unep country project on trade liberalisation in the agriculture sector and the environment

UNEP Country Project on UNEP Country Project on Trade Liberalisation in the Agriculture Trade Liberalisation in the Agriculture

Sector and the EnvironmentSector and the Environment

Project Leader: Tunji AkandeProfessor, Nigerian Institute of Social and Economic Research

(NISER), Ibadan, Nigeria

1

The rice sector in Nigeria

19 February 2003 Geneva

BackgroundBackground

Nigeria is Sub-Saharan Africa’s largest consumer, producer and importer of rice. Thanks to the population of about 130 million people.

Trade liberalization in the Nigerian rice sector

3

37

18

23

0

5

10

15

20

25

1960-69 1970-79 1980-89 1990-98

kgBackground (cont’d)Background (cont’d)Trade liberalization in the Nigerian rice sector

Per capita consumption is 23kg/annum

4

Background (cont’d)Background (cont’d)Rice is the fastest growing commodity in Nigeria’s food basket.

0%

20%

40%

60%

80%

100%

1961 1965 1969 1973 1977 1981 1985 1989 1993 1997

Sorghum

Millet

Maize

Rice (Milled Equivalent)

Yams

Cassava


5

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Source: PCU

'00

0 Area

Output


•Area under rice is 1.6 million ha and increases at 7.9% per annum•Paddy rice output in 2000 is about 2.9 million tons

6

Background (cont’d)Background (cont’d)

0

0.5

1

1.5

2

2.5

3

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

Source: PCU

(to

ns

)/h

a

Yield is low: 1.7 tons/ha


7

Rice imports averaged about 300,000 in 1995 but now about 1 million metric tons since 2000

Expenditure on rice imports is US$600 million in 2001


0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

quantity

value

8

BackgroundBackground (Cont’d)(Cont’d)

The importance of rice in the Nigerian economy may be summarised as follows:

• A major food commodity with increasing demand (self-sufficiency and food security are social goals)

• An import-substitution crop capable of eliminating imports if domestic production expands


9

Background (Cont’d)Background (Cont’d)Employment for farmers, young school

leavers, processors, millers, transporters and other handlers.

A raw material for agro-allied firms; industrial demand shortages stand at about 500,000 metric tons.

Nigeria has a huge potential for export to the West and Central African sub regions.


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Project Approach and ProcessProject Approach and Process The national institution hosting the study is the

Nigerian Institute of Social and Economic Research (NISER)

NISER is Nigeria’s foremost policy research institute Founded in 1950 Involved in social and economic research in the

following areas: Agriculture and Rural Development Technology Development Economic Development Human Resources Development


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Project Approach and Project Approach and Process (Cont’d) Process (Cont’d)

Physical Development Social Development Political Development Macroeconomic and Strategic Modelling Rural Policy analysis and Management Transport Policy Analysis Indigenous Knowledge System


12

Project Approach and Process Project Approach and Process (Cont’d)(Cont’d)

Each is a department or unit and has full complement of required disciplines. The knowledge base available at NISER permits interdisciplinary research activities. NISER is headed by a Director-General.


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Project TeamProject Team Tunji Akande – Professor/Agricultural Economist,

Agriculture and Rural Development Policy Analysis – Project Leader

Femi Olokesusi – Professor, Environment and Natural Resource Management

Ms Bola Akanji – Snr. Research Fellow, Agricultural Economist, Rural Sociology, Gender Analysis

Godwin Akpokodje – Research Fellow, Economist, Quantitative Analysis and Modelling

Jire Adeoye – Reader, Soil Scientist, (University of Ibadan/IITA)


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Stakeholders’ ApproachStakeholders’ ApproachProject Steering Committee Members:NISER (Chair of the committee)West African Rice Development Association (WARDA)University of Agriculture, AbeokutaPremier Seeds, ZariaFederal Ministry of EnvironmentFederal Ministry of Agriculture and Rural DevelopmentFederal Ministry of CommerceCentral Bank of NigeriaNational Planning CommissionNational Cereal Research InstituteInstitute of Agricultural Research and TrainingRice Producers Association of NigeriaRice Millers Association of Nigeria


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Project objectivesProject objectives1. Develop in-country methodologies

2. Characterize the Nigerian rice sector (production, processing, marketing, consumption and policy)

3. Conduct integrated assessments of trade liberalisation for the rice sector

4. Develop policy packages

5. Provide financial implications of policy package

6. Identify and propose agencies and institutions to carry out the implementation.

7. Develop capacity for analysing and implementing environment-friendly policies and programmes


Development of In-country Development of In-country Methodology Methodology

• Methodology developed is both participatory and inclusive, as all stakeholders made an input. This is to ensure that the findings and recommendations emanating from the project have wide acceptance and implementation in policy cycles.

• Interactions with stakeholders are in the form of meetings, consultations and workshops.


