case study on commodity chain analysis · the case study contains five exercises based on a...

Case Study on Commodity Chain Analysis Irrigated Rice Chain of the Niger’s Office (Mali): Financial and Economic Accounts

Bockel, L., 1 Tallec, F.,2 Policy Officer, Agricultural Policy Support Service, Policy Assistance Division, FAO Consultant, Agricultural Policy Support Service, Policy Assistance Division, FAO

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FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS, FAO

See also the Value Chain Analysis software The FAO-VCA software tool carryies out value-chain analyses for agricultural and rural development policies. By storing relevant data it can calculate flows of physical outputs and inputs, flows of aggregated costs, value-added and net benefits. In addition, it allows users to directly compare different hypothetical scenarios. FAO-VCA Software Tool» Value Chain Analysis for Policy Making: Methodological Guidelines for a Quantitative Approach»

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Case study on Commodity Chain Analysis Irrigated Rice Chain of the Niger’s Office: Financial and Economic Accounts

Table of contents

1 Summary .....................................................................................1 2 Introduction .................................................................................1 3 General background ......................................................................2

3.1 Presentation of the rice chain at the national level ................................ 2 3.2 Presentation of the areas of the Niger’s Office ...................................... 5

4 Information base for the exercises ..................................................6 4.1 Typology of rice growing systems ....................................................... 6 4.2 Agents in the sub-chain of the Niger’s Office area ................................. 7 4.3 Main channels of the sub-chain .......................................................... 8 4.4 Quantitative data about the sub-chain (basis of calculations of flows) ..... 9 4.5 Technical and economics data by agent ............................................ 11

5 Wording of exercises ................................................................... 17 5.1 Exercise 1: functional analysis ......................................................... 17 5.2 Exercise 2 : Calculation and analysis of flows ..................................... 17 5.3 Exercise 3 : production-trading account by agent ............................... 20 5.4 Exercise 4 : Consolidated account and chain account .......................... 22 5.5 Exercise 5 : Simulations within the sub-chain ................................... 22

6 Results of exercises ..................................................................... 23 7 Conclusion ................................................................................. 23 8 Readers’ notes ............................................................................ 23

8.1 Time requirements ......................................................................... 23 8.2 Complementary capacity building materials ....................................... 23 8.3 EASYPol links ................................................................................. 24

9 Further reading........................................................................... 24


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1 SUMMARY

This module illustrates a case study regarding the Commodity Chain Analysis (CCA). It belongs to a set of modules which discuss how to carry out CCA through a step–by-step procedure. The user is introduced to a real situation where he has to build and analyze a commodity chain. The case study contains five exercises based on a database provided in a spreadsheet, containing all relevant information (e.g, yields, hectares per agent etc). The first exercise allows the user to familiarize with the functional analysis of a commodity chain. The second exercise aims to practise the flows analysis. The third one helps experts to use the production-trading accounts which are the real foundations of the CCA. The fourth one allows us to build the analysis model based on the accounts of individual agents. Finally, the fifth one illustrates how to use this model to simulate scenarios.

2 INTRODUCTION

This module stems from a Malian case study1 which includes a set of exercises that discuss how to carry out CCA through a step–by-step procedure (from functional analysis up to the financial and economic account). The irrigated rice sub-chain of the Niger’s Office is used as a support for these exercises, mainly based on a set of technical documents2

.

This module has been designed to be used as a support document in the training on CCA. It is a good tool to introduce the framework of commodity chains in work groups of about ten people. It can be used with concrete data on irrigated rice chains based on spreadsheet tables (Excel files). To find relevant materials in these areas, the reader can follow the links to other EASYPol modules or the references3

1 Based on a translation from the French Cellule de Planification et de Statistiques (CPS) of French Ministry of Rural and Environmental Development (MDRE) within the framework of PAMOS project “Appui à la Mise en Oeuvre du Schéma Directeur” (MAL/91/005).

. It is recommended that users read the theoretical

2 Documents (written in French) : i) Impact of the devaluation on the rice chain (CIRAD IER, August 1995), ii) Determination of retrocession value for 4 rice plants of DRC (1995) iii) Proceeding of rice chain seminar (September 1995) iv) Note DPE on Malian rice chain and the tariff protection (August 1995) v) Note on development problematic of the Niger’s Office area – “Options de réaménagement Cabinet” (June 1995) vi) Prospects of the Niger’s Office area development (Niger’s Office, June 1995) vii) Production costs of rice and paddy within different irrigated systems (Primature, 1995)

3 EASYPol hyperlinks are shown in blue, as follows : - training paths are shown in underlined bold font; - other EASYPOL modules or complementary EASYPol materials are in underlined bold

italics; - links to the glossary are in bold; and - external links are in italics.

EASYPol Module 047 Applied Material

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modules EASYPol (thematic overview and analytical tools) beforehand to understand the exercises included in this module.

