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

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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

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Presentation Outlines

• Background 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

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Background to Study

• Rice-a globally important food crop also for
  Nepal
• Landraces- 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

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Rice Varietal Diversity
Landrace Intermediate
Landrace-Early maturing
Landrace-Late maturing
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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

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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 .

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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

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Map of Nepal and Study Site
Terai
Bara Ecosite
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Research Methods

• Baseline household survey of farmers (N202)
• 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

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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

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Market Channels Practices
Small scale traders
Collection point at Gola-Large-scale traders
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Rice Market and Landraces

• Less than half of the households sell rice
• Farmers grow 53 varieties of which, 33 are LRs
• Two landraces were formally traded in market
• Market recognises only phsically observable
  quality i.e coarse and fine grain types
• Many coarse LRs traded informally in small scale
  irregularly and are of heterogenous grain types
• Fine grain aromatic Basmati LR traded in formal
  market in small scale

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Market Shares for Landraces
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Market Price and Margin Analysis

• Price 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 gt 1 whilst
  for the coarse grain Mutmur LR lt 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
  

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Market Participation Rice Diversity

• Farmers 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 MVs
• Farmers growing marketable landraces (Basmati)
  were better off with less off-farm work

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Varietal Ratings for Attributes

• Inferior physical attribute is valued in market
  but not their superior agronomic attributes
• Basmati rated higher for consumption but low for
  agronomic attributes
• Coarse grained LRs Mutmur rated higher for
  agronomic attributes but lower for consumption

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Disincentives to Landraces

• Landraces face disincentives both from market and
  policy environments
• Market development favouring modern varieties
  (MV) over landraces
• Seed and input subsidies directed to MVs
• Public funded extension and training support
  given for only MVs

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Summary and Conclusions

• Mostly 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.

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Implications for Research Policy

• Value 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

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Market Price and Marketing Margin
LRsMutmur Basmati MVsChina-4 Sabitri
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Rice Variety Choices and Market Participation
()Pairwise T- Test () Chisquare Test
significant (Plt 5) level
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Wealth, Farm Size, Literacy Market Participation
()Pairwise T- Test () Chi-square Test
significant (Plt 5) level
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Sauce-Economic Status of Growers of Basmati MVs
()Pairwise T- Test () Chi-square Test
significant (Plt 5) level