MATTY DEMONT1, PIETER RUTSAERT2, MAIMOUNA NDOUR1, WIM VEBEKE2
1Africa Rice Center (AfricaRice), Senegal
2Ghent University, Agricultural Economics, Belgium
Urban bias constitutes an important institutional impediment to economic development in poor countries. The neglect of rural areas resulted in severe market failure the past decades. Some African governments now recognise that they should invest in agriculture in order to reverse urban bias but mainly focus on the increase of production. However the equally important objective of investing in quality tailored to consumers so as to reverse urban bias' footprint on end-markets is often forgotten. Senegalese policy makers are now implementing an ambitious food self"=sufficiency programme which focuses almost exclusively on production. Recently, farmers in the Senegal River Valley (SRV) have started marketing enhanced"=quality SRV rice branded as Rival.
Rice imports into Senegal consist almost entirely of broken rice. In international markets, broken rice is considered an inferior product and is therefore much cheaper than whole-grain rice. We conduct Vickrey second price auctions in two major Senegalese end"=markets and show that, while the conventional SRV rice is seen as an inferior product to imported rice, urban consumers are willing to pay price premiums averaging 45FCFA/kg (US$0.09/kg) for quality SRV rice, relative to imported rice. They are further willing to add 17FCFA/kg (US$0.03/kg) for Rival"=labeled rice. These findings suggest that SRV rice is able to compete against imported rice if post"=harvest quality is tailored to consumer preferences. Our data further identifies product familiarity as a significant decision"=making factor in purchasing quality SRV rice, while there is still an 18-47% awareness gap in Senegalese cities. This provides useful information for generic promotion programs that need to accompany food self"=sufficiency programs, which aim to reverse urban bias.
Keywords: Agricultural policy, experimental auction, grain quality, value chain, West Africa