Objectives

This module illustrates how Commodity Chain Analysis (CCA) can be used in a case study of a given commodity chain. It is an applied material which uses the conceptual presentation of the chain analysis (the first four modules EASYPol). This module can be used in different contexts such as:

reference materiel for policy analysts in carrying out their on-the-job tasks,

in academic courses.

Targeted audience

This module is intended for a wide audience, ranging from policy analysts and decision makers, to development practitioners, training institutions, and media. It is of particular relevance to senior and mid level officials and professional officers in ministries of agriculture, livestock, forestry, rural development, and cooperatives, including line departments and training institutes/units. It should also be of particular interest to senior executives of parastatals, financial institutions, and NGOs/CBOs. Suitably adapted, it may also be used as a reader in undergraduate courses in development.

Required background

No specific technical background, beyond reasonable language skills, is required for this module. However, it is anticipated that individuals with a degree in economics, and agricultural or rural development related areas, and those with several years of experience in agricultural policy analysis or development planning and implementation, at a mid to senior level position, should have little difficulty in grasping the module’s content. The trainer is strongly recommended to verify that trainees have a minimum understanding of micro-economics. If this background is weak or missing, the trainer may consider to join the EASYPol glossary to the module.

3 GENERAL BACKGROUND

3.1 Presentation of the rice chain at the national level

Rice production, with 270.649 ha harvested in 1994/1995 takes only 3% (on average) of cultivated areas. However, with an average yield of 1.598 ton/ha4

4 The ton used here is the metric tonne (1 ton = 1 000 kg)

, the connected production of 467.251 tons of paddy currently represents more than 20% of the gross cereal production. The primary rice supply is based on this production. To value it, at the national level, we have to combine the whole production of paddy in Mali. At first, the exercise could seem simple, but in reality, it is very difficult because most of the


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data is only based on the results of the survey of the overall economic situation and the results of the modern (or “managed”) sector. Except for these remarks, most of the production is located in the valley and the delta of the river “Niger”, particularly in the Ségou and Mopti areas, bearing 80% of the production. This hugely contrasted context of production could be better felt with regard to the workshop theme, if the national production and the Niger’s Office production were calculated separately. There are four production systems in Mali, based on the four following criteria:

1. type of arrangement, 2. technical level of farms, 3. areas and, 4. actual yield:

(a) Traditional rice growing There are several types of traditional rice growing. Areas change a lot, year by year. Most of them are located in the central delta of the Niger river, the lakeside area, and beyond. They are assessed at about 135.975 ha in 1994/1995. The corresponding production is 81.585 tons, that is to say 0,670 ton/ha. The cultivated variety is the floating rice, up to 1,50 m under water; and in addition, the erect rice (“riz dressé”), up to 0,5 m under water. The first one is really prized by natives. (b) Rice growing by controlled submersion This rice growing method aims at improving the control of water level. Areas are assessed at 81.000 ha, of which under half were managed, and only 34.462 ha farmed in 1994/1995. Yield rarely exceeds 1,5 ton/ha. (c) Total control by gravity Usually, this kind of control is carried out by a dam of flood waters and a system of irrigation canals. Today, it represents about 49.263 ha with a yield of 4 ton/ha. The double crop is possible. The current arrangements of the Niger’s Office, at Sélingu and Baguinéda are representative of this kind of production system. (d) Hollow rice growing This method is used in areas where the average rainfall exceeds 1.000 mm/year. Parcels and fields are located in the bottom areas where the rain waters are collected. The potential is assessed at 50.000 ha, including 31.405 ha farmed in the CMDT area and the OHVN area. The cultivated varieties are the rain rice and the hollow rice (“riz de bas-fond”). Yields are about 1,5 ton/ha if good hydrological conditions are present, as in 1994/1995.


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(e) Irrigation by pumping (PPIV) and the others The method is based on the total control of the water. The typical arrangement includes pumping stations, dykes, irrigation canals and works for regulation. The total area is assessed at 19.544 ha. The agricultural technique includes a nursery, planting out, and irrigation, right up to the paddy’s ripening. Usually, parcels are cramped. The social context is in favor of this technique, based on huge man labor. Yields are high: 4-5 ton/ha. Double crop yields are often possible. Systems by total control (3) and PPIV (5), covering only a quarter of areas (68.807 ha), contributed to 63% of the national production, that is to say 467.251 tons of paddy. The Niger’s Office which contains 68% of it, contributed to this national production with 204.724 tons (re-arranged areas + non re-arranged areas), that is to say 44%. Between 1986 and 1992, the average yield of paddy with the Niger’s Office doubled (from 2,0 ton/ha up to 4,0 ton/ha).

