Browsing by Author "Nkurunziza, Benjamin"

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    Determining Rwanda's comparative advantage in rice : Eastern Province case study
    (Stellenbosch : Stellenbosch University, 2015-12) Nkurunziza, Benjamin; Traub, Lulama; Stellenbosch University. Faculty of Agrisciences. Dept. of Agricultural Economics.
    ENGLISH ABSTRACT: As agriculture remains the economic engine of rural Africa, reducing poverty in Africa will depend largely on stimulating agricultural growth. To realize this growth, the efficient allocation of a country’s scarce natural resources becomes a prerequisite. Rwanda is endowed with extensive wetlands with a high potential for rice production due to its hilly topography, abundant rainfall, and warm temperatures. However, many of these wetlands remain uncultivated despite the prevailing rice deficit in the domestic and regional markets. Over the past decade, Rwanda has increasingly become dependent on regional and global markets for rice, as domestic supply is unable to keep pace with the growing domestic demand. This production deficit has limited the potential gains that farmers and the nation could realize in the form of income and foreign exchange earnings. The main objective of this study is to determine Rwanda’s comparative advantage in rice and to identify constraints limiting efficiency. To achieve this objective, this study utilizes the Policy Analysis Matrix (PAM) to measure the comparative advantage in rice production and the level of inefficiencies within the rice subsector in the Eastern Province of Rwanda. The key findings of the analysis demonstrate that this province has a comparative advantage in rice. However, within the sample, 68 % of rice farmers’ cooperatives, cultivating rice on 25% of the total area under study, have no comparative advantage. In terms of net welfare gains, due to market distortions, domestic rice prices are artificially high, which creates a deadweight loss in the rice market. In particular, the protectionist policies (i.e. rice import tariffs and farm inputs subsidization) induce the private farm profit to outweigh the social farm profit. This abnormal profit allows rice production to become financially profitable even where there is a comparative disadvantage. On the demand side, although the domestic price of imported rice in Rwanda is slightly higher than the local rice price, the majority of consumers prefer imported rice to local rice, due to its long grain shape, aroma, and good quality. The low domestic demand for bold and short grain rice, which is cultivated by 70 % of Rwandan rice farmers, limits domestic rice producers’ market share. Given the study’s findings, the policy recommendations are threefold. The first involves technology dissemination and adoption. In order to improve the domestic rice production capacity and competitiveness, without compromising efficiency, it is imperative for rice farmers to adopt labour saving technologies. This technology adoption would allow for an increase in the area on which rice can be grown efficiently, due to a reduced social production cost. The second recommendation is that government should encourage research on the identification of aromatic and long grain rice varieties that can adapt to Rwanda’s agroecology, thereby meeting consumers’ demand preferences. Finally, though rice import tariffs protect domestic farmers against foreign competition, these policies decrease consumers’ welfare due to a reduction in the range of rice consumed in the domestic market. This study recommends the government to facilitate exportation of local rice in regional markets, and reduce rice import barriers. This intervention would benefit both farmers and consumers, while stabilizing the trade balance.