Reversing urban bias in African rice markets: A review of 19 National Rice Development Strategies

Global Food Security 2 (2013) 172–181

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Reversing urban bias in African rice markets: A review of 19 National Rice Development Strategies Matty Demont a,b,n a b

Africa Rice Center (AfricaRice), Saint-Louis, Senegal International Rice Research Institute (IRRI), Los Baños, Laguna, Philippines

art ic l e i nf o

a b s t r a c t

Article history: Received 30 November 2012 Accepted 2 July 2013

Economic development in poor countries is often hampered by urban bias. Partly as a result of historical urban bias, African countries have become heavily dependent on food imports with concomitant risks for food security as witnessed during the 2008 food crisis. African governments now recognize that they should reverse urban bias by investing in agriculture in order to decrease food import dependency. However, they typically focus primarily on supply-shifting investments that may be insufficient to render domestically produced food competitive, particularly in import-biased food markets. We review the national rice development investment strategies of 19 African countries and argue that in order to reverse urban bias in African rice markets, more resources will need to be allocated to value-adding and demand-lifting investments. & 2013 Elsevier B.V. All rights reserved.

Keywords: Food sovereignty Agricultural policy Value chain upgrading Quality Competitiveness Standard

1. Introduction In May 2008, world rice prices tripled in just a few months to reach 30-year, inflation-adjusted highs (Demont and Neven, 2013). Four months later, the price spike echoed in northern Senegal where it doubled the prices of two competing products on the market, i.e. imported broken rice and locally produced rice (Fig. 1). However, in September 2008 as soon as the fresh harvest from the hinterlands arrived on the market, local rice prices suddenly plummeted back—almost towards their pre-crisis level—and closed the year with a record price discount of 40%. What happened? In April 2008, Senegal responded to the food crisis by launching an ambitious National Rice Development Strategy (NRDS). The NRDS aimed at achieving self-sufficiency in rice by 2015, notably by expanding area and encouraging intensification of rice production in the Senegal River Valley (SRV) (Diagne et al., 2013). The problem is that similarly to past programs, the NRDS overly relied on productivity and when rice farmers were massively bringing the rice surplus generated by the program to market, the market was temporarily flooded as there was no commensurate increase in demand for local rice, resulting in a steep decline of prices (Demont and Rizzotto, 2012). Three years later, despite the program, Senegalese rice production still only satisfies 39% of domestic demand (ANSD, 2011).

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This classic “technology treadmill” effect (Cochrane, 1958) is not unique for rice production nor for Africa. Barrett (2008) argues that supply-shifting investments will only become profitable if there is a market for absorbing the surplus created. In poorly connected markets, increased production volumes might not reach broader markets, and local market flooding will cause adverse effects through rapidly falling prices. This may generate povertyreducing effects for local rice consumers in the short run, but it may jeopardize farmers' medium and long-run incentives to expand and intensify (Demont and Rizzotto, 2012). In better integrated markets, returns to increased output diminish less rapidly than in locally segmented markets characterized by more price inelastic demand (Barrett, 2008). But why was the temporary surplus not timely absorbed by consumers in times of food crisis? The problem is that Senegalese policy makers faced the remaining effects of past “urban-biased” policies in their rice markets. For more than half a century, they had attempted to satisfy urban dwellers—their most important voters—through cheap imports of broken rice rather than through sustained investment in the domestic rice sector in order to feed urban populations with domestic rice. As a result, Senegalese consumers have become used to the look and texture of imported broken rice, have assimilated it in their consumption patterns and even have developed a marked preference for it; visualized in Fig. 1 by the price premiums they are paying for imported relative to local rice (Demont et al., 2013a). Urban bias—a term coined by Lipton (1977)—is conceptualized by Bezemer and Headey (2008) as the systemic bias against agriculture and the rural economy in governments' policies and allocation of developmental resources. Urban bias is believed to be

M. Demont / Global Food Security 2 (2013) 172–181

US¢/kg

one of the largest institutional impediments to the competitiveness of food sectors in developing countries around the world. In Africa, consumers have been gradually shifting their consumption patterns from traditional coarse grains (maize, millet and sorghum) to non-traditional grains (wheat and rice) due to urbanization. Urban working women have less time for food preparation and have a tendency toward “fast food” like rice (Reardon, 1993). Urban-biased policies contributed—and continue to contribute—to this trend by encouraging food imports and their focus on rice is primarily driven by a desire to satisfy the demands of growing urban populations for affordable food rather than as a goal to improve the livelihoods of rural producers (Moseley et al., 2010). Moreover, food imports are also an important source of income for the state (Laroche Dupraz and Postolle, 2013). Since the 1960s, African appetite for rice has increased at an average annual rate of 4.4%, i.e. twice as fast as in the world as a whole, to reach a total consumption level of 20 million tons in 2009 (Rutsaert et al., 2013). Between 2000 and 2010, rice demand growth in Sub-Saharan Africa (SSA) attained 4.6% per year, i.e. nearly twice the 2.6% rate of population growth over that same period, suggesting not only an increase in the number of rice consumers, but also an increase in per-capita consumption (USDA, 2012b). Africa's rice sector has not been able to match this growth in demand and as a result it has become increasingly dependent

105 100 95 90 85 80 75 70 65 60 55 50 45 40 Sep-2007

Sep-2008

Sep-2009

Sep-2010

Sep-2011

Sep-2012

Month/year Imported broken rice

Local rice

Fig. 1. Annual retail prices of imported and local rice in Saint-Louis, Senegal from 2007 to 2012 harvests. Source: CSA (2012).