Table 1 - Irrigated areas by type of arrangement (campaign 1994/95)

Areas ha

Yield. ton/ha

Production ton

Potent. ha

Niger’s Re-arranged areas 19637 5162 101366

Office Non Re-arranged areas 27345 3780 103364

TOTAL Total N’s O 46982 4460 204724

CONTROL BAGUINEDA 1480 3530 5224

SELINGUE 768 3600 2765 165000

TOTAL GRAVITE 49230 4418 212719

PPIV / others 19544 4000 78176

TOTAL CONTROL 68774 4299 290895

CONTROLLED SUBMERSION

Niger’s Office (Ségou, Mopti and others)

34462 1140 39287 81000

Hollow CMDT 31405 1600 50428 50000

TRADITIONAL RICE GROWING 135975 600 81585 254000

SET OF SYSTEMS 270616 1725 462015 >

1000000

Rice consumption

On the whole, it emphasizes that the urban diet is not really different from the rural diet. Some state employee households and some urban households with regular income (and on average higher than the other households) are distinguishable by a higher consumption of bread, raw vegetables, meat and fats, even if the quantity are way outside of the required norms.


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Table 2 - Cereals consumption per inhabitant

Produces (kg/inhab.) Kayes Koulikoro Sikasso Ségou Mopti T.bouctou Gao Bamako Total

Millet Sorghum Rice husked Corn Fonio

22.7 107.7 21.2

34.7 1.9

99.2 92.7 19.7

20.2 0.4

82.7 50.7 12.0

73.7 1.7

114.3 27.3 34.4

17.3 3.1

147.9 24.7 47.6

5.6 0.9

69.1 46.2 69.9

7.0 2.5

42.4 15.4 68.8

21.6 0.3

22.4 42.0 59.7

7.8 0.6

85.6 53.9 34.0

27.1 1.55

Total 188 232 221 196 227 195 149 133 202

Source: Survey Budget-Consumption 1988/1989, DNSI-PNUD. Yearly, a Malian consumes 202,25 kg of cereals, including 34,0 kg of rice. The Koulikoro, Sikasso and Mopti areas are distinguishable by an extremely high annual consumption of cereals, with 233 kg, 221 kg and 226 kg per inhabitant/year respectively. From the beginning of the delta and the Segou area, the average rice consumption per inhabitant is appreciably high but less than areas in southeast Asian with more than 180 kg per inhabitant. An empiric estimate by colonists of the Niger’s Office gave a paddy global consumption of 300 kg, that is to say a rice equivalent of 195 kg, including seeds, gifts, food for employees, and loss. However, the consumption has increased continuously because:

price stability or even relative drop in the decade before January 1994,

accessibility and ease of cooking

food energizing Rice became a current food in Malian towns. The master plan of the rural sector assesses the rate of increase of its consumption at 2,1% in towns and 0,4% in rural areas. In the last decade, between the national supply and the different demands for rice, it showed a deficit. Rice availability is not enough. Therefore, the country would have imported 30.000 tons of rice between 1989 and 1992.

3.2 Presentation of the areas of the Niger’s Office

The headquarter of the Niger’s Office is at Ségou. There are 3 management divisions: (i) General Management (GM), (ii) Financial and Administrative Management (FAM), (iii) Country Planning and Rural Development Management (CPRDM), including the Operator Service of Primary Network (OSPN). The first two bear the mission of delegating works, the business concerns, the maintenance of primary and secondary infrastructures and rural council. The third one is in charge of the water management in the primary network, and the realization of maintenance works depended on the Markala’s dam.


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There are five areas: Niono, Molodo, N'Débougou, Kouroumari and Macina. Each one has an Area Management (AM), a Water Management Service (WMS) and a Financial and Administrative Service (FAS).

There are three classes of arrangement areas, according to the water supply, the working order of the primary network and the traffic on the tracks:

Class 1: Re-arranged areas (type: retail, Arpon, World Bank, KFW, others), Class 2: Having good water supply, but with draining and service deficits, Class 3: Weakened service conditions. For the sake of the workshop, we definitively valued all class 1 areas as the typical re-arranged areas, and the areas of class 2 and 3 as the typical non re-arranged areas. In other respects, the rice areas registered out of rack are analyzed in the next section.

4 INFORMATION BASE FOR THE EXERCISES

4.1 Typology of rice growing systems

Areas5

used for rice growing, as function of type of areas (re-arranged, non re-arranged, out of rack) are the following:

Re-arranged areas (RA) Farmed areas Yield 94-95 Production

(ha) (kg) (ton) Macina 7 833 5 162 40 434 Niono 8 256 5 162 42 617 Ndébougou 3 448 5 162 17799 Molodo Kouroumari 100 5 162 516 TOTAL 19 637 5 162 101 366

Non re-arranged areas (NRA)

Farmed areas Yield 94-95 Production (ha) (kg) (ton)

Macina 3 885 3 780 14 685 Niono 496 3 780 1 875 Ndébougou 5 754 3 780 21 750 Molodo 6 800 3 780 25 704 Kouroumari 10 410 3 780 39 350 TOTAL 27 345 3 780 103 364

5 Given the different estimations between the documents, figures proposed must be considered as examples.


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Rice areas out of rack (OR)

Farmed areas Yield 94-95 Production (ha) (kg) (ton)

