, the CET duty was applied to all rice imports. The immediate impact of the tariff is depicted below in Figure 7. The access costs and tariff significantly raise the price of imported rice in Uganda. Together, the tariffs and access costs from the boarder to the point of competition from 2005 – 2013 amounts to around 110 percent of the CIF price.
Figure 7. Comparison of CIF, Import Price in Kampala, and Wholesale Price (all values in USD)
Source: RATIN (2014), Comtade, VECO (2006), PMA (2009)
The tariff creates a wedge between the CIF price of imported rice and the landed cost of imported rice in Kampala. Due to the transportation cost from Mombasa to Kampala and other associated cost, this price wedge amounts to more than 100 percent of the CIF price (ranging from 102 to 126
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percent between 2005 and 2013). The wholesale market prices of rice, which is an average of imported and locally produced rice, adjust close to the landed cost of imported rice5. With the significant increase in domestic production and consequently reduced imports since 2005 (Table 1), this latter wedge started to widen. Therefore, the tariff, the cost of importation and the total quantity imported are the major determinants of the wholesale prices of rice in Uganda. Ultimately, these may be transmitted totally or partially to other markets, i.e., farm gate and retail markets.
There is a noticeable departure in prices from the import cost of rice to Kampala and the observed wholesale market value in 2008, and 2011 – 2013. These differences are likely an effect of a non-competitive market structure. There are many non-tariff barriers to trade (NTB) in Uganda beyond what the presented data could capture in observed access costs. Time and knowledge are two large capital resources that serve to block new agents from entering the market. To import in Uganda, excessive paperwork must be signed and bureaucratic measures met which require experience and time not readily accessible to the average market agent. Other fiscal barriers include, but are not limited to: delays at customs clearance, internet failures, bribery, and powerful lobby groups. Thus, due to the large amount of NTBs, the importation market of many products, but specifically rice, tends to act like a strong oligopoly. Therefore, even when local prices seem to be noncompetitive in respect to import prices at the point of competition (Kampala), the importers appear to raise their prices in order to gain on margin versus market share.
Figure 8. Adjusted nominal rate of protection at the point of competition
Source: Author’s own calculations
The domestic price may also be affected by the domestic supply of rice given that a significant part of domestic production is consumed locally at the production areas (40 percent is consumed by famers) and nearby urban centers. This can cause the wholesale prices to rise, and consequently, larger protection rates offered at the point of competition when supply is low. In years such as 2012 where domestic rice production was down (Figure 10) the prices at the wholesale level rose causing a price gap at the observed level of USh 1,566,301 and a protection rate of 105 percent (Table 9, Figure 8).
5 The wholesale price was below the estimated landed cost of rice in Kampala in 2009-2010 as actual cost may differ from our estimates.
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Farm-gate Indicators
At the producer level, the observed price gap was positive ranging from USh 38,938 in 2005 to USh 1,109,197 per tonne of un-milled rice in 2012 (Table 9). The adjusted price gap is slightly lower due to existence of inefficiencies in the value chain and low level of local taxes imposed on rice. The nominal rate of protection follows the same trends. The observed nominal rate of protection was initially low and at 15 percent reaching a maximum of 261 percent in 2011 (Table 10). While it was negative in 2005-2006, the adjusted nominal rate of protection was positive throughout the period of 2007-2013. The trends of the nominal rate of protection, presented in Figure 9, suggest that response of the farm-gate price to application CET tariff at producer level was initially weak but became stronger over time. Information asymmetry in the marketplace from the newly applied tariff could explain the initially low levels of protection.
The level of the observed nominal rate of protection in 2005-2010 is distinctly lower than in the subsequent period of 2011-2013. During the former period, the indicator appears to be relatively staple averaging 61 percent. Given the tariff level, this could be considered as the normal or expected level for the observed nominal rate of protection for rice in Uganda.
Figure 9. Observed and Adjusted NRP at the Farm gate for rice in Uganda (2005-2013)
Source: Author’s own calculations
However, in the latter period of 2011-2013, the observed nominal rate of protection was exceptionally high ranging from 140 to 213 percent and averaged 181 percent. The adjusted nominal rate was even higher. These unexpectedly high levels of protection were caused by a 50 percent increase in the producer price in 2011 while the world prices were relatively stable. This price hike was accompanied by a similar but smaller increase in the wholesale price of rice. The price increase in both markets was maintained and enforced by further enforced by a rise in the world price of rice in 2012-2013 (see Table 2-3). This price hikes were likely to have resulted from some seasonal
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Observed nominal rate of protection at farm gateAdjusted nominal rate of protection at farm gate
27
shortage of rice in the domestic market. This type of seasonal shortage may result from increased activities of formal, cross-border, trade with neighboring countries, particularly Congo and South Sudan.