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on imports (Seck et al., 2010). Since the sixties, the share of imports in rice consumption in sub-Saharan Africa has steadily increased by 2.2% per year to reach 43% in 2009 (Fig. 2). In particular, because of urban bias, rice markets in big urban consumption centers endowed with a port have become heavily import-biased and, as a result, urban consumers' preferences have become biased towards imported rice. With such high dependence on imports strengthened by import-biased preferences, urbanbiased African countries are highly exposed to international market shocks. This has grave consequences for their food security and political stability, as witnessed during the 2008 food crisis (Becker and Yoboué, 2009; Laroche Dupraz and Postolle, 2013; Moseley et al., 2010; Seck et al., 2010). Urban-biased policies have left their footprint on some African rice markets; i.e. imported rice has established the quality standards against which domestic rice now has to compete. However, African rice often fails to compete with imports because of poor harvesting, threshing, drying and storing practices at the farm and outdated processing technologies and infrastructure which is insufficiently equipped for producing local rice at similar quality standards as imported rice (Seck et al., 2010). As a result, locally milled rice is generally of poor quality and mainly consumed in rural areas. It often tends to be contaminated with stones and dust. The consequence is that local rice is differentiated from imported rice and suffers from a bad image in cities (EUCORD, 2012). In addition, some consumers attitudinally prefer imported rice for reasons that go beyond quality, notably because of its additional dimension of “foreignness” that contributes to attitudinal liking for status-enhancing reasons (Batra et al., 2000; EUCORD, 2012; Opoku and Akorli, 2009). Urban-biased African countries hence face major challenges in reversing urban bias in rice markets. By ignoring the integral components further downstream in the supply chain like processing and marketing, many of their past attempts solely based on productivity have failed (Chaléard et al., 2002; Demont and Rizzotto, 2012; Lançon et al., 2004; USAID, 2009b). One of the major challenges for Africa is therefore to produce sufficient and affordable rice that meets the preferences of its fast-growing and increasingly urbanized population; and which can compete with imported rice not only in terms of price, but also in terms of both intrinsic (cleanliness, homogeneity, sensory attributes, etc.) and extrinsic quality attributes (presentation, packaging, branding, image, etc.). The question now becomes how that challenge can be met.

65% 60% 55% 50% 45% 40% 35% 30% 25% 20%

1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

15%

Fig. 2. Rice import dependency (share of imports in rice consumption) in sub-Saharan Africa, 1961–2009. Source: FAO (2013).

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M. Demont / Global Food Security 2 (2013) 172–181

2. Investing in the African rice sector Although grown efficiently by small farmers, a successful rice economy needs sophisticated engagement from governments to develop the economies of scale and scope that permit a low-cost rice system. R&D and extension, rural infrastructure, a stable marketing environment, and a broad base of consumer demand all depend to a greater or lesser degree on effective government investments and policies (Aker et al., 2011). None of these elements, on their own, can do the job. Price policies alone, for example, did not achieve their goal of reversing urban bias, as evidenced by a large body of research reviewed by Demont et al. (2013a). Analogously to Laroche Dupraz and Postolle (2013), we follow the perspective of the food sovereignty movement which argues that long-term food security cannot rely on dependency on food imports, but must be built on the development of domestic production with enough barrier protection to shelter it from world price fluctuations and unfair trading. This movement argues for increased investment in agriculture, a major paradigm shift initiated by the World Bank's (2008) World Development Report and echoed in the UNCTAD's (2009) World Investment Report and the FAO's (2012) State of Food and Agriculture entitled “Investing in Agriculture for a Better Future.” As the large multiplier effects of agriculture to broader growth and poverty reduction are externalities to the sector itself, the private sector will typically underinvest relative to the social optimum. Moreover, the pervasive nature of market failures and distortions in underdeveloped agriculture justify a judicious and quite extensive public agricultural investment portfolio (Binswanger and Deininger, 1997). Many of the investments made by governments are called “public goods” because they generate benefits for society that cannot be captured by a private investor. Private investors have little or no incentive to provide those public goods because they cannot charge enough to recover the cost of the investment (FAO, 2012). However, increasing scarcity of public resources and declining official development assistance in agriculture have prompted governments to look increasingly to the private sector—domestic and foreign—for significant new investment. FAO (2012) places farmers centrally in the investment arena and argues that governments are responsible for creating the legal, policy and institutional environment that enables private investors to respond to market opportunities in socially responsible ways. This can entail the provision of important public goods and services that are not adequately provided by the private sector, such as agricultural R&D and extension, rural and market infrastructure, market intelligence and human capacity building. Some of these can be provided by private agents, but will mostly require public funding. Governments also influence the market incentives for investment in agriculture relative to other sectors through support or taxation of the agriculture sector, exchange rates and trade policies. UNCTAD (2009) focuses on foreign direct investment (FDI) and transnational corporations (TNCs) as sources of investment in agriculture. Contract farming is seen as a significant alternative to FDI in terms of TNC participation in agriculture. In this view, governments should address the specific obstacles to efficient cooperation between TNCs and local farmers. Among them are education and training programs for local farmers, the provision of government-led extension services, the establishment of standards and certification procedures, the granting of financial aid, matchmaking services to connect local farmers to TNCs, support for the establishment of farmer organizations, and improving the domestic court systems to increase legal security. Governments could also consider the development of model contracts to protect the interests of farmers in negotiating with TNCs. Governments can also play a more active role in leveraging private-sector participation in value chain development to the benefit