Macina 143 1 680 1 210 Niono 920 2 400 3 974 Ndébougou 0 2000 1 260 Molodo 0 1 180 2 791 Kouroumari 0 1 780 641 TOTAL 1063 2303 9 876

Two kinds of farms are analyzed:

TYPE 1 : RA Farm in re-arranged area

TYPE 2 : NRA Farm in non re-arranged area

Average area/family RA area Out of rack area (OR) Number of farmers Average pop/family

4.1 ha 4 ha

0.1 ha 5 789 12.5

Average area/family NRA area Out of rack area (OR) Number of farmers Average pop/family

4.4 ha 4.305 ha 0.09 ha 6214 12.5

Areas farmed (RA+OR) 20 116 Areas farmed (NRA+OR) 27 935 Type 1 gathers together farms mainly located in RA areas. Their average area is 4,1 ha including 4 ha in RA and 0,1 ha in OR. The type 2 gathers together farms located in NRA. The average area is 4,4 ha, include 4,305 ha in NRA and 0,095 in OR.

4.2 Agents in the sub-chain of the Niger’s Office area

In the upstream chain, at the present time, the Niger’s Office takes care of the maintenance of infrastructures (irrigation network, tracks), the increasing re-arranged areas, the supply and management water. His services are paid on the base of royalties by farmer. The country associations (CA) of farmers who buy mainly inputs (fertilizers, seeds) and partly of purchases equipment, are also involved in the downstream chain, in realizing the threshing of the production which are paid by paddy’s farmers (8% of the production). The CA directly threshes the paddy and they sell mainly to the Bamako’s wholesalers. Farmers are differentiated into 2 classes, depending on the different yields and inputs used (in these 2 classes, out of rack areas are really small):

farmers in re-arranged areas,

farmers in non re-arranged areas. Most of the husking is done in their area. The private huskers realize the near totality, directly working for the farmers and the CA. They work as a service and are paid only in cash, rarely in kind.


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The systems of rice production “DRC” (Delta’s Rice growing Company) still realize a limited part of husking in their area (about 3.000 tons in 1994/1995). Collectors-traders-stallholders6

buy the greater part of farmers’ rice, which they later sell to the wholesalers on the spot or at Bamako. A part of the paddy purchased is resold to private huskers as well.

The Bamako’s wholesalers come and buy husked rice from the collectors-traders, from the CA, and from rice-mills for resell to the retailers. They also buy rice brought to Bamako by collectors. Owners of urban huskers come and buy paddy in the area in order to transform it at Bamako and sell the rice to the retailers. The retailers mainly get their supply from the wholesalers and the urban huskers. They sell in different urban markets, mainly at Bamako. In the upstream CA, import companies of fertilizers and equipment were not considered in this sub-chain, nor were the blacksmiths who repair agricultural equipment or breeders who take advantage of bran from rice growing.

4.3 Main channels of the sub-chain

In descending order in order of importance, the main channels of the sub-chain are the following (the only ones analyzed here):

Farmers’ paddy private huskers farmer’s rice collectors-traders Bamako’s wholesalers retailers

Farmers’ paddy private huskers farmer’s rice subsistence farming

Farmers’ paddy urban huskers who sell the rice retailers

Farmers’ paddy paid in kind to CA for the threshing private huskers rice sold to CA Bamako’s wholesalers retailers

Farmers’ paddy collectors-traders urban huskers who sell rice retailers

Farmers’ paddy paid in kind to CA for the threshing sold to DRC rice growing who sell the rice Bamako’s wholesalers retailers

6 Traders-stallholders and collectors are brought together with the name of collectors-traders-stallholders following a lack of available information to separate them.


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4.4 Quantitative data about the sub-chain (basis of calculations of flows)

The data on flows regarding the processing in areas is the most accurate. Thus, the analysis will be done at this stage, in the downstream production. The basic elements which allow us to calculate the flows are the following:

Private huskers

Total in the area (estimate) 750 Husking yield 0,67 Average cost purchase 1995 1 500 000 FCFA Average annual functioning / equip 410 hours Average hourly ability 550 Kg/hours

About Delta’s Rice growing Company (DRC), available data are the following:

DRC

Total in the area 4 units

Ability plan/ unit 18 500 ton

Theoretical ability total 74 000 ton Husking yield 0,7 Annual volume dealt 3 000 ton Used ability 4,05%

At the production stage, here below is the available data on flows:

Total Production of the Niger’s Office area Re-arranged areas + non re-arr. areas+ out of rack

Place (paddy ton)

Macina 55 359

Niono 46 700

Ndébougou 39 549

Molodo 25 704

Kouroumari 39 866

TOTAL 207 179


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Model summary of flows of paddy and rice (starting point for evaluate flows)

100% 207 179 ton paddy produced

8% 16 574 ton paddy to the CA for threshing

7% 82% 13 574 ton processed by husking Bko’s wholesalers retailers

1% 18% 3 000 ton processed by rice plants Bko’s wholesalers retailers

92% 190 604 ton paddy to the farmers

75% 82% 155 551 ton paddy processed by private husking (service)

41 261 ton equiv. paddy for subsistence farming (300 kg/inhabit)

114 289 ton equiv. paddy sold to collectors Bko’s wholesalers retailers

17% 18% 35054 ton paddy kept

hypothesis:

7% 40% 14 021 ton sold to urban huskers retailers

5% 30% 10 516 ton sold to collectors urban huskers retailers

5% 30% 10 516 ton to others uses (gifts, seeds...)