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Development of In-country Methodology Development of In-country Methodology

A primary survey was conducted in 3 rice-producing regions, leading to:-

Technical analysis of soil, water and physical environment Economic, social and environmental impact analysis• Soil analysis indicates the concentration of chemical

residues and effects on biodiversity of rice producing areas• Socio-economic analysis focuses on the economics of rice

production, processing, trade and consumption; and considers issues of profitability, household food, self-sufficiency, enterprise combination, etc


Integrated Assessment of Integrated Assessment of Impacts of Trade Liberalization Impacts of Trade Liberalization

and WTO AoAand WTO AoA

Trade-related policies affecting the rice sector:

• Trade policy (tariff, quantitative restrictions, import license, outright bans, establishment/abolition of commodity boards, etc)


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Integrated Assessment of Impacts of Integrated Assessment of Impacts of Trade Liberalization and WTO AoATrade Liberalization and WTO AoA

Exchange rate policy-overvaluation of domestic currency prior to liberalisation measures;

Floating exchange rate since liberalisationFiscal policy/government investment-Direct

public spending; provision of credit by public agencies; direct credit by Central Bank of Nigeria; and several financial and trade-related assistance


20

Analytical tools selected are:Analytical tools selected are:

Gross Margin Analysis (profitability)Summary Statistics (frequencies,

means, standard deviations, etc)Policy regime analysisRegression Analysis


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Environmental ImpactsEnvironmental ImpactsTrade liberalization in the Nigerian rice sector

Rice Life Cycle Stages Inputs Environmental Effects

1. Establishment of Rice Farm - Land preparation

2. Maintenance of mature rice farm - Weed, pest and

disease control

Slashing, bush burning

Use of agrochemicals

Deforestation, biodegradable waste

Damage to biodiversity, human health, etc.

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Environmental Impacts (contd)Environmental Impacts (contd)Trade liberalization in the Nigerian rice sector

Rice Life Cycle Stages

Inputs Environmental Effects

3. Harvesting

4. Threshing

Manual

Manual

Grit and paddy straw create waste management problem

Grit, paddy husks create waste management problem. Rice husk particles may cause eyesight and breathing problems

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5. Processing

- Parboiling

- Milling

- Disposal of rice husk/dust

Soaking paddy in water and heated

Hand pounding and/or automated milling system

Burning

Smoke, soot, air pollution and greenhouse gases

Health problems

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6. Distribution and marketing

7. Consumption

Transportation Soil compaction, air pollution from vehicular exhaust fumes

Beriberi

25

Environmental ImpactsEnvironmental ImpactsMain negative environmental impacts identifiedIncreased land conversion to rice farms and

expansion into marginal landsDeforestation and land degradationLoss of bio-diversityEmission of air pollutantsSalinization and soil nutrient degradationContribution to greenhouse gases and climate

changeHuman health effects


26

Social and Economic ImpactsSocial and Economic Impacts

Positive ImpactGenerates substantial income to rice

farmersRice production is highly profitableIncreasing rate of commercialization

among smallholder producersSavings in foreign exchange as local

production substitute for imports


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Social and Economic Impacts (Contd)Social and Economic Impacts (Contd)Competitive production and efficiency as

local rice producers compete with importEmployment opportunities for school

leaversStem rural-urban migrationPoverty reductionImproved nutrition


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Social and Economic Impacts (Contd)Social and Economic Impacts (Contd)

Negative ImpactImports dampens local

productionHuge import expenditureHealth problemsGender disparity


Valuation of the effectsValuation of the effects

This is at the conceptual stage


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Combined Environmental, Economic Combined Environmental, Economic and Social Costsand Social Costs

Yet to be conducted satisfactorily


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Emerging policy issueso The need for distributional equity in

the benefits of trade liberalization in the rice sector

o The need to explore alternative uses for rice rather than human consumption

Development of Policy Package Development of Policy Package Trade liberalization in the Nigerian rice sector

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The need to address the structural and technological deficiencies in rice production systems

The need to combat diseases asociated with rice production

Development of Policy Package Development of Policy Package


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• Need to promote rice production as a strategy for poverty alleviation

• Further articulation and implementation challenges will be examined

Development of Policy Package Development of Policy Package


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Project Experience: Project Experience:

Main Conclusions and Steps ForwardMain Conclusions and Steps Forward …Rice is, perhaps, the commodity

driving the Nigerian food economy today

Nigeria plans to double output by 2005!

100% tariff has raised the price of rice by 60% since December, 2002


35

Project Experience: Project Experience:

Main Conclusions and Steps ForwardMain Conclusions and Steps Forward …Rice production is associated

with costs and benefitsBenefits include food supply,

income, employment, etc.Costs are associated with

environmental degradation


unep country project on trade liberalisation in the agriculture sector and the environment

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