of smallholders. Many mechanisms for alleviating the high transaction costs of market participation focus on the organization of smallholders into formal and informal groupings (FAO, 2012), encouragement of vertical coordination through stakeholders' platforms (Demont and Rizzotto, 2012; Poulton and Macartney, 2012) and public–private partnerships (PPPs). PPPs have received increasing attention as a way to involve the private sector in supplying goods and services with some degree of public goods characteristics and for bringing together private and public investors to promote agricultural development, poverty reduction and food security (Poulton and Macartney, 2012). According to UNCTAD (2009), PPPs for R&D can serve as models for fostering innovation, reducing costs, and for mitigating the commercial and financial risks of the venture through risk-sharing between the partners. Whether funded by public resources, the private sector or through PPPs, agricultural investment into the domestic rice sector can be roughly categorized into (i) supply-shifting, (ii) value-adding and (iii) demand-lifting investments. Supply-shifting investments include direct and indirect support for rural infrastructure, human capital development, R&D, extension, intensification and access to land, seed, credit, inputs and mechanization. Value-adding investments include direct and indirect support for processing and storage capacity, R&D, quality upgrading and governance, capacity building and branding, labeling, identity creation and certification. Investment in processing and storage capacity can be both supplyshifting and value-adding as it may reduce losses and at the same time increase supply and quality of processed produce. Demand-lifting investments into the domestic rice sector include direct and indirect support for market infrastructure, value chain upgrading, R&D, capacity building, market information systems (MIS) and promotion (of domestic relative to imported rice). Investment in branding and certification can be both value-adding and demandlifting if it is linked to a general value chain upgrading strategy and promotion. Brands and labels can serve as (collective) quality certification devices, although for their function to be credible, additional promotion and certification costs are required. Because certification entails fixed costs shared by all producers of the brand, the private sector typically underinvests in it (Moschini et al., 2008). Likewise, small firms cannot afford mass media promotion campaigns and therefore depend on generic promotion of their nation and region of origin (Zhao et al., 2003). Hence, both certification and generic promotion should be subsidized by the public sector. Although branding is a private good, the public sector can support local actors in developing their own branding and marketing strategies through R&D, coordination and human capacity building. However, if local actors perceive too much initial risk to invest in their own brands, the public sector could develop an umbrella branding strategy for local rice that individual firms could exploit or buy into (through a sort of licensing arrangement) (USAID, 2009a). The investment portfolio should be embedded in a broader framework of value chain upgrading, which is cited by the World Bank as a first policy objective in making agriculture in developing countries more competitive and more effective in supporting sustainable growth and reducing poverty (World Bank, 2008, pp. 19, 228). Depending on initial conditions, there is an optimal portfolio and sequence of supply-shifting, value-adding and demand-lifting investments that needs to be implemented in order to successfully boost the rice sector and reverse urban bias (Demont and Rizzotto, 2012). The portfolio should be designed in such way that it enables value chains to develop and to be pro-poor. Poor consumers may benefit more from supply-increasing investments which make local rice cheaper, while poor producers may benefit from supply-increasing, value-adding and demand-lifting investments by enabling them to access urban markets which were previously only accessible for rice importers. Hence, any strategy of value chain upgrading to increase food security for the poor should consider the trade-off between

M. Demont / Global Food Security 2 (2013) 172–181

adding value and maintaining affordability (Tomlins et al., 2007). In other words, not all rice should be subject to the proposed threestage sequence; pro-poor value chains should serve both market segments of quality-sensitive and price-sensitive consumers. Value needs to be added in order to make local rice competitive to imported rice and enable poor farmers to serve quality-sensitive consumers, while at the same time cheap rice needs to be available for price-sensitive consumers (Demont et al., 2013a).