According to the estimated indicators, rice producers and traders receive substantial support (incentives) and policy transfers. The support is mainly a transfer from consumers as the government is not pursuing any type of subsidies to consumers offset the impact of high rice prices. The observed nominal rate of protection at the farm gate compares favorably, on average, with the tariff rate but observed NRP at the wholesale is much lower. This indicates that the tariff benefits rice producers more than traders. This may be due to the favorable prices received by rice producers selling directly to consumers and retailers in producing regions.
The incentives to rice producers may explain the progressive expansion of rice production in Uganda especially during the period of 2005-2010 (Figure 1). Over this period, rice production increased by 42.5 percent. Combining this support with increased utilization of agro-inputs and sustainable soil management may help realize the ambitions of the NRDS to triple rice production in Uganda by 2016.
The variability of the level of support indicated by the nominal rate of protection suggests that the domestic rice markets are weakly connected to the international markets and further the wholesale prices are not fully transmitted to the farm gate prices. Domestic prices in any given year tend to be related to international prices in the previous year. This may be due to the time lag between the marketing season of domestic rice and the arrival of imports in the country and lack of information on current world market price trends. This may result in significant uncertainty for both producers and wholesale/importers of rice.
Market Development Gap
The difference between observed and adjusted prices determines the market development gap. It estimates how much of the price gap is caused by value chain inefficiencies resulting from excessive marketing costs (e.g. bribes, excessive margins, taxes). Thus, it gives an approximation of the size of the market space that can and should be developed. More negative values represent less efficient markets.
The market development gap as a percent of the farm gate price has decreased significantly from 34 percent in 2005, to 20 percent in 2013. The absolute size of this gap seems to be inversely related to producer prices. With high prices the market may become more competitive and the value chain may become more efficient.
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Figure 11. Market Development Gap for rice in Uganda (2005-2013)
Source: Author’s own calculations
-45%
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Market Development Gap at Farm Gate (Adjusted)
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6. CONCLUSION AND RECOMMENDATIONS
Main Message The estimated price gaps and associated nominal rates of protection for rice in Uganda indicate substantial incentives to producers and wholesalers. This support is due to adoption of the common external tariff on rice imports from mainly Asian countries. Although the level of support at the farm gate level is close to tariff rate on average, it is exceptionally high in recent years as a result of significant price hike since 2011 particularly at the producer level.
While the price incentives to rice producers have encouraged remarkable increase in rice production over the last decade mainly through area expansion, the high price of rice in Uganda represents an unavoidable tax on consumers. Indeed, the high prices at the wholesale market translate into high prices at the retail level which may not be affordable to low income consumers. This may lead to imports of cheaper and low quality rice.
Despite incentive success in the short-run, tariff induced protection is unsustainable in the long-run. As domestic production rises during Uganda’s campaign toward self-sufficiency imports will decline and domestic prices will diminish as they will not enjoy tariff-protection. This is good for consumers, but incentives to farmers to produce will fall. In order to achieve the NRDS plans to triple rice production by 2018, significant improvement in productivity is needed.
Adoption of yield enhancing technologies to improve productivity reduces the average cost of production. This will increase rice profitability even when prices decline and maintain competitiveness of domestic rice production without the need for distorting trade policies such as tariffs. This requires increasing investment in research to develop new high yielding and water efficient rice varieties and improved agronomic practices. Uganda must principally invest in improving input markets, extension services, and improvements in infrastructure to encourage increased utilization of agro-inputs and sustainable soil management. This will all serve to increase the currently untapped yield potential of NERICA rice that, at current levels of output, is half of what it could be with proper inputs.
Recommendations Despite the large protection for farmers in the rice value chain, the increases in production (40 percent from 2005 – 2013) have largely come from increased land expansion rather than the adoption of technological innovation or adaptation. This type progress does little to help producers become more competitive globally under non-tariff circumstances. The transfers to the producers have nearly exclusively come from the consumers who are faced with paying exaggerated prices due to: tariffs, poor market infrastructure, and oligopolistic importing agents. A balance between consumers and producer benefit needs to be recognized in policy-making.
In Uganda, for rice to be competitive in the long-run, when the country is expected to become self-sufficient, incentives to producers must come from productivity-increasing technological changes rather than tariffs. There is a high potential for increased rice yields through the adoption of better agronomic practices such as: improving upon high-yielding seeds, fertilizer application, and modern irrigation systems. More reliable rice production will help producers engage in contractual agreements that higher level agents in the value chain currently do not arrange when supply output is so variable. Additional technological support at the processing stages in the value chain, such as
31
better milling machines, will provide higher quality processed rice which is more competitive at the wholesale level.
