Abstract
AbstractThe study applies parametric and nonparametric estimation methods to determine hedonic prices of rice quality attributes, and a partial equilibrium model to determine the payoff to investing in quality improvement in five countries in Sub-Saharan Africa. Results indicate that consumers are willing to pay price premiums for head rice, slender grains, peak viscosity, parboiled rice, and rice sold in urban markets. However, they strongly discount amylose content, rice with impurities and imported rice. Investing in quality improvement through amylose content reduction leads to net welfare gains with a benefit-cost ratio of 47.86 and internal rate of return of 90%.
Highlights
The 2008 dramatic rise in global rice prices following export restrictions by India and Vietnam caused food insecurity and subsequently social unrest in several African countries such as Cameroon (Slayton, 2009)
We hypothesize that consumers in SSA pay premiums for greater head rice, greater length-to-width ratio, domestic rice, parboiled rice, and rice sold in urban markets, and they discount chalkiness, high amylose content, and rice with a high proportion of impurities
We test for the null hypothesis of homoskedasticity, first with the Breusch–Pagan–Godfrey test (Breusch and Pagan, 1979; Godfrey, 1978), which is sensitive to the normality of errors assumption, and with White’s general test (White, 1980), which does not assume normality
Summary
The 2008 dramatic rise in global rice prices following export restrictions by India and Vietnam caused food insecurity and subsequently social unrest in several African countries such as Cameroon (Slayton, 2009). Economic theory does not prescribe a functional form specification for it and the widely assumed additive separability of attributes is an econometric construct (Bin, 2000; Costanigro and McCluskey, 2011; Cropper et al, 1988; Halvorsen and Pollakowski, 1981; Jordan et al, 1985; Lisi, 2013; Rosen, 1974) This has elicited considerable interest in the use of nonparametric and semiparametric methods to estimate hedonic price models. The third objective is to examine potential changes in producer and consumer welfare and returns to public investment in upgrading the quality of rice through genetic improvement To this end, we apply the estimated hedonic prices to a partial equilibrium model. The evidence generated is highly relevant to ongoing efforts by national and international rice R&D organizations involved in market intelligence and the development of rice product profiles that meet consumer preferences These efforts, which are led by CGIAR, require proper priority setting given the scarcity of resources for investing in crop improvement.
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