AWOTIDE, B.A. , A. DIAGNE, T.T. AWOYEMI,

T. NAKELSE, and O.S. OJO

A contributed paper Submitted for Presentation at

the 2nd International Conference on Sustainable

Development in Africa, Dakar, Senegal,

26-27 November, 2015 

Does Seed Certification Impact Smallholder Farmers’ Allocative Efficiency and Willingness-To-Pay for

Certified Improved Rice Seed? Evidence from Nigeria.

INTRODUCTION

Rice is a crop of major economic importance across the globe (Wailes, 2003; Griswold, 2006)

It accounts for one in five calories consumed worldwide-FAO, (2006)

Among the major staple foods in SSA, rice consumption is growing most rapidly (Diagne, 2010).

RICE CONSUMPTION PER CAPITA

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Year

0

5

10

15

20

25

30

Year

Ric

e c

onsum

pti

on P

er

capit

a

Source: Underlying data from FAO, 2012

PADDY PRODUCTION, AREA HARVESTED AND FERTILIZER CONSUMPTION

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Production_Paddy ('000MT) Harvested_Area ('000HA) Fertilizer Consumption ('000MT)

Years

Source: Underlying data from USDA, 2012

IMPORT QUANTITY: 1960-2011

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

0

500

1000

1500

2000

2500

3000

3500

4000

Years

Import

qauti

ty (

'000t)

Underlying data from USDA, 2012

According to Morris et al., (1999), of all the inputs required for agricultural production, none has the ability to affect productivity more than improved seeds:

Almost 60 improved rice varieties have been developed and disseminated

SEED CERTIFICATION AND QUALITY IMPROVEMENT

A legally sanctioned system for quality control of seed multiplication and production.

Carried out to guarantee the quality of the seed and to ensure genetic identity and purity.

A quality assurance system whereby seed intended for marketing is subject to official control and inspection.

At its simplest, the system certifies that a sack/bag, packet or box of seed contains what is written on the label and that the seed was produced, inspected and graded, in accordance

OBJECTIVES OF SEED CERTIFICATION

to supply high quality seed to farmers and other growers:

true to identity

high in purity and germination capacity

free from certain pests and diseases

OBJECTIVES OF THE STUDY

To access the farmers WTP for the certified improved seed

Empirically determine the impact of seed certification on WTP and farmers’ allocative efficiency

DATA AND SAMPLING FRAMEWORK

Study area: Nigeria

Three states: Niger (Lowland), Osun (Upland), Kano (Irrigated)

Data collected: 2008 (Baseline) and 2010 (post intervention)

600 rice farming households : treated and control group

The control group (160 farmers) : received up to 20kg certified improved rice seed

Map of Nigeria Showing the Study Area

Study Area: Osun, Kano, and Niger

ANALYTICAL TECHNIQUES

WTP-single bounded referendum-style binary choice format –Hanemann (1984)

Determinants of WTP: Probit Model -(1 if WTP>0 and 0 otherwise).

-

Allocative efficiency: stochastic frontier model (Frontier 4.1)- (Coelli, 1996)

Impact Assessment: Local Average Treatment Effect (LATE) technique

IV- Random assignment (Katz et al., 2001; Galasso et al., 2004; and Ravallion, 2005.

Results and Discussion

SOCIO-ECONOMIC CHARACTERISTICS OF THE RESPONDENTS BY TREATMENT STATUS

Characteristics Treated(n=160)

Control(n=403)

Total(n=563)

DifferenceTest

Socio-demographic VariablesMale farmers (%)Female farmers (%)Average age of household head Native of the study area (%)Number of years of residence in the villageAverage household sizeAgriculture as main occupation (%)Farmers with secondary occupation (%)

 82.4317.5745.3079.0535.008.5094.5980.41

 80.0020.0045.0090.1242.008.0087.7191.81

 19.3680.6445.0087.2140.008.0089.5288.81

 0.0000.0000.460.0006.57***0.570.070.11***

Human Capital Variables No formal education (%)Primary school education (%)Secondary school education (%)Tertiary school education (%)Average number of years of educationExperience in lowland rice farming (%) Experience in upland rice farming (%)Experience in irrigated rice farming (%)Attended vocational training (%)Years of experience in upland rice farmingAverage years of experience in lowland rice farmingAverage years of experience in irrigated rice farming

 20.2714.8614.866.766.0061.4931.7631.0833.785.6011.0031.0831.08

 35.6614.227.472.414.0088.4330.1210.848.197.0019.0010.8410.84

 31.6214.399.413.554.6081.3530.5516.1614.926.6516.953.033.03

 0.15***0.0060.070.0432.050.29***0.0160.200.261.43*7.99***3.693.69

Legend: Significance level **P<0.05, *P<0.10, *** P<0.01.