Given the high marketing costs, an improvement in rural infrastructure to reduce transportation cost and improve farmers’ access to markets needs to be considered. Low-cost and efficient transportation, not only raises producers’ price of output but also reduces the cost of inputs.
Limitations Major limitations in this article include accurately assessing access costs from the border to the point of competition which would give us a clearer picture about what specific barriers to trade were to exist in the importation market. Farm gate prices of rice, as with other food commodities in Uganda, are unavailable from any official source. Investment in accurate data collection, especially producer prices, is fundamental to improve the quality of analysis.
Further Insights Kenya, Uganda and Tanzania are members of the EAC adopting the common external tariff. The three countries are rice producers but only Tanzania is an exporter. A comparison of price incentives and for rice producers in the three countries could provide interesting additional insights.
As stated above, this article has focused on producer incentives, but the other side of the economy, i.e. the consumer side, must be analyzed. For a nation to economically improve, balances between producer and consumer benefits must be accommodated.
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BIBLIOGRAPHY FAOSTAT. 2012. http://faostat.fao.org. Accessed January 2014.
FIT Uganda. 2006. UPLAND RICE SUB SECTOR STUDY REPORT IGANGA DISTRICT, EASTERN UGANDA – Report submitted to VECO. Kampala, Uganda. May 2006
Gitau, R., Mburu, S., Mathenge, M. and M. Smale. 2011. Trade and agricultural competitiveness for growth, food security and poverty reduction: A case study of wheat and rice production in Kenya. WPS 45/2011. Tegemeo Institute of Agricultural Policy and Development. Nairobi, Kenya. Pp. 69.
Kijima Yoko,Otsuka, K. and Sserunkuuma D. 2008. Assessing the Impact of a NERICA on Income and Poverty in Central and Western Uganda, Journal of Agricultural Economics 38 (2008) 327–337.
Ministry of Agriculture, Animal Industry and Fisheries (MAAIF). 2009. Uganda National Rice Development Strategy. Second draft. Ministry of Agriculture, Animal Industry and Fisheries, Entebbe, Uganda.
Ministry of Agriculture, Animal Industry and Fisheries (MAAIF). 2010. Statisitcal Abstract. Ministry of Agriculture, Animal Industry and Fisheries, Entebbe, Uganda.
Ministry of Agriculture, Animal Industry and Fisheries (MAAIF). 2011. Statisitcal Abstract. Ministry of Agriculture, Animal Industry and Fisheries, Entebbe, Uganda.
Mohapatra, S. 2009. Uganda Rice Revolution. Rice Today July-September. International Rice Research Institute.
Nathan Associates Inc. (2011). CORRIDOR DIAGNOSTIC STUDY OF THE NORTHERN AND CENTRAL CORRIDORS OF EAST AFRICA. Action Plan. Volume 1: Main Report.
NRI/IITA. 2002. Transaction Cost Analysis Report. IITA.
Plan for Modernization of Agriculture (PMA) Secretariat. 2009. Rice Value Chain Study in Achuli and Lango Sub-regions. PLAN FOR MODERNISATION OF AGRICULTURE (PMA) SECRETARIAT. Kampala, Uganda.
Shippers Council of Eastern Africa (2013). East Africa Performance Survey 2012. Second Edition.
Uganda Bureau of Statistics (UBoS). 2014. Trade data. http://www.ubos.org/index.php?st=pagerelations&id=15&p=related%20pages:Macro-economic. Accessed January 2014.
Nakaweesi, Dorothy. "Low Local Production Driving up Rice Prices." Daily Monitor [Kampala] 27 Nov. 2012: 1. Daily Monitor. Web. 16 Apr. 2014.
