Market-Based Incentives for Conserving Diversity on Farms: The Case of Rice Landraces in Central Tarai, Nepal

Devendra Gauchan

University of Birmingham, UK and In Situ Agrobiodiversity On-Farm Project Nepal (NARC/LIBIRD/IPGRI)

Presented at BIOECON Conference, Venice, Italy, 28-29th August 2003

Presentation OutlinesBackground to study

Market Incentives & Crop Genetic Diversity

Research Methods

Findings: Market share, market channels, price and margin analysis and Market Participation

Summary and conclusions

Implications for policy and research

Background to StudyRice-a globally important food crop & also for NepalLandraces- sources of global crop genetic diversity and livelihood security for farmers in agroecosystems

Markets can provide signals for farmers decisions to maintain or abandon diverse landraces (LR)

Markets if function well, could be cheapest instruments to conserve agrobiodiversity on-farm

However, so far, market studies have focused mainly modern varieties (MV)- studies on market and policy incentives & disincentives to maintain landraces are lacking

Rice Varietal DiversityLandrace-Late maturingLandrace-Early maturingLandrace Intermediate

Market Incentives and Issues Markets may be thin for LRs; Price signals may be limited use to provide incentives to cultivate

Markets may function poorly- farmers produce for own consumption affecting choice of varieties

The attributes that farmers demand for production & own consumption may not be recognised and valued by other consumers

Price premium may not transmit consumer demand for quality when attributes are not transparent

Market & Policy Incentives & Disincentives Technological change, with development of markets provide incentives for Modern Varieties over Landraces.

Input markets biased to MVs with direct seed subsidies or hidden subsidies on other inputs (e.g. fertilizers).

Information problems inherent in new seed technology biased for MVs through public extension & trainings

Asymmetry of information and poor flow of market information in landraces .

Case Study Purpose Advance scientific understanding of the incentives the farmers have to grow landraces as the market environment changes in Nepal

Study premise: If the superior traits of landraces recognised and valued in markets -they could deliver incentives in the form of price premiums

Map of Nepal and Study SiteBara EcositeTerai

Research MethodsBaseline household survey of farmers (N=202)

Key Informant Survey, Focus groups and other Informal methods (e.g. direct observation)

Market channels, market actors & product flow

Marketing costs and Margin Analysis

Market price analysis: Price Differentials between LR and MV and Within LRs

PAGE

Analysing Market Incentives

Market System Analysis

Market Price Analysis

Market Channel Analysis

Market Margin Analysis

Price Signals

Product Flow and Outlet of Cultivars

Margin and Profit Signals

Analysis of Market Incentives

4

2

Market Channels Producer-Sellers

Local market intermediaries: Golas, Bania, Kutuwa, Paldar, Kawarni etc.

Small-scale local processors e.g. custom mills

Large scale trader processors e.g. Millers(de-huskers)

Exporter /importer of milled rice, parboiled rice

Wholesalers of milled rice

Retailers

Local farmer & urban consumers

Market Channels & PracticesSmall scale tradersCollection point at Gola-Large-scale traders

Rice Market and LandracesLess than half of the households sell riceFarmers grow 53 varieties of which, 33 are LRsTwo landraces were formally traded in marketMarket recognises only phsically observable quality i.e coarse and fine grain typesMany coarse LRs traded informally in small scale irregularly and are of heterogenous grain typesFine grain aromatic Basmati LR traded in formal market in small scale

Market Shares for Landraces

Chart2

75

25

Market Share by Rice Types

Modern varieties (75%)

Landraces(25%)

Sheet1

+-----------------------------------------------------------+

BARA-Rice

+--------------------+-------------Modern varieties (75%)Landraces (25%)

Rich Medium Poor Count %Share7525

Percen

t Market Transactionof Landraces

+------------------------+------+------+------+------+------Formal Channel (25%)Informal Channel (75%)

All varieties Bara-RiceVarieties perHouseholdsBara-RiceVarieties perHouseholds2575

1.00.................... 2 8 46 56 28.4%VarietiesRichMediumPoorPercentVarieties /HH

