Determining Rwanda's comparative advantage in rice : Eastern Province case study

[摘要] ENGLISH ABSTRACT: As agriculture remains the economic engine of rural Africa, reducing poverty in Africa willdepend largely on stimulating agricultural growth. To realize this growth, the efficient allocationof a country's scarce natural resources becomes a prerequisite. Rwanda is endowed withextensive wetlands with a high potential for rice production due to its hilly topography, abundantrainfall, and warm temperatures. However, many of these wetlands remain uncultivated despitethe prevailing rice deficit in the domestic and regional markets.Over the past decade, Rwanda has increasingly become dependent on regional and globalmarkets 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 inthe form of income and foreign exchange earnings.The main objective of this study is to determine Rwanda's comparative advantage in rice and toidentify constraints limiting efficiency. To achieve this objective, this study utilizes the PolicyAnalysis Matrix (PAM) to measure the comparative advantage in rice production and the level ofinefficiencies within the rice subsector in the Eastern Province of Rwanda. The key findings ofthe analysis demonstrate that this province has a comparative advantage in rice. However, withinthe sample, 68 % of rice farmers' cooperatives, cultivating rice on 25% of the total area understudy, 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 thesocial farm profit. This abnormal profit allows rice production to become financially profitableeven where there is a comparative disadvantage.On the demand side, although the domestic price of imported rice in Rwanda is slightly higherthan the local rice price, the majority of consumers prefer imported rice to local rice, due to itslong grain shape, aroma, and good quality. The low domestic demand for bold and short grainrice, 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 involvestechnology dissemination and adoption. In order to improve the domestic rice productioncapacity and competitiveness, without compromising efficiency, it is imperative for rice farmersto adopt labour saving technologies. This technology adoption would allow for an increase in thearea on which rice can be grown efficiently, due to a reduced social production cost. The secondrecommendation is that government should encourage research on the identification of aromaticand long grain rice varieties that can adapt to Rwanda's agroecology, thereby meetingconsumers' demand preferences. Finally, though rice import tariffs protect domestic farmersagainst foreign competition, these policies decrease consumers' welfare due to a reduction in therange of rice consumed in the domestic market. This study recommends the government tofacilitate exportation of local rice in regional markets, and reduce rice import barriers. Thisintervention would benefit both farmers and consumers, while stabilizing the trade balance.

[发布机构] Stellenbosch University