Certain hypotheses were assumed about the part of rice production for subsistence farming (300/kg/inhabit) and the use of paddy non-husked on the spot. But it could be revised if needed (possibility of simulation on the base of others hypothesis).


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Purchase and selling price of paddy and rice

The prices used are based on the 1994/1995 campaign and are average prices. Different prices are not used for each area. Some adjustments to these prices could be made by the participants.

Used price (Average prices 1995 in FCFA)

Farmers: Re-arranged areas

Selling price of paddy to urban huskers 110 Selling price of paddy to coll.- traders 110 Selling price of rice to coll.- traders 180

Non re-arranged areas Selling price of paddy to urban huskers 110 Selling price of paddy to coll.- traders 110 Selling price of rice to coll.- traders 180

Country associations Selling price of paddy to rice growing 110 Selling price of rice to wholesalers 185

Rice growing Selling price of rice to wholesalers 185

Collectors-traders-stallholders Selling price of paddy to urban huskers 117 Selling price of rice to Bko’s wholesalers on the spot 185 Selling price of rice to Bko’s wholesalers at Bko 200

Urban huskers Selling price of rice to retailers at Bamako 218

Bamako’s wholesalers Selling price of rice to retailers at Bamako 214

Retailers Selling price of rice to consumers 223,5

4.5 Technical and economics data by agent

a. Private huskers

Huskers fixed and mobile

Price of husking/sack FCFA 592

Unit cost

Gas-oil FCFA/l 267 Oil FCFA/l 1113 Lubricant FCFA/kg 986 Operator FCFA/sack 20 Labor FCFA/sack 20 Sieve FCFA/pair 5694 Blades, knife FCFA/pair 5156 Maintenance FCFA/year 101556


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b. DRC’s rice growing

COST Variable costs Total Cost/ton

Cost ex-works in 1995 by ton paddy (000 FCFA) (FCFA)

Gas-oil and lubricant 3 483 10 449 3 483 Power 1 116 3 348 1 116 Sack 4 220 12 661 4 220 Transport 640 1 920 640 Continuous labor 110 818 36 939 Temporary labor 1 500 4 500 1 500 Maintenance 1 867 5 602 1 867

Cost out of commercial cost and depreciation

149 298 49 766

Bank interest on campaign 3 159 9 476 3 159 Fixed charges 132 000 44 000 Third party holder 3 885 1 295 depreciation 150 000 50 000

Commercial cost + depreciation 295 361 98 454 TOTAL 444 659 148 220 Cost price per kg 15 148

The variable costs were specified in order to facilitate a simulation of cost revenue, with the rice growing working at 100% of its capability, for example.

Production norms

Gas-oil liter/hour 2,4

Oil liter mainten. 6

Lubricant kg mainten. 1

Oil Functioning hours

106

Lubricant Functioning hours

105

Sieve ton 13 Blades, knifes ton 65 Maintenance Functioning

hours 436

Cost of husking/ husking /year

FCFA

Gas-oil 262728

Oil 25830

Lubricant 3850

Sieve 98769

Blade, knife 89437 Maintenance 105000 Labor 56375 Operator 56375 Depreciation (6 years) 250000 Total expenses annual 948364

Cost price per kg paddy 4,2 Cost price per kg rice 6,3 Husking price/kg paddy 7,6


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Purchases and sales of DRC’s rice growing:

Total paddy sold by CA 3000 ton Purchase price 110 FCFA/kg Rice produced 2100 ton Selling price to wholesales 185 FCFA/kg

c. Farmers in re-arranged areas

d. Farmers in non re-arranged areas

7 MD: man-days.

Re-arranged areas : Quantity inputs per ha Familial labor +mutual aid 74 MD7 Continuous labor 7 MD Temporary labor 23 MD Seeds 79 Kg urea 211 Kg DAP 135 Kg Sacks (/75 kg) 68 Sacks

Re-arranged areas : Unit price (FCFA) Paddy /kg 110 Rice /kg 180 Familial labor +mutual aid 0 Continuous labor 700 Temporary labor 700 Seeds 90 Urea 185 DAP 200 Sack 225 Threshing /kg 8,8 Husking /kg paddy 7,5

Re-arranged areas : Others costs per ha (FCFA) Water royalties 32 000 Farmyard manure 4000 Threshing - transport (8%) 45 426 Husking 32 901 Depreciation 15 373 Maintenance 5 500 Financial costs 4058

Non re-arranged areas : Quantity inputs per ha Familial labor +mutual aid 61 MD Continuous labor 9 MD Temporary labor 20 MD Seeds 85 Kg urea 190 Kg DAP 75 Kg Sacks (/75kg) 36 sacks

