COORDINATION AND PROFIT MARGINS IN RICE VALUE CHAIN IN NIGER STATE, NIGERIA

Abstract

ABSTRACT The study examined rice value chain in Niger State to ascertain the extent of coordination and profit margins among actors. It determined the benefits accruing to actors and the supports received. Multistage and stratified random sampling techniques were used to select 315 input providers, farmers, collectors, processors, wholesalers and retailers from Agaie, Katcha and Lavun Local Government Areas of the State. Data were collected on socio-economic characteristics, access to value chain support services, value chain relationships, costs and returns as well as constraints faced by the actors. Descriptive statistics and budgetary techniques were used to analyze the data. Results revealed that the actors were in their economically active age (less than 60 years) and married with large household sizes. Vertical coordination was high among the actors but horizontal coordination was weak. All actors realized profits. Profit margin per bag was highest for wholesalers and retailers and lowest for processors. However, the processors earned the highest return on investment (4.63), followed by wholesalers (1.49), farmers (1.35), paddy collectors (1.29) retailers (1.27) and input providers (1.13). While coordination among the actors was strong, value chain support was weak. Therefore, it was concluded that even though there were positive profit margins and returns on investment, opportunities existed for increasing them by providing value chain support in the form of forming and strengthening clusters of actors, providing financial linkages, offering effective extension and advisory services, training actors on business management skills and contract negotiation, providing effective contract enforcement mechanisms, promoting central warehousing and establishing large-scale processing plants.