3. Review of the National Rice Development Strategies (NRDS) The Coalition for African Rice Development (CARD), launched in May 2008, provides an interesting case study to analyze the investment portfolios that African governments have implemented in order to boost their national rice sectors. CARD, alongside other partners, sets the goal of doubling rice production in subSaharan Africa within 10 years—from 14 million tons per year in 2008 to 28 million tons per year in 2018. It sets out an overall strategy and a framework for action while building on existing structures, policies and programs. CARD proposed a template for the development of National Rice Development Strategies (NRDS) and 19 African countries have subsequently developed NRDS documents which are available on the web portal “Rice for Africa” (CARD, 2013). As a result, a sample of 19 investment plans is available. The NRDS template stipulated that the formulation process of the NRDS should be led by national institutions and subject to a broad-based policy dialog and consultation with active participation of relevant stakeholders in the rice value chain. We particularly focused on Part 6 “Strategies for sub-sectors,” which was broken down into seven sub-sectors along the value chain. The NRDS template explicitly stated that national institutions are not required to cover all sub-sectors. This flexibility implies that the NRDS documents reflect the national institutions' and rice stakeholders' perceptions of the priority areas of investment that they deem necessary to develop their national rice sectors. In order to identify priority areas and investment gaps in the reversal of urban bias and the development of the African rice sector, we critically reviewed the NRDS investment plans. We paid particular attention to whether activities are convincingly elaborated in the strategy or not. In Table 1, we categorize the seven sub-sectors in the NRDS template into supply-shifting, value-adding and demand-lifting investments and impute the investment portfolios of the 19 CARD members along these categories. In case no budget is reported, we use the symbol “x” to show that the investment is included in the portfolio but without detailed information on resource allocation. Activities that are missing or not convincingly elaborated in the NRDS document are indicated with a dash. Only nine out of 19 NRDS documents provide a comprehensive investment portfolio which is detailed enough in order to break down total investment intentions over specific areas of investment (represented by investment shares in percentage). In interpreting investment intentions, we will attribute more weight to those shares assuming that they better reflect real investment intentions and priorities. Before reviewing the investment plans, we split the sample into three groups with different rice sector development history and investment priorities (Fig. 3). 3.1. Group 1: coastal countries characterized by dominant consumer preferences for imported rice (Benin, Cameroon, Côte d’Ivoire, Ghana, Nigeria, Senegal and Togo) Group 1 includes coastal countries in West-Central Africa of which the port is also the primary urban consumption center (marked in red in Fig. 3). Saverimuttu and Rempel (2004) predict that those countries are typically more susceptible to urban-biased

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policies than landlocked countries. Fox (2012) reverses the causality and argues that the growth of these large urban consumption centers was made possible—in the first place—by imports more than by productivity growth. Therefore, one may expect that consumers in those countries have the tendency to develop food preferences biased towards imports, such as imported rice. This is largely confirmed by the literature (NRDS documents published by CARD, 2013; Demont et al., 2013a, 2013b; EUCORD, 2012; Fall et al., 2007; Lançon et al., 2001, 2003, 2004; Moseley et al., 2010; Rutsaert et al., 2013; Tomlins et al., 2007; USAID, 2009b). Hence, it comes as no surprise that the top three rice importers in Africa— Nigeria, Côte d’Ivoire and Senegal—are all part of this group (USDA, 2011; 2012a). However, the highest annual growth rates in rice consumption since 2000 are recorded for Benin (19%), Cameroon (17%) and Ghana (10%) (Rutsaert et al., 2013), and recent experimental evidence from Cameroon suggests that urban consumers with higher per-capita consumption levels of rice are willing to pay higher premiums for rice quality (Akoa Etoa et al., 2013). Hence, the challenge in these countries will be to reverse urban bias in an early stage such that the domestic rice sector can tap into these important market opportunities. Demont and Rizzotto (2012) argue that removing urban bias in those markets requires an optimal investment portfolio in the three main areas and sequenced as follows: (i) value-adding investments in order to bring quality of local produce up to the level of imports; (ii) scaling-up of quality produce through supplyshifting investments; and (iii) demand-lifting investments in order to enhance the chain competitiveness of domestic relative to imported rice. The stages represent milestones; all stages need to be initiated more or less synchronously due to lags between investment and impact, but some actions can only be effective if certain milestones in previous actions are attained. The second stage, for instance, can only be successfully implemented if a critical threshold in the first stage—for example, a minimum quality standard—is met. In the third stage, the surplus created in the second stage is gradually being absorbed by urban consumers and progressively substitutes for imports. Implementation of the third stage can only be successful if a critical threshold in the second stage—for example, a minimum marketable surplus— is met. Because of the complex investment mix needed, for Group 1 countries a holistic value chain approach has been typically proposed in order to improve local rice competitiveness with imports (Colen et al., 2013; Demont and Neven, 2013; Demont and Rizzotto, 2012; Demont et al., 2013a; USAID, 2009b). In those countries, local rice is typically differentiated from imported rice through its inferior quality. In the absence of strong consumer attachment to domestic rice, the best short and medium-term option these countries face is to first quality-dedifferentiate local from imported rice by adding value to local rice products such that they blend into the set of competing imported rice brands (Stage 1). Quality needs to be governed throughout the entire value chain. First, harvesting, threshing, drying and storing practices at the farm need to be upgraded in order to increase quality, purity and homogeneity of paddy delivered to the rice mill. Secondly, processing infrastructure needs to be upgraded through investment in enhanced parboiling, milling, cleaning, sorting, and drying equipment. It is expected that this intermediate stage of quality-dedifferentiation will better integrate domestic markets into broader markets. As a result, supplyshifting investments implemented in Stage 2 will be more effective in boosting rice production and increasing market share as they will induce less severe price eroding market effects (Barrett, 2008). Consequently, a larger share of the welfare created in Stage 2 will accrue to farmers which will provide incentives for further intensification and area expansion. Due to lags between investment and impact, Stage 2 should be initiated well before a critical milestone

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Table 1 Investment portfolios implemented by 19 African CARD member countries that have submitted National Rice Development Strategies (NRDS). Sources: NRDS documents published on the CARD (2013) web portal. Country

Supply-shifting investments

Demand-lifting investments Value-adding investments

Total investment (106 US$a)