Non re-arranged areas : Unit price (FCFA) Paddy /kg 110 Rice /kg 180 Familial labor +mutual aid 0 Continuous labor 700 Temporary labor 700 Seeds 90 Urea 185 DAP 200 Sacks 225 Threshing /Kg 8,8 Husking /kg paddy 7,5

Non re-arranged areas : Others costs per ha (FCFA) Water royalties 23 166 Farmyard manure 4000 Depreciation 14 325 Financial costs 4058 Maintenance 5 500


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e. Areas out of rack

f. Country associations

Input prices FCFA

(projection of +15% non including) Purchase price DAP 185 Selling price DAP 200 Purchase price urea 180 Selling price urea 185 Average margin of inputs 5,4% Bank interest of campaign BNDA 10,5%

Bank interest of campaign (fertilizers):

Margin CA on inputs < financial costs

Financial costs on bank interest on campaign 294 459 000 FCFA

Margin CA on inputs 152 640 000 FCFA

Costs of a part of the farmers’ equipment credits

10% financial cost on 20% farmers’ equipment capital (hypo.)

Average capital of equipment valued by farmer

Number Price Value

Plow 1 20000 20000 FCFA

Harrow 1 20000 20000 FCFA

Cart 1 80300 80300 FCFA

Ox 3 100000 300000 FCFA

Total 420 300 FCFA

Total number of farmers 11 003

Capital of equipment 4 624 561 000 FCFA

Financial costs 2,00% 92 491 000 FCFA

Out of rack : Unit price (FCFA) Paddy /kg 110 Rice /kg 180 Familial labor +mutual aid 0 Continuous labor 700 Temporary labor 700 Seeds 90 Urea 185 Sacks 225 DAP 200 Threshing FCFA/Kg 8,8 Husking /kg paddy 7,5

Out of rack : Quantity inputs per ha

Familial labor +mutual aid 39 Continuous labor 5 Temporary labor 21 Seeds 100 Kg Urea 0 Kg DAP 0 Kg Sacks (/75kg) 20 sacs

Out of rack : Others costs per ha (FCFA) Water royalties 1 256 Farmyard manure 4000 Depreciation 12 606 Financial costs 4058 Maintenance 5 500

Threshing and marketing costs FCFA/kg

Threshing cost out of labor (Gas oil /lubricant)

0,61

Functioning costs CA (50%) 0,38 Salaries (threshing) 2,33 Working salaries (50%) 0,47 Depreciation (85%) 0,34 Maintenance and miscell. 0,30 TOTAL 4,40


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g. Collectors-traders-stallholders

Costs Collectors-traders-stallholders

Transports 10 FCFA/kg Rice

Marketing costs 5 FCFA/kg Rice, paddy

Labor 30% Financial costs 50% Other 20%

h. Urban huskers

Costs Urban huskers

Transport 6,8 FCFA/kg paddy

Husking

Gas oil/ lubricant 1 297 FCFA/ton paddy Maintenance 835 FCFA/ ton paddy Functioning 466 FCFA/ ton paddy Continuous Labor 250 FCFA/ ton paddy Temporary labor 250 FCFA/ ton paddy Depreciation 1 109 FCFA/ ton paddy

Marketing costs 4 FCFA/kg rice

Labor tmp 50% Other 50%

Others 1 FCFA/kg rice

i. Bamako’s wholesalers

Costs 15,1 FCFA/kg

Transport to Bamako 10 FCFA/kg

including Transport (rent car) 7 FCFA/kg Temporary labor (loading) 1 FCFA/kg Others 2 FCFA/kg

Marketing costs 5,1 FCFA/kg

Including Financials cost 2,6 FCFA/kg Depreciation 2 FCFA/kg Other 0,5 FCFA/kg

Salaried labor 3,4 FCFA/kg

Including Continuous Labor 2,4 FCFA/kg Temporary labor 1 FCFA/kg

j. Retailers

Costs 3,5 FCFA/kg

Marketing costs

Including Transport 0,5 FCFA/kg Financials cost 1 FCFA/kg Other 1 FCFA/kg Market taxes 1 FCFA/kg


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k. Niger’s Office

Costs (FCFA) DIR. areas FAS- areas WMS TOTAL areas Staff cost 37347412 57790684 233798085 328936181 TFSE 7050200 21210000 33716200 61976400 Gas oil and lubricants 3060981 1684856 46872789 51618626 Office supplies 900000 6000000 3300000 10200000 Insurance 2000000 2000000 12937500 16937500 Administrative costs 7246000 13650000 9123000 30019000 Taxes 70000 70000 175000 315000 Depreciation 10100000 21683333 87803335 119586668

TOTAL 67774593 124088873 427725909 619589375

Costs (FCFA) GM-head. CPRDM-head. FAM- head. TOTAL head.