World Bank. 2011. Doing Business in the East African Community 2011. The International Bank for Reconstruction and Development/The World Bank. Washington DC
World Bank. 2012. Doing Business in the East African Community 2012. The International Bank for Reconstruction and Development/The World Bank. Washington DC
World Bank. 2013. Doing Business in the East African Community 2013. The International Bank for Reconstruction and Development/The World Bank. Washington DC
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ANNEX I: Data and calculations used in the analysis
Year 2005 2006 2007 2008 2009 2010 2011 2012 2013trade status m m m m m m m m m
DATA Unit Symbol food security y y y y y y y y yBenchmark price
Observed USD/Tonne Pb(int$) 281 278 271 355 415 387 399 441 479 Adjusted USD/Tonne Pba 281 278 271 355 415 387 399 441 479
Exchange rateObserved USh/USD ERo 1,781 1,831 1,720 2,030 2,178 2,453 2,313 2,527 2,584 Adjusted USh/USD ERa 1,781 1,831 1,720 2,030 2,178 2,453 2,313 2,527 2,584
Access costs border - point of competitionObserved USh/Tonne ACowh 246,103 253,122 237,780 280,630 300,957 339,033 375,332 377,036 385,484 Adjusted USh/Tonne ACawh 246,103 253,122 237,780 280,630 300,957 339,033 375,332 377,036 385,484
Domestic price at point of competition USh/Tonne Pdwh 911,701 1,168,467 1,054,632 1,772,616 1,776,887 1,817,717 2,166,887 3,058,142 2,914,775 Access costs point of competition - farm gate
Observed USh/Tonne ACofg 223,999 232,000 244,847 325,690 365,433 379,200 446,180 505,893 532,438 Adjusted USh/Tonne ACafg 91,590 109,188 108,521 266,601 298,202 300,637 360,801 423,631 403,096
Domestic price at farm gate USh/Tonne Pdfg 300,000 375,000 500,000 650,923 815,750 955,500 1,435,417 1,573,000 1,443,000 Externalities associated w ith production USh/Tonne E - - - - - - - - - Budget and other product related transfers USh/Tonne BOT - - - - - - - - - Quantity conversion factor (border - point of competition) Fraction QTwh 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Quality conversion factor (border - point of competition) Fraction QLwh 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Quantity conversion factor (point of competition - farm gate) Fraction QTfg 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 Quality conversion factor (point of competition - farm gate) Fraction QLfg 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
CALCULATED PRICES Unit Symbol 2005 2006 2007 2008 2009 2010 2011 2012 2013Benchmark price in local currency
Observed USh/Tonne Pb(loc$) 500,145 508,331 466,871 721,491 904,285 950,120 923,538 1,114,805 1,238,262 Adjusted USh/Tonne Pb(loc$)a 500,145 508,331 466,871 721,491 904,285 950,120 923,538 1,114,805 1,238,262
Reference price at point of competitionObserved USh/Tonne RPowh 746,248 761,454 704,651 1,002,121 1,205,242 1,289,154 1,298,870 1,491,841 1,623,746 Adjusted USh/Tonne RPawh 746,248 761,454 704,651 1,002,121 1,205,242 1,289,154 1,298,870 1,491,841 1,623,746
Reference price at farm gate Observed USh/Tonne RPofg 261,062 262,945 213,176 325,689 417,974 458,750 398,086 463,803 522,997 Adjusted USh/Tonne RPafg 393,470 385,757 349,502 384,777 485,205 537,313 483,464 546,065 652,339
INDICATORS Unit Symbol 2005 2006 2007 2008 2009 2010 2011 2012 2013Price gap at point of competition
Observed USh/Tonne PGowh 165,453 407,014 349,981 770,495 571,645 528,564 868,018 1,566,301 1,291,029Adjusted USh/Tonne PGawh 165,453 407,014 349,981 770,495 571,645 528,564 868,018 1,566,301 1,291,029
Price gap at farm gateObserved USh/Tonne PGofg 38,938 112,055 286,824 325,234 397,776 496,750 1,037,331 1,109,197 920,003Adjusted USh/Tonne PGafg -93,470 -10,757 150,498 266,146 330,545 418,187 951,953 1,026,935 790,661
Nominal rate of protection at point of competitionObserved % NRPowh 22% 53% 50% 77% 47% 41% 67% 105% 80%Adjusted % NRPawh 22% 53% 50% 77% 47% 41% 67% 105% 80%
Nominal rate of protection at farm gateObserved % NRPofg 15% 43% 135% 100% 95% 108% 261% 239% 176%Adjusted % NRPafg -24% -3% 43% 69% 68% 78% 197% 188% 121%
Nominal rate of assistanceObserved % NRAo 15% 43% 135% 100% 95% 108% 261% 239% 176%Adjusted % NRAa -24% -3% 43% 69% 68% 78% 197% 188% 121%
- 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%- - - - - - - - -
DECOMPOSITION OF MDG Unit Symbol 2005 2006 2007 2008 2009 2010 2011 2012 2013International markets gap USh/Tonne IMG 0 0 0 0 0 0 0 0 0Exchange rate policy gap USh/Tonne ERPG 0 0 0 0 0 0 0 0 0Access costs gap to point of competition USh/Tonne ACGwh 0 0 0 0 0 0 0 0 0Access costs gap to farm gate USh/Tonne ACGfg -132,408 -122,812 -136,326 -59,089 -67,231 -78,563 -85,378 -82,262 -129,342Externality gap USh/Tonne EG 0 0 0 0 0 0 0 0 0Total market development gap USh/Tonne MDG -132,408 -122,812 -136,326 -59,089 -67,231 -78,563 -85,378 -82,262 -129,342Market development gap as share of farm gate price % MDG -44% -33% -27% -9% -8% -8% -6% -5% -9%Market development gap as share of adjusted reference price at % MDG -34% -32% -39% -15% -14% -15% -18% -15% -20%
34