2.00.................... 5 14 34 53 26.9%1284628Rich2572

3.00.................... 7 16 15 38 19.3%25143427Medium8141619

4.00.................... 2 19 4 25 12.7%37161519Poor4634154

5.00.................... 3 4 2 9 4.6%4219413

6.00.................... 1 5 2 8 4.1%53425

7.00.................... 2 1 0 3 1.5%61524

8.00.................... 0 3 0 3 1.5%72102

9.00.................... 1 0 0 1 .5%80301

12.00................... 0 1 0 1 .5%91001

12010

T1...................... 23 71 103 197 100.0%

+-----------------------------------------------------------+

Average No. of rice varieties or landraces/HH by wealth category

+----------------------------------------------------+

Wealth class T2

+--------------------

Rich Medium Poor

+------------------------+------+------+------+------

All varieties

Sum................... 85.00253.00197.00535.00

Mean.................. 3.70 3.56 1.91 2.72

Standard Error of Mean .43 .24 .11 .13

Minimum............... 1.00 1.00 1.00 1.00

Maximum............... 9.00 12.00 6.00 12.00

Valid N............... 23 71 103 197

Landraces

Sum................... 27.00 78.00 39.00144.00

Mean.................. 1.93 1.73 1.22 1.58RichmediumPoorAll

Standard Error of Mean .38 .26 .09 .15Growing only landraces+93107

Minimum............... 1.00 1.00 1.00 1.00Growing only modern varieties +30356651

Maximum............... 6.00 12.00 3.00 12.00Growing both landraces and modern varieties +61622442

Valid N............... 14 45 32 91

+----------------------------------------------------+

Average area (ha) of rice landraces/HH by wealth category

+----------------------------------------------------+

Wealth class T2

+--------------------

Rich Medium Poor

+------------------------+------+------+------+------

All varieties

Sum................... 47.42 69.51 39.67156.60

Mean.................. 2.06 .98 .39 .79

Standard Error of Mean .25 .07 .04 .06

Minimum............... .17 .10 .03 .03

Maximum............... 4.33 3.37 2.00 4.33

Valid N............... 23 71 103 197

KaskiRice

Landraces Number of rice varietires/HH by wealth category

Sum................... 6.57 13.99 5.59 26.15+-----------------------------------------------------------+

Mean.................. .47 .33 .19 .30 WEALTH T2

Standard Error of Mean .11 .03 .02 .03 +--------------------+-------------

Minimum............... .03 .03 .03 .03 Rich Medium Poor Count Count

Maximum............... 1.40 .93 .53 1.40 Percen

Valid N............... 14 43 29 86 t

+------+------+------

Improve variety Count Count Count

Sum................... 40.85 55.52 34.08130.44+------------------------+------+------+------+------+------

Mean.................. 1.86 .82 .36 .71NRVAR

Standard Error of Mean .23 .06 .03 .051.00.................... 2 13 12 27 15.5%

Minimum............... .17 .10 .03 .032.00.................... 7 8 8 23 13.2%

Maximum............... 3.67 2.47 1.93 3.673.00.................... 9 12 10 31 17.8%

Valid N............... 22 68 94 184 4.00.................... 10 12 5 27 15.5%

+----------------------------------------------------+5.00.................... 13 8 1 22 12.6%

6.00.................... 7 8 2 17 9.8%

7.00.................... 5 4 1 10 5.7%

8.00.................... 2 2 0 4 2.3%

9.00.................... 2 0 1 3 1.7%

10.00................... 3 0 0 3 1.7%

11.00................... 2 0 0 2 1.1%

12.00................... 1 0 0 1 .6%

13.00................... 2 0 0 2 1.1%

15.00................... 1 0 0 1 .6%

22.00................... 1 0 0 1 .6%

T1...................... 67 67 40 174 100.0%

+-----------------------------------------------------------+

Average no. of rice varieties/HH by wealth category

+----------------------------------------------------+

WEALTH T2

+--------------------

Rich Medium Poor

+------------------------+------+------+------+------

NRVAR

Sum...................386.00245.00111.00742.00

Mean.................. 5.76 3.66 2.78 4.26

Standard Error of Mean .45 .24 .29 .23

Minimum............... 1.00 1.00 1.00 1.00

Maximum............... 22.00 8.00 9.00 22.00

Valid N............... 67 67 40 174

+----------------------------------------------------+

Average no. of rice landraces/HH by wealth category

+----------------------------------------------------+

WEALTH T2

+--------------------

Rich Medium Poor

+------------------------+------+------+------+------

NRLAN

Sum...................316.00201.00 95.00612.00

Mean.................. 4.72 3.24 2.88 3.78

Standard Error of Mean .44 .22 .33 .22

Minimum............... 1.00 1.00 1.00 1.00

Maximum............... 20.00 7.00 9.00 20.00

Valid N............... 67 62 33 162

+----------------------------------------------------+

anova /variable nrlan by wealth(1,3).