Time horizon

Area expansion, irrigation and infrastructure

Otherc

Group 1: Coastal countries characterized by dominant consumer preferences for imported rice Benin x 2008–18 x x x Cameroon 382 2008–18 33% 14% 36% Côte d’Ivoire 954 2012–16 16% 5% 63% Ghana x 2008–18 x x x Nigeria x 2008–18 x x x Senegal 348 2009–11 79% 1% 20% Togo x 2008–18 x x x

x 9% 13% x x – x

– – – x x – x

– – x x x – –

x 1% 2% x x – –

– – 1% – x – –

x 7% x x x x x

Group 2: Coastal countries characterized by dominant consumer preferences for local rice Guinea 1300 2008–18 41% 1% 39% Kenya x 2008–18 x x x Madagascar x 2008–18 x x x Mozambique 357 2008–11 x x x Sierra Leone 57 2009–18 73% 14% x Tanzania x 2008–18 x x x

x x – x x x

x – – x – x

x – – x – –

x – x x 10% x

– – – – – –

20% x x x 4% x

Group 3: Landlocked countries Burkina Faso 517 2008–18 Ethiopia x 2009–19 Mali 1600 2008–18 Rwanda 157 2011–18 Uganda x 2008–18 Zambia x 2011–15

17% x x 8% x x

– x – 1% x x

– – – – x x

– x x 28% x x

– x – – – –

3% x x 1% x x

54% x 49% 39% x x

6% x 3% 9% x x

20% x 48% 15% x x

Notes: the symbol “x” indicates that the investment is planned, but no detailed budget has been provided in the NRDS document. A dash indicates that the investment is missing or not convincingly elaborated in the NRDS document. In some cases, the investment shares may not add up to 100% due to rounding. a b c

In order to convert FCFA into US$, we used an exchange rate of US$1 ¼500 FCFA recorded in September 2012 (OANDA, 2012). Market information system. Other investments include implementation, governance, operation, monitoring and evaluation of the NRDS and are subsumed in all NRDS documents, although they are not always explicitly budgeted.

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R&D, extension, Intensification, access to Processing (milling, Quality upgrading, Branding, labeling, Value chain upgrading, Promotion, MISb, market capacity building, identity creation, land, seed, credit, inputs, parboiling) and innovation, advertising, certification governance storage capacity capacity building mechanization infrastructure, linkages communication, awareness creation

M. Demont / Global Food Security 2 (2013) 172–181

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Fig. 3. Sample of 19 African member countries of the Coalition for African Rice Development (CARD) that have submitted National Rice Development Strategies (NRDS). Legend: Group 1: Coastal countries characterized by dominant consumer preferences for imported rice, Group 2: Coastal countries characterized by dominant consumer preferences for local rice, Group 3: Landlocked countries. Source: CARD (2013).

in Stage 1 is reached. In the SRV, for instance, the major bottleneck private investors are currently facing is the insufficient supply of paddy rice, implying that investment in productivity is becoming vital for the continuation of their operations, which are currently running below their optimal scale (Diagne et al., 2013). The transition from Stage 2 to Stage 3 largely depends on the question whether consumers prefer imported rice for its superior quality or for its “foreignness.” In other words, if price premiums for imported rice are observed on the market (e.g. Fig. 1), do they purely reflect differences in quality or are they driven by perceived differences in image of the product and its origin? Investment in consumer research will be necessary in order to find out the driving factor of preferences. If only the first factor is at work, urban bias can be theoretically reversed through value-adding investments (Stage 2) supplemented by investments in value chain upgrading and enhanced linkages (Stage 3); if both factors are at work, reversing urban bias will require additional demand-lifting investments in promotion, advertising and communication (Stage 3)

in order to dedifferentiate the inferior image of domestically produced rice from its competitor. Once the quality and image is raised to the standards of imported rice, supply-shifting, valueadding and demand-lifting investments may target competitive strategies such as cost leadership or differentiation (Porter, 1985) in order to progressively gain market share and outcompete imported rice in African rice markets through either lower cost or superior image. Cameroon, Côte d’Ivoire and Senegal provide detailed investment portfolios of their NRDS (Table 1). Striking is the fact that their portfolios are strongly biased (92–100%) towards supplyshifting investments, while we have seen above that Group 1 may benefit most from a holistic value chain approach with sequenced investments in the three main areas. Cameroon is a particular case. Due to the landlocked nature of several of its rice growing areas in the Northwest and Far North, remote regions far from the large consumption centers of the South of the country, rice produced is often exported to Nigeria where road infrastructure in the border

