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Devendra Gauchan University of Birmingham, UK and

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)

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Devendra Gauchan University of Birmingham, UK and

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  1. 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

  2. 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

  3. 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

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

  5. 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

  6. 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 .

  7. 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

  8. Map of Nepal and Study Site Terai Bara Ecosite

  9. Research Methods • Baseline household survey of farmers (N=202) • 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

  10. 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

  11. Market Channels & Practices Small scale traders Collection point at Gola-Large-scale traders

  12. 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

  13. Market Shares for Landraces

  14. 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 > 1 whilst for the coarse grain Mutmur LR < 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

  15. 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

  16. 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

  17. 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

  18. 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.

  19. 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

  20. Market Price and Marketing Margin LRs=Mutmur & Basmati; MVs=China-4 & Sabitri

  21. Rice Variety Choices and Market Participation (*)Pairwise T- Test & (+) Chisquare Test significant (P< 5%) level

  22. Wealth, Farm Size, Literacy &Market Participation (*)Pairwise T- Test & (+) Chi-square Test significant (P< 5%) level

  23. Sauce-Economic Status of Growers of Basmati & MVs (*)Pairwise T- Test & (+) Chi-square Test significant (P< 5%) level

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