* * * A N A L Y S I S O F V A R I A N C E * * *

Sheet1

000

000

000

000

000

000

000

000

000

000

Rich

Medium

Poor

Sheet2

000

000

000

000

Rich

Medium

Poor

No of Varieties Per Household

No. of Farm Household

Farmers' Cultivation of Rice Varieties

Sheet3

000

000

000

000

000

Farmers Cultivation of Rice Varieties

15 Growing only landraces+

15 Growing only modern varieties +

15 Growing both landraces and modern varieties +

Wealth Groups

Percent of Farmers

0

0

Market Share by Rice Types in Bara

0

0

Market Transaction of Rice Landraces in Bara

Chart1

25

75

Market Transaction of Rice Landraces

Informal Channel (75%)

Formal Channel (25%)

Sheet1

+-----------------------------------------------------------+

BARA-Rice

+--------------------+-------------Modern varieties (75%)Landraces (25%)

Rich Medium Poor Count %Share7525

Percen

t Market Transactionof Landraces

+------------------------+------+------+------+------+------Formal Channel (25%)Informal Channel (75%)

All varieties Bara-RiceVarieties perHouseholdsBara-RiceVarieties perHouseholds2575

1.00.................... 2 8 46 56 28.4%VarietiesRichMediumPoorPercentVarieties /HH

2.00.................... 5 14 34 53 26.9%1284628Rich2572

3.00.................... 7 16 15 38 19.3%25143427Medium8141619

4.00.................... 2 19 4 25 12.7%37161519Poor4634154

5.00.................... 3 4 2 9 4.6%4219413

6.00.................... 1 5 2 8 4.1%53425

7.00.................... 2 1 0 3 1.5%61524

8.00.................... 0 3 0 3 1.5%72102

9.00.................... 1 0 0 1 .5%80301

12.00................... 0 1 0 1 .5%91001

12010

T1...................... 23 71 103 197 100.0%

+-----------------------------------------------------------+

Average No. of rice varieties or landraces/HH by wealth category

+----------------------------------------------------+

Wealth class T2

+--------------------

Rich Medium Poor

+------------------------+------+------+------+------

All varieties

Sum................... 85.00253.00197.00535.00

Mean.................. 3.70 3.56 1.91 2.72

Standard Error of Mean .43 .24 .11 .13

Minimum............... 1.00 1.00 1.00 1.00

Maximum............... 9.00 12.00 6.00 12.00

Valid N............... 23 71 103 197

Landraces

Sum................... 27.00 78.00 39.00144.00

Mean.................. 1.93 1.73 1.22 1.58RichmediumPoorAll

Standard Error of Mean .38 .26 .09 .15Growing only landraces+93107

Minimum............... 1.00 1.00 1.00 1.00Growing only modern varieties +30356651

Maximum............... 6.00 12.00 3.00 12.00Growing both landraces and modern varieties +61622442

Valid N............... 14 45 32 91

+----------------------------------------------------+

Average area (ha) of rice landraces/HH by wealth category

+----------------------------------------------------+

Wealth class T2

+--------------------

Rich Medium Poor

+------------------------+------+------+------+------

All varieties

Sum................... 47.42 69.51 39.67156.60

Mean.................. 2.06 .98 .39 .79

Standard Error of Mean .25 .07 .04 .06

Minimum............... .17 .10 .03 .03

Maximum............... 4.33 3.37 2.00 4.33

Valid N............... 23 71 103 197

KaskiRice

Landraces Number of rice varietires/HH by wealth category

Sum................... 6.57 13.99 5.59 26.15+-----------------------------------------------------------+

Mean.................. .47 .33 .19 .30 WEALTH T2

Standard Error of Mean .11 .03 .02 .03 +--------------------+-------------

Minimum............... .03 .03 .03 .03 Rich Medium Poor Count Count

Maximum............... 1.40 .93 .53 1.40 Percen

Valid N............... 14 43 29 86 t

+------+------+------

Improve variety Count Count Count

Sum................... 40.85 55.52 34.08130.44+------------------------+------+------+------+------+------

Mean.................. 1.86 .82 .36 .71NRVAR

Standard Error of Mean .23 .06 .03 .051.00.................... 2 13 12 27 15.5%

Minimum............... .17 .10 .03 .032.00.................... 7 8 8 23 13.2%

Maximum............... 3.67 2.47 1.93 3.673.00.................... 9 12 10 31 17.8%

Valid N............... 22 68 94 184 4.00.................... 10 12 5 27 15.5%

+----------------------------------------------------+5.00.................... 13 8 1 22 12.6%