SOCIO-ECONOMIC CHARACTERISTICS OF THE RESPONDENTS BY TREATMENT STATUS CONDT.

Institutional VariablesContact with extension agents (%) Relationship with NCRI (%)Relationship with ADP (%)Relationship with AfricaRice (%)

 95.9514.1978.383.38

 46.9924.3420.9616.87

 59.8621.6736.0613.38

 0.490.10***0.570.13***

Social Capital Variables Member of any organisation (%) Post of responsibility in any organisation (%) Attended training organized by the organisation (%)

 54.0531.0851.35

 23.1918.6020.96

 31.3221.8951.35

 0.310.120.30

Legend: Significance level **P<0.05, *P<0.10, *** P<0.01. Source: field survey, 2010.

Legend: Significance level **P<0.05, *P<0.10, *** P<0.01.

DESCRIPTIVE ANALYSIS :FARMERS’ WILLINGNESS-TO-PAY CERTIFIED IMPROVED RICE SEED

Willingness-To-Pay Treated Control Pooled data

Proportion that are willing to pay 58.00 42.00 67.00

WTP by Gender Males (%) Female (%)

 43.0038.00

 76.0077.00

 67.0068.00

WTP by Poverty StatusPoorNon-poor

 32.0048.00

 61.5890.00

 56.0077.00

Educated Farmers (%) 35.00 74.00 62.00

Farmers that have contact with extension agents (%)

38.00 95.00 63.00

Mean WTP( N/kg) 162.29 158.77 156.80

This value (N156.80/kg)suggests that, the farmers may not buy the seed if the price per kilogram is higher than ₦156.80/kg and will be willing to buy if the cost is less than this amount.

DETERMINANTS OF WTP FOR CERTIFIED IMPROVED RICE SEED

Variable Coefficient Stand. error t- statistic Marginal Effects

Bids( Starting value) -0.010*** 0.002 -6.71 -0.004

Age (year) -0.456 0.357 -1.28 -0.182

Gender (male=1) 0.313* 0.175 1.79 0.124

Household size (number) 0.058*** 0.018 3.17 0.023

Education (Year) 0.010 0.011 0.93 0.004

Credit (yes=1) 0.149* 0.078 1.91 0.059

Received certified seed 0.767 0.775 0.99 0.297

Perception about seed quality 0.089 0.769 0.12 0.035

Income 0.288*** 0.091 3.17 0.115

Membership of association (yes=1) 0.449*** 0.162 2.77 0.176

Secondary occupation (yes=1) -1.451*** 0.257 -5.64 -0.451

Distance to seed source (Km) -0.001*** 0.015 -6.59 -0.258

Constant 7.64***   3.93 0.000

Number of observation

Log Likelihood

LR (Chi2(14)

Prob>chi2

Pseudo R2

540.00

-263.53

221.07***

0.000

0.30

     

The result shows that the model has a good explanatory power

IMPACT OF SEED CERTIFICATION ON WTP FOR CERTIFIED IMPROVED RICE SEED

Estimation Parameter Robust Std. Error Z-value P>|Z|

Mean Difference

Observed DifferenceTreatedControl

23.718***142.37***118.66***

3.263.120.93

7.2845.60127.80

0.0000.0000.000

Local Average Treatment Effect Estimation (LATE)

LATE by WALD estimatorsLATE by LARF

26.3433.41***

228.4963.53 

0.129.46

0.9080.000

LARF Estimates by Gender, Poverty and State

Impact by GenderMale Female

 26.69***61.38***

 3.697.16

 7.228.57

 0.0000.000

Impact by Poverty StatusPoorNon-poor

 34.75***32.36***

 4.13.71

 8.328.72

 0.0000.000

Impact by StateUplandIrrigatedLowland

 169.54***36.37***17.59***

 14.744.424.04

 11.518.234.36

 0.0000.0000.000

SUMMARY STATISTICS OF THE VARIABLES IN THE STOCHASTIC FRONTIER MODEL

Variable Mean % of Total Cost

Average total cost of production (TC) N 42289.29 -

Average Cost of seed 6386.55 15.10

Average cost of fertilizer 15166.61 35.86

Average cost of herbicide 6889.64 16.29

Average cost of labour 13916.19 32.90

Average age of farmers (year) 45.00 -

Average educational level (years) 5.00 -

Average household size (number) 8.00 -

Average farming experience (years)Contact with extension agents(yes=1)Gender(male=1)