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regions is generally in good condition. Household surveys underline the fact that most imported rice is destined for urban consumption in Douala and Yaoundé where consumers prefer it due to its superior quality. Recent experimental evidence suggests that upgrading of processing technologies such as the development of improved parboiling can help quality-dedifferentiating local from imported rice and rendering local rice competitive in urban markets in Cameroon (Akoa Etoa et al., under review). However, the government's planned investment in processing is primarily supply-shifting as it focuses on increasing processing capacity such as husking machines and does not include any investment in quality upgrading or branding. Less than 1% is devoted to value chain upgrading, mainly through the establishment of a viable MIS and enhanced organization of marketing (credit lines). In contrast, Côte d’Ivoire's second priority area also includes demand-lifting investments such as value chain upgrading through public-private partnerships, labeling and large-scale promotion. However, it is questionable whether the small budget share (3%) allocated to these activities will be sufficient for reversing urban bias. Among all NRDS, Senegal's investment portfolio is most heavily biased towards supply-shifting investments. Its strategy mentions value-adding investments (strengthening capacity in processing and quality-upgrading, establishment of additional sorting, sizing and polishing equipment with the aim of introducing quality labeling) and value chain upgrading (encouraging the creation of private professional agencies charged with buying, processing and selling rice), but no separate budget line has been detailed for these activities. Field experiments have shown that the majority of Senegalese consumers are willing to pay quality premiums for local rice and are further adding premiums for local rice brands (Costello et al., 2013; Demont et al., 2013a, 2013b). This suggests that the persistent consumer preferences for imported rice observed on the market (Fig. 1) have less to do with the product's foreignness than with its superior post-harvest grain quality. The main policy lesson that can be drawn from these findings is that the first priority in the reversal of urban bias in Senegalese rice markets is the investment in post-harvest quality-upgrading (enhanced milling, cleaning, sorting and drying infrastructure) in order to tailor post-harvest quality to urban consumer standards (Demont et al., 2013a). The portfolios of the other countries in Group 1 seem to include a more holistic set of investments along the value chain. However, due to the absence of detailed information on budget allocations, it is difficult to judge whether their investment portfolios are wellbalanced. Nigeria's NRDS can be commended for three reasons. The investment portfolio covers all three areas and is probably the most complete among all NRDS. Secondly, the strategy clearly recognizes that investments need to be phased over time, i.e. it distinguishes between short-term (1–2 years), medium-term (3–5 years) and long-term investments (more than 5 years). Thirdly, it is the only NRDS that explicitly recognizes that value-adding investments should precede supply-shifting investments in reversing urban bias, which is consistent with Demont and Rizzotto's (2012) proposed policy sequence. 3.2. Group 2: coastal countries characterized by dominant consumer preferences for local rice (Guinea, Kenya, Madagascar, Mozambique, Sierra Leone and Tanzania) Group 2 includes the other coastal countries (marked in green in Fig. 3) of which rice markets have not (yet) been significantly marked by urban-biased policies, some of them due to a long history of rice production and consumption such that consumers have preserved their historical preferences for the characteristics of local rice (CARD, 2013; Chaléard et al., 2002; Hume, 2009).

However, because of their coastal location, they are vulnerable to such policies as they are continuously exposed to food imports, particularly for countries that record high growth rates in consumption since 2000, e.g. Mozambique (12%) and Kenya (10%) (Rutsaert et al., 2013). Tanzania, Kenya, Uganda, Rwanda and Burundi, however, actively counteracted urban bias beginning in 2005 by agreeing, as member states of the East Africa Community (EAC), to an agreed EAC common external rice import tariff at 75% ad valorem. EAC negotiators hence opted to protect the farming sector rather than consumers by agreeing to this relatively high import tariff (EUCORD, 2012). However, protected by tariffs or not, the challenge in Group 2 countries will be to maintain comparative advantage in demand, i.e. preserve favorable consumer preferences for local rice, and progressively regain market share through an optimal mix of simultaneous supply-shifting and value-adding investments. In other words, sequencing value-adding before supply-shifting is less critical than in case of Group 1 countries as quality is already tailored to consumer preferences. Detailed investment portfolios are reported by Guinea and Sierra Leone (Table 1). Although Guinea proposes a wellbalanced set of activities along the value chain, it only proposes a detailed budget breakdown for supply-shifting investments up to 80% of the total budget, while it is not clear how the remaining 20% is allocated. Since it imports only 26% of national requirements and consumer preferences are in favor of local rice, their investment portfolio may be adequate to achieve the goal of medium-term food self-sufficiency and to export rice to subregional, regional and international markets in the longer term. Sierra Leone faces similar consumer preferences for local rice which fetches price premiums of about 15–20% relative to comparable grades of imported rice due to the acknowledged fact that local rice is more nutritious than imported rice. Its investment portfolio mainly focuses on infrastructure, R&D and capacity building, including improvement of market infrastructure and MIS. The portfolios of the other countries in Group 2 are comparable. Madagascar is the largest African producer and largest per capita consumer of rice (EUCORD, 2012). Although its NRDS is similarly biased towards supply-shifting investments, EUCORD (2012) argues that its major weakness is the lack of a cohesive marketing strategy and isolation of production areas from the major markets. The NRDS explicitly recognizes this and proposes demand-lifting investments in order to develop trade and promote contractualization between producers and operators. Tanzania is the second largest producer of rice in East Africa, after Madagascar. The comparative advantage of its rice sector can be attributed to the aromatic qualities of several of its domestic rice varieties; the country even exports significant quantities of high-quality fragrant rice to neighboring countries where it commends a substantial premium over imported rice. According to EUCORD (2012), its major constraint is the low cost-competitiveness of its domestic rice sector, due to high production and transaction costs. It provides a well-balanced NRDS with explicit attention to valueadding and demand-lifting investments in order to improve competitiveness of its national rice sector. Kenya's proposal, in contrast, seems quite biased towards supply-shifting investments, perhaps because it claims that the locally produced rice is already of high quality compared to imported rice and is preferred by consumers. However, this argument is contradicted by EUCORD (2012), who claims that “Local Kenyan rice has difficulties competing for consumer preference, with imported Asian rice” (p. 17). Moreover, authorities need to address the country's poor infrastructure, the improvement of which would help alleviate most of the problems faced by the agriculture sector. Consumers in Mozambique prefer local rice because of its perceived characteristics of freshness, fragrance, and taste. However, the country faces constraints in processing capacity and lack of brand building and