6.00.................... 7 8 2 17 9.8%

7.00.................... 5 4 1 10 5.7%

8.00.................... 2 2 0 4 2.3%

9.00.................... 2 0 1 3 1.7%

10.00................... 3 0 0 3 1.7%

11.00................... 2 0 0 2 1.1%

12.00................... 1 0 0 1 .6%

13.00................... 2 0 0 2 1.1%

15.00................... 1 0 0 1 .6%

22.00................... 1 0 0 1 .6%

T1...................... 67 67 40 174 100.0%

+-----------------------------------------------------------+

Average no. of rice varieties/HH by wealth category

+----------------------------------------------------+

WEALTH T2

+--------------------

Rich Medium Poor

+------------------------+------+------+------+------

NRVAR

Sum...................386.00245.00111.00742.00

Mean.................. 5.76 3.66 2.78 4.26

Standard Error of Mean .45 .24 .29 .23

Minimum............... 1.00 1.00 1.00 1.00

Maximum............... 22.00 8.00 9.00 22.00

Valid N............... 67 67 40 174

+----------------------------------------------------+

Average no. of rice landraces/HH by wealth category

+----------------------------------------------------+

WEALTH T2

+--------------------

Rich Medium Poor

+------------------------+------+------+------+------

NRLAN

Sum...................316.00201.00 95.00612.00

Mean.................. 4.72 3.24 2.88 3.78

Standard Error of Mean .44 .22 .33 .22

Minimum............... 1.00 1.00 1.00 1.00

Maximum............... 20.00 7.00 9.00 20.00

Valid N............... 67 62 33 162

+----------------------------------------------------+

anova /variable nrlan by wealth(1,3).

* * * A N A L Y S I S O F V A R I A N C E * * *

Sheet1

000

000

000

000

000

000

000

000

000

000

Rich

Medium

Poor

Sheet2

000

000

000

000

Rich

Medium

Poor

No of Varieties Per Household

No. of Farm Household

Farmers' Cultivation of Rice Varieties

Sheet3

000

000

000

000

000

Farmers Cultivation of Rice Varieties

15 Growing only landraces+

15 Growing only modern varieties +

15 Growing both landraces and modern varieties +

Wealth Groups

Percent of Farmers

0

0

Market Share by Rice Types in Bara

0

0

Market Transaction of Rice Landraces in Bara

Market Price and Margin AnalysisPrice Differentials between LR & MV high and observable for some landraces

The ratio of average farmgate and market price to those of similar MVs for Basmati LR is > 1 whilst for the coarse grain Mutmur LR < 1

Coarse grained landraces considered poor quality in formal market & lower margins and profits

Though profit margins for local Basmati-fine landrace is high, its market is affected by the supply of cheaper Basmati from across the border

Market Participation & Rice DiversityFarmers selling rice have larger farm, more literate and wealthy as compared who donot sell rice

Farmers selling rice grow more no of varieties both LRs and MVs & have larger area in MVs

Higher % of farmers selling rice maintain more combination of LRs & MVsFarmers growing marketable landraces (Basmati) were better off with less off-farm work

Varietal Ratings for AttributesInferior physical attribute is valued in market but not their superior agronomic attributesBasmati rated higher for consumption but low for agronomic attributesCoarse grained LRs Mutmur rated higher for agronomic attributes but lower for consumption

Disincentives to LandracesLandraces face disincentives both from market and policy environmentsMarket development favouring modern varieties (MV) over landracesSeed and input subsidies directed to MVsPublic funded extension and training support given for only MVs

Summary and ConclusionsMostly informal and thin market for landraces

Superior Traits in LRs are not recognized in market -except consumption traits of aromatic varieties

Price signals for many landraces are not generally transmitted from consumer to producers

Farmers growing Basmati landrace are better off than other landraces growers

In contrast to coarse types, market incentives for high quality aromatic Basmati landrace is high.

Implications for Research & PolicyValue addition & market linkage of landraces with high social value is needed

However, further analysis of costs and benefits-before specific mix of policy intervention

Not all the landraces are equal: Market dev. & incentives may favour one landrace to other types

The tacit assumption that the poor who maintains rice landraces needs further empirical work

The genetic contribution of landraces types is unknown; if poor maintain unqiue alleles, then there may be trade off in efficiency vs equity.THANK YOU

Market Price and Marketing MarginLRs=Mutmur & Basmati; MVs=China-4 & Sabitri

Rice Variety Choices and Market Participation(*)Pairwise T- Test & (+) Chisquare Test significant (P< 5%) level

Wealth, Farm Size, Literacy &Market Participation (*)Pairwise T- Test & (+) Chi-square Test significant (P< 5%) level

Sauce-Economic Status of Growers of Basmati & MVs(*)Pairwise T- Test & (+) Chi-square Test significant (P< 5%) level

No. of adults working on-farm

No. of adults working off-farm

Share of total labor working on-farm

Farm size

(ha)

Food sufficiency (mos.)

Highest wealth

rank

Mean

Percent

Grow Basmati

2.75

0.39*

0.89*

1.74*

10.56*

33

Do not grow Basmati

2.67

0.70

0.79

0.71

6.63

7

Grow modern varieties

2.67

0.60**

0.82

0.93**

7.52**

11

Do not grow modern varieties

2.78

1.21

0.71

0.46

5.11

14