Staff cost 52810235 75507244 34562341 162879820 TFSE 18641200 4634438 16417900 39693538 Gas oil and lubricants 3444053 45520300 2140583 51104936 Office supplies 1920000 7000000 7200000 16120000 Insurance 4500000 11340000 1700000 17540000 Administrative costs 14974000 12452000 9912000 37338000 Taxes 135000 245000 60000 440000 Depreciation 22313333 36950000 13383333 72646666

TOTAL 118737821 193648982 85376157 397762960 We need to add the maintenance of the primary network of the irrigation to the functioning costs (561 661, 000 FCFA).

RESOURCES

Average royalties paid by ha

Royalties

FCFA/ha

Recorded areas

for royal. ha

areas farming

ha

Perc. royal.

paid (%)

Average paid

FCFA/ha

Re-arranged areas Class 1 32 000 19 637 19 637 100% 32 000

Non re-arranged areas Class 2 24 000 23 460 23 460 100% 24 000

Class 3 16000 3 885 3 885 100% 16 000

Total NRA 27 345 27 345 100% 22 863

Out of rack 16 000 1 063 1 063 100% 16 000


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5 WORDING OF EXERCISES

5.1 Exercise 1: functional analysis

(i) Prepare a table of agents and functions of the sub-chain irrigated rice N’s O on the basis of sections 4.2 and 4.3. Format of proposed table:

Level in the chain Function(s) Agent(s) “ Product ”

Upstream

Production

Downstream

(ii) Draw the graph of the sub-chain on the basis of the information in section 4.2

5.2 Exercise 2 : Calculation and analysis of flows

(i) Calculate the annual volume of business from huskers.

(ii) Calculate the flows of production from each group of farms. On the basis of:

[Average yields/ area] x [areas farmed (ha)/ area ]

for the different type of farms, calculate the paddy production by farm (cf section 4.1). Extrapolate the paddy production by farm, by multiplying the number of farms concerned to obtain the total production of farms of type 1, 2 and 3. On the basis of the obtained result and the information in section 4.4, fill in the following table for each group of farms.


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Farmer in re-arranged area

Paddy product ton

Paddy for CA (threshing) ton

Paddy avail. for farmer ton

*Paddy processed by private husk. ton

Equiv. paddy personal consumpt° ton

300 kg/person

Rice sold ton

*Paddy non processed ton

Including sold urban huskers ton

Including sold collect.-traders. ton

Including... ton

Farmer in non re-arranged area

Paddy product ton

Paddy for CA (threshing) ton

Paddy avail. for farmer ton

* Paddy processed with private husk. ton

Equiv. paddy personal consumption

ton

300 kg/person

Rice sold ton

*Paddy non processed ton

Including sold urban huskers ton

Including sold collect.-traders. ton

Including... ton

(iii) Upstream marketing Fill in the following table:

Country associations

Purchases Sales Paddy

Paddy

Rice

Rice


19

Collectors-traders-stallholder


Paddy

Rice

Rice

Wholesalers


Paddy

Rice

Rice

Urban huskers


Paddy

Rice

Rice

Retailers


Paddy

Rice

Rice


20

5.3 Exercise 3 : production-trading account by agent

(i) Creation of an accounting input sheet. Make a list of intermediate inputs In expectation of the next calculations, classify these intermediate inputs (II) into 3 classes: II imported, II local out of chain, II local within chain. Set a common presentation for each production-trading account, on the basis of the following table:

Expenses (000FCFA) Income (000FCFA) Intermediate inputs Sales II imported Sales out of chain II local out of chain Personal consumption II local within chain Sales within chain Total II Total income Value added Total VA Total expenses Total income


21

(ii) Changeover from technical and economic data to the trading account Calculate the different costs per ha, for each type of area Use the following tables:

Costs per ha in RA FCFA Seeds Water royalties Fertilizer Farmyard manure Threshing - transport (8%) Husking Depreciation Familial labor +mutual aid Continuous labor Temporary labor Sack Financial costs Maintenance Total costs

Costs per ha in NRA FCFA Seeds Water royalties Fertilizer Farmyard manure Threshing - transport (8%) Husking Depreciation Familial labor +mutual aid Continuous labor Temporary labor Sack Financial costs Maintenance Total costs

Costs per ha out of rack FCFA Seeds Water royalties Fertilizer Farmyard manure Threshing - transport (8%) Husking Depreciation Familial labor +mutual aid Continuous labor Temporary labor Sack Financial costs Maintenance Total costs


22

Use the results to fill in the production-trading account by type of farmer [ex: (cost by ha NRA x nb ha in NRA of farmer + costs by ha out of rack x nb ha out of rack) x nb farmers] and include the corresponding products (flows of sales multiplied by unit cost. Calculate the trading account of the others agents.

