Files
Abstract
The number of rice mills in Uganda has increased rapidly during the past decade, presumably
in response to the increasing demand for rice milling services by rice farmers. However,
recent studies show that despite the notable improvements in farmers’ access to milling
services, some farmers still sell rice in unmilled form as paddy, which attracts a lower price
than milled rice (grain). This study was undertaken with the overall objective of examining
why some rice-growing households in Uganda sell milled rice and others don’t, and how this
affects the profitability of rice production.
Data for this study were collected in October 2009, through a survey of 194 rice farmers in
Eastern Uganda by Makerere University and Japanese International Corporation Agency
(JICA). Descriptive statistical methods of data analysis were used to characterize ricegrowing
households by the form in which they sell rice; while the profitability of rice
production was estimated using gross margin analysis and compared using the difference of
mean test between households that sell milled rice and those that don’t. The factors
influencing the proportion of rice sold as grain were analysed using the Tobit regression
model.
The surveyed households were grouped into three categories based on the form in which they
sold their rice; “unmilled”, “milled” and “both”. Most of the sampled households (83%) sold
all or part their rice as grain. On average, households which milled all their rice before selling
were endowed with significantly bigger landholdings and households (family labor) than
their cohorts in the “unmilled” and “both” categories. However, those who sold all their rice
as paddy were faced with significantly longer distance to the nearest mill than households
that milled all or part of their rice before sale.
Profitability analysis show that rice production is associated with positive gross margins,
regardless of the form in which it is sold, implying that rice production is a profitable
venture. Although milling households incurred higher costs, they also had higher gross
margins, implying that selling milled rice is more profitable than selling paddy. The price of
milled rice, volume of harvested rice, household size, membership in rice-farmers’ group
have significant and positive relationships with the proportion of rice sold as grain; while distance to the nearest rice mill is negatively and significantly associated with the proportion
of rice sold as grain.
Farmers should be encouraged and assisted to mill their rice before sale through training and
extension, as well as other interventions that reduce the transactions costs of milling. Such
interventions include; facilitating their access to yield-enhancing inputs to increase harvested
volumes and helping them to market/mill their rice in groups. Also facilitating private
entrepreneurs to set up milling plants closer to farmers through such measures as rural
electrification and reduction of electricity tariffs; or to invest in mobile rice mills through
improvement of the rural road network, for example, would go further to reduce the
transactions costs of accessing milling services and encourage rice-milling before sale.