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proposes a well-balanced and holistic NRDS with attention to value-adding investments in grades and quality standards, postharvest technologies, agro-processing, the promotion of national brands and value chain coordination. Since the growth rates of rice consumption are so high in Mozambique and Kenya, the challenge in these countries will consist in gaining market share with local production before consumers have the time to develop preferences for imported rice. 3.3. Group 3: landlocked countries (Burkina Faso, Ethiopia, Mali, Rwanda, Uganda and Zambia) Group 3 finally represents the landlocked countries (marked in yellow in Fig. 3). The available evidence reveals the existence of strong preferences for local rice in these countries (CARD, 2013; EUCORD, 2012; Moseley et al., 2010). Group 3 countries are somewhat protected from urban-biased policies in that their “landlockedness” structurally challenges them to access world markets (Faye et al., 2004). However, landlockedness does not prevent Burkina Faso, for instance, to import 60% of its rice consumption needs from Pakistan, India, Thailand and Vietnam via the ports of Côte d’Ivoire, Ghana and Togo (USDA, 2012a). As a result, Burkina Faso shares some of the challenges of Group 2 countries in developing its rice sector, notably the challenge of maintaining consumer preferences for local rice and gaining market share under heavy competition with rice imports. This illustrates that the impact of “landlockedness” as a natural barrier to urban-biased policies in the rice sector crucially depends on neighbors' infrastructure, stability, administrative practices and cross-border political relations (Faye et al., 2004). Landlockedness gives Group 3 countries somewhat more “breathing space” in developing their rice sector since they are less exposed to the competitive forces of the world market (Moseley et al., 2010). However, record annual growth rates in rice consumption are recorded in this group since 2000, e.g. for Rwanda (49%), Ethiopia (19%), Zambia (15%) and Burkina Faso (9%) (Rutsaert et al., 2013), which implies that investment in their rice sector is becoming a priority. Natural barriers to rice imports such as landlockedness act somewhat similarly as cultural barriers like favorable preferences for local rice and therefore, a mix of investments similar to Group 2 countries will be needed ranging from a productivity to a value chain approach depending on the extent of surplus production. Thanks to higher-yielding rice varieties like Nerica, productivity is dramatically increasing in some regions (Diagne and Demont, 2007). Hence, the more rice production systems evolve from purely subsistence to surplus-based, the more attention will need to be given to value chain upgrading in those regions (Colen et al., 2013). In particular, landlocked African countries need to place particular emphasis on developing their internal transportation infrastructure as trade is significantly affected by transportation costs. Second, regional infrastructure integration strategies are needed to develop active trade routes and to expand market access for landlocked countries. Small economies such as Rwanda face tremendous constraints in trying to trade internationally due to the weak road and rail infrastructure in Eastern Africa. Internal infrastructure investments in Rwanda will yield limited returns if not accompanied by similar investments in Kenya, Tanzania and Uganda. Third, and closely linked to the previous point, regional integration strategies need to focus on administrative coordination (Faye et al., 2004). For all these reasons, landlocked countries benefit from a regional value chain approach (UNECA and AU, 2009). Burkina Faso, Mali and Rwanda provide detailed investment portfolios of their NRDS (Table 1). Burkina Faso proposes a set of investments which are mainly supply-shifting; major attention is

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given to increasing scale of production, input use and processing. The NRDS document explicitly states that demand-lifting investments such as identity, access and promotion of local rice should be governed by the private sector. However, as mentioned before, in case of underinvestment, the government can assist investors by fostering the enabling environment and supporting them in the development of their branding and marketing strategies (USAID, 2009a). Mali's NRDS is very comparable, but given its ambition to become a major rice exporter, more attention is given to value chain upgrading (promoting trade, horizontal coordination, marketing credit and export strategies), although no detailed budget is provided for the latter activities. Mali's inland Niger Delta is one of the oldest rice production areas in the world and is the zone where African rice (O. Glaberrima) was likely domesticated (Seck et al., 2012). Mali is self-sufficient in rice which is due to several factors. First, Mali's landlocked status made imported rice relatively more expensive, a factor that favors domestic rice producers. Although being landlocked is often presented as a development handicap (Faye et al., 2004), in this instance, it created enough financial space for the sustenance and growth of a national food economy. Second, Mali's internal road network has improved in recent years, which reduced the cost of getting local rice to market. Third, quality of local rice is tailored to urban consumers who prefer local to imported rice to the point of paying price premiums for it (Moseley et al., 2010). As a landlocked country, Rwanda partially depends on Tanzania for rice imports. Rwanda's investment portfolio covers well the three areas of investments and can be commended for its value chain approach. As the quality of local rice lags behind that of imported rice (EUCORD, 2012), the NRDS identifies qualityupgrading as its third strategic axis. It provides a detailed plan for increasing the milling quality of Rwandan rice, but allocates a too small budget share (1%) to actual quality-upgrading, while most of the value-adding investments consist in supply-shifting activities like increasing the processing capacity to minimize postharvest losses. Instead, in order to increase milling standards, the Government of Rwanda has banned small rice hullers and mills that produce more than 15% broken rice or have no capacity for grading (Stryker, 2010). Further, because of challenges due to landlockedness, it allocates an important budget share (28%) to investments that improve physical access to national and regional markets. The NRDS of the other countries in Group 3 are comparable. Ethiopia's portfolio touches the three areas of investment and its proposed link with Ethiopian Commodity Exchange (ECX) is particularly promising. Uganda pays more attention to valueadding investments like packaging and branding, while Zambia explicitly focuses on demand-lifting investments like collective marketing systems, strengthened market linkages, better horizontal coordination, promotion and retailing in supermarkets.