5.4 Exercise 4 : Consolidated account and chain account

(i) Consolidate the account into aggregated accounts. Realize an aggregated account, in the upstream chain (CA + Niger’s Office). Realize an aggregated account of all the farmers. Realize an aggregated account, in the downstream chain (husking, marketing) (ii) Realize an aggregated account of the whole commodity chain. Consolidate the aggregated accounts into an account for the whole commodity chain. Analyze the breakdown of the value added by position. Analyze the distribution of the net profit by agent. (iii) Realize a consolidated balance of the government for the whole chain. Distinguish in use, direct subsidies, direct provisions of state organizations (Niger’s Office), and in resources, taxes deducted by government, notably with respect to importations (VAT, “PCS”, “CPS”) and taxes paid on the markets by the retailers.

5.5 Exercise 5 : Simulations within the sub-chain

(i) Simulation of an increase in the royalties by 40%. Analyze the effects of an increase in royalties for each type of farms. (ii) Simulation of a poor year (drop in yield by 25%) Effect on the gross profit of the farmers Effect on the gross profit of the others agents Effect on the commodity chain (iii) Others possible simulations: Except for the import taxes and market licenses, the participation of the government in the sub-chain is insignificant. It has no control over product prices, nor does any state organization in charge of the upstream chain (inputs, treatment). The sub-chain works in a situation of total liberalism. The lack of credit, the economic weakness of agents and


23

most of all, the precariousness of farmers at the land level have involved an economic behavior of decline of investment by less than 1% of depreciation costs.

6 RESULTS OF EXERCISES

Results are available on

7 CONCLUSION

spreadsheet tables in Excel.

This module puts the conceptual presentation of the chain analysis (the first four modules EASYPol) into practice. The exercise of irrigated rice chain analysis of the Niger’s Office (Mali) is used as a support for this methodological approach. The financial and economic account is calculated. This module positions the framework of experts in charge of analyzing the chain. There is a complex empirical database which illustrates a usual situation (data more or less joined by hectare, by perimeter, by operator, by area). The first exercise allows one to get accustomed with the functional

8 READERS’ NOTES

8.1 Time requirements

The trainer is strongly recommended to verify that trainees have a minimum understanding in micro-economics. If this background is weak or missing, the trainer may consider to read the following module: • Commodity Chain Analysis. Constructing the Commodity Chain: Functional

Analysis and Flow Chart,

8.2 Complementary capacity building materials

EASYPol module 043:

This module is complemented by a set of “spreadsheet tables” and related pictures that can be used to highlight selected exercises during the lectures or when trainees are in working groups. The trainer may also consider the opportunity to present the relevant segments of the country case study based on real data: Commodity Chain Case Study: Analysis of the Suburban Horticulture Sub-Chain

of Bamako (Mali),

EASYPol Module 048

http://www.fao.org/docs/up/easypol/334/CCA_047EN.xls�

http://www.fao.org/docs/up/easypol/330/value_chain_analysis_flow_charts_043en.pdf�


http://www.fao.org/docs/up/easypol/334/CCA_047EN.xls�

http://www.fao.org/docs/up/easypol/335/value_chain_analysis_FAO_horticulture_bamako_048EN.pdf�



24

8.3 EASYPol links

This module belongs to a set of modules about the Commodity Chain Analysis.

Commodity Chain Analysis. Constructing the Commodity Chain: Functional Analysis and Flow Chart,

EASYPol Module 043 Commodity Chain Analysis: Financial Analysis, EASYPol Module 044

Commodity Chain Analysis: Impact Analysis Using Market Prices, EASYPol Module 045

Commodity Chain Analysis: Impact Analysis Using Shadow Prices, EASYPol Module 046

See the case study using the Commodity Chain Analysis : Commodity Chain Case Study: Analysis of the Suburban Horticulture Sub-Chain

of Bamako (Mali),

EASYPol Module 048

See all VCA material on EASYPol resource package: Value Chain Analysis

9 FURTHER READING

Aldridge, Kimberly M., 1992, A framework for analyzing alternative institutional arrangements for the cereals market information system in Mali, Mémoire de “Master of Science in agricultural economics, Michigan State University, Michigan, U.S.A., pp. 15-40.

Audette, R., Larivière, S., Martin, F., 1994. Analyse de filière dans le secteur agro-alimentaire: guide de réalisation d'une étude filière, rapport préliminaire ACDI - Eco. rurale inc.

Bourgeois, R., 1998. La constitution des filières et les institutions quaternaires. Daviron, B., 1998. Les défaillances de marché et les filières agricoles. Fabre, P., 1994. Note de méthodologie générale sur l'analyse de filière, Document de

formation pour la planification agricole n° 35, FAO ESPT. Hugon, P., 1998. Avantages comparatifs, compétitivité et organisation des filières.



http://www.fao.org/docs/up/easypol/331/value_chain_analysis_financial_analysis_044EN.pdf�

http://www.fao.org/docs/up/easypol/332/value_chain_analysis_market_Prices_045EN.pdf�

http://www.fao.org/docs/up/easypol/333/value_chain_analysis_shadow_prices_046EN.pdf�



http://www.fao.org/easypol/output/browse_by_training_path.asp?pub_id=336&id_elem=336&id=336&id_cat=336