20.000.360.81

-

MAXIMUM-LIKELIHOOD ESTIMATES OF PARAMETERS OF THE COBB-DOUGLAS FRONTIER FUNCTION FOR

SMALLHOLDER RICE FARMERS IN NIGERIA

Variable Coefficients Standard Error t-ratio

General Model ConstantCost of seedCost of fertilizerCost of herbicideCost of labour

 0.601***0.299***0.182***0.311***0.016

 0.0410.0210.0090.0090.001

 14.6125.8918.6631.891.59

Cost inefficiency ModelContact with extension agents(yes=1)Gender (male=1)Age (years)Farming experience (Years)Household size(Number)Formal education (Years)

 0.556***-0.278***-0.010***-0.012***0.053***0.009***

 0.0420.0330.0020.0010.0040.002

 13.83-8.43-4.56-9.1913.754.44

Variance ParametersSigma-squareGammaLog likelihood function

 0.1090.989726.40

 0.0040.001

 30.00875.00

Seed, Fertilizer and herbicide are important inputs in rice production in Nigeria.

Female farmers are more cost efficient than the male counterpart

Distribution of Allocative efficiency among the Farmers

Efficiency level Frequency Relative efficiency (%)

1.0-1.09 455.00 80.82

1.1-1.19 69.00 12.26

1.2-1.29 28.00 4.97

1.3-1.39 7.00 1.24

1.4-1.66 4.00 0.71

Total 563.00 100.00

Maximum 1.66  

Minimum 1.00  

Mean

Standard Deviation

1.07

O.074

 

The mean allocative efficiency of the farms was estimated as 1.07: an average rice farm in the area has costs that are about 7% above the minimum defined by the frontier.

Impact of Seed Certification on Allocative Efficiency

Estimation Parameter Robust Std. Error Z-value P>|Z|

Local Average Treatment Effect Estimation (LATE)

LATE by WALD estimatorsLATE by LARF

0.0230.025***

1.860.009

0.012.78

0.9900.005

LARF Estimates by Gender, Poverty and State

Impact by GenderMale Female

 0.0230.031

 0.00970.023

 2.351.31

 0.0190.189

Impact by Poverty StatusPoorNon-poor

 0.1170.0344

 0.01040.011

 1.133.26

 0.2580.001

Impact by StateUpland IrrigatedLowland

 0.0340.0210.024

 0.0100.0110.009

 3.371.912.50

 0.0010.0560.012

Determinants of Allocative Efficiency among the Rice Farmers in Nigeria

  Coefficient

Std. Error t-statistics P>|t|

Coefficients of the Non-interacted Terms  

Received certified seed 0.049* 0.029 1.70 0.089

Age 0.001** 0.000 2.56 0.011

Gender 0.014 0.009 1.47 0.143

Household size 0.003*** 0.001 3.51 0.000

Education -0.001 0.001 -0.22 0.826

Years of experience in upland farming -0.002*** 0.001 -3.96 0.000

Years of experience in lowland farming 0.001 0.001 0.82 0.412

Farm size -0.003 0.002 -1.14 0.256

Coefficient of the Interacted Terms  

Age -0.001 0.001 -1.54 0.124

Gender -0.024 0.018 -1.33 0.185

Household size -0.002 0.002 -0.91 0.362

Education 0.002* 0.001 1.74 0.083

Years of experience in upland farming 0.003*** 0.001 3.18 0.002

Farm size 0.001 0.004 0.16 0.876

R-squaredAdjusted R-squaredWald test for the coefficient of the non-interacted termsWald test for the coefficient of the interacted terms

0.990.9954***3.07***

     

SUMMARY AND CONCLUSION

The results of the analysis reveal that mean WTP was N156.80/kg . The male-headed households expressed higher WTP for the seed certified seed than the female counterparts.

Headed households and as household size increases the probability that farmers would be willing to pay for the seed quality improvement also increases

Access to credit significantly influenced the farmers’ WTP for the seed quality improvement.

The study reveals further that the higher the income of the farmers, the more they are likely to answer yes to the offered sum in the choice question.

The result of the LATE by LARF which is the only one that has any causal interpretation in this study reveals that the amount the farmers are willing to pay for the seed quality improvement increased by N33.4 as a result of the access to certified seed through the seed voucher.

Furthermore, seed certification has a higher impact on the amount the poor farmers (N34.80) are willing to pay than the non-poor (N 32.40) counterparts

Summary and Conclusion CONTD.

POLICY RECOMMENDATIONS

Inclusion of seed certification as part of the agricultural development efforts in Nigeria

The seed certifying agency should be properly funded and monitored to ensure that improved seed released by the breeders are adequately certified before handling them down to the farmers

Farmers access to good quality certified seed should be enhanced through the seed subsidy program and other strategies

Rural farmers should be educated more on the seed handling techniques to reduce the use of low quality seed

THANK YOU