4. Discussion and conclusions Rice consumption is increasing in almost all countries in Africa and production has not kept pace with this trend. As a result, the continent is increasingly relying on rice imports. The 2008 food crisis has shown that this dependency has serious risks for food security and stability of the continent. African governments increasingly recognize the need to reverse urban bias and this has led to a food sovereignty movement (Laroche Dupraz and Postolle, 2013), which argues that long-term food security cannot rely on dependency on food imports, but must be built on increased investment in agriculture (FAO, 2012; UNCTAD, 2009; World Bank, 2008). However, African governments' focus on

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supply-shifting investments may be insufficient to render domestically produced rice competitive against imported rice, particularly in import-biased food markets where imports have established the quality standards against which domestic rice now has to compete. Urban-biased African countries hence face major challenges in reversing urban bias in rice markets, i.e. producing sufficient and affordable rice that meets the preferences of their fast-growing and increasingly urbanized population; and which can compete with imported rice not only in terms of price, but also in terms of both quality and image. The Coalition for African Rice Development (CARD) aims at doubling rice production in sub-Saharan Africa within 10 years (2008–2018) and 19 African CARD member countries have subsequently developed National Rice Development Strategies (NRDS). In order to identify priority areas and investment gaps in the reversal of urban bias and the development of the rice sector in Africa, we critically reviewed the NRDS' investment plans as they reflect the national institutions' and rice stakeholders' perceptions of the priority areas of investment that they deem necessary to develop their national rice sectors. Coastal countries are typically more susceptible to urbanbiased policies than landlocked countries. In some of those coastal countries, urban consumers have developed food preferences biased towards imported rice. Removing urban bias in those markets requires a judicious investment portfolio in three main areas and sequenced as follows: (i) quality-dedifferentiation through value-adding investments; (ii) supply-shifting investments; and (iii) demand-lifting investments. Such a complex investment portfolio needs to be embedded in a value chain approach in order to increase chain competitiveness of domestic relative to imported rice. Despite these insights, the NRDS proposed by Cameroon, Côte d’Ivoire and particularly Senegal are highly biased towards supplyshifting investments. The most comprehensive NRDS is proposed by Nigeria; its multiphase investment plan explicitly recognizes that value-adding investments should precede supply-shifting investments. Coastal countries where consumer preferences are currently dominantly in favor of local rice are one step ahead relative to the first group because they do not require the first stage of qualitydedifferentiation. However, they are nevertheless vulnerable to urban-biased policies and their rice sectors will need to maintain competitiveness and gain market share before consumers have the time to develop preferences for imported rice. Landlocked countries generally face somewhat less competitive pressure from world markets, depending on their neighbors' infrastructure, stability, administrative practices and cross-border political relations. However, exceptions exist, such as Burkina Faso. These countries will need an optimal mix of simultaneous supplyshifting, value-adding and value chain upgrading investments depending on the extent of surplus production. Landlocked countries need to place particular emphasis on investment in their internal marketing infrastructure and may benefit from a regional value chain approach. The major focus of the proposed NRDS of these countries is on supply-shifting investments, but some attention to value chain upgrading is noted, e.g. in the case of Mali, which has the ambition to become a major exporter and Rwanda, which needs to improve physical access to national and regional markets. We conclude that in order to reverse urban bias in African rice markets, more resources will need to be allocated to value-adding and demand-lifting investments. Value needs to be added in order to make domestic rice competitive to imported rice and enable African rice farmers to access urban markets. In order to gain access to those markets, domestic rice not only needs to compete in terms of price, but also in terms of both intrinsic (cleanliness, homogeneity, sensory attributes, etc.) and extrinsic quality

attributes (presentation, packaging, branding, image, etc.). We expect that once rice value chains are upgraded, supply-shifting investments will be more effective in reversing urban bias than past attempts based on productivity alone. However, any strategy of value chain upgrading to increase food security for the poor should consider the trade-off between adding value and maintaining affordability. Hence, the ultimate challenge for African policy makers, researchers and donors will be to find the optimal portfolio and sequence of supply-shifting, value-adding and demand-lifting investments that is designed in such way that it enables rice value chains to develop and to be pro-poor.

Disclaimer The views expressed in this information product are those of the author and do not necessarily reflect the views of the Africa Rice Center.

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