The true price of paddy rice for Senegalese farmers

The true price of paddy rice for Senegalese farmers

in News
This news is part of the following focus area:
Rose Somda
Communication Coordinator

The President of the Republic of Senegal, his Excellency Mr Macky Sall, has allocated to the country's rice producers a subsidy of 32 CFA francs on the price per kilogram of paddy rice. This brings the purchase price per kilogram of paddy rice from 130 CFA francs to 162 CFA francs. Out of those 32 CFA francs, 2 CFA francs will be paid for collateral management and certification and the remaining 30 CFA francs go directly to rice producers.

The decision to subsidise paddy rice as well as fertilizers was taken on Thursday, February 24, 2022, during the Council of Ministers. It was the result of an advocacy process that Rikolto supported.

''The President of the Republic has taken a strong measure to subsidise the price of paddy rice up to 32 CFA francs, which creates an incentive for producers. I also assure you that this is a shortcut to achieving self-sufficiency in rice.''

Ousseynou Ndiaye President of the Interprofessional Rice Committee (CIRIZ)

The potential of rice production in Senegal

In Senegal, rice is the most consumed type of grain. Yet, national production covers only 34% of the national need of one million tons per year. The country has an irrigable land potential of 240,000 ha, and 183,000 ha of plains for rainfed rice. However, the value chain is plagued by several difficulties including the growing disinterest of producers in the sector because of its low profitability and the capacity gaps of the actors, especially producers, for a better marketing of paddy rice.

Rikolto supports the country's rice actors and aims to contribute to an institutional environment that benefits a climate for rice production and marketing in the country. We bring together producers, processors and traders at the request of CIRIZ, the Interprofessional Rice Committee, and support its actions to reduce obstacles that hamper the rice sector in living up to its full potential.

The true price of paddy rice

With the support of Rikolto, CIRIZ was able to organise multi-stakeholder consultations to determine the price of paddy rice. The process is based on meetings and dialogues between all actors in the value chain, making it possible to come to a win-win situation for farmers and businesses alike.

"Rikolto helped organise meetings and studies, for all actors to agree upon operating accounts.”

Mame Birame Ndiaye Director of the Rice programme in West Africa

The development of these operating accounts has led to a better understanding by stakeholders of the constraints all of the actors in the rice sector (farmers, processers, etc.) face. The accounts also served as evidence for CIRIZ that the prices set each year for a kilogram of paddy rice were not profitable for the producers.

Thanks to the exchanges during the multi-stakeholder meetings, the obstacles that affect the profitability of the rice sector could be identified. The conclusion was that producers are not earning enough from the sale of the production to be able to cover all costs, even taking into account existing input subsidies.

Advocacy for a price subsidy that benefits rice farmers...

"CIRIZ has started a plea with the state for the subsidy on paddy rice. We sat down with technical officials and policy makers from the Ministries of Agriculture, Finance, Trade, and Industry at the invitation of the Ministry of Commerce. We discussed a memorandum that was presented to the President of the Republic in the Council of Ministers press release.”
Ousseynou Ndiaye President of the Interprofessional Rice Committee (CIRIZ)

Rikolto contributed to the empowerment of CIRIZ members, training them in advocacy and lobbying techniques. Then, the leaders began their consultations with the ministerial departments in charge of rural development.

The producers asked for a minimum purchase price of 160 CFA francs per kilogramme of paddy rice. Therefore, 30 CFA more one the previous price. The decision of the President of the Republic, His Excellency Mr Macky Sall is a breath of oxygen for the producers. That way, the producers could receive a decent price for their rice.

As a result, the incentive of 32 CFA francs was established. Out of those 32 CFA francs, 2 CFA francs will be paid for collateral management and certification and the remaining 30 CFA francs go directly to the producers. That brings the total going rate of paddy rice up to 162 CFA francs, instead of 130 CFA francs.

... and rice processors

The extra 2 CFA francs per kilogram that do not go to farmers make it possible to secure third-party ownership. Thank to this risk-reducing mechanism, processors can access credits from financial institutions to pay producers whilst securing their raw materials until the processing season. The mechanism was developed by the Banque Agricole (LBA) of Senegal and USAID as part of the Naatal Mbay project, which allows CIRIZ to mitigate the risk of default of processors and to comply with the requirements of the Central Bank of West African States (BCEAO). Membership in the third-party ownership programme has become a condition for obtaining marketing credit.

Rikolto supported CIRIZ in organising meetings and a third-party assessment workshop. These meetings allowed them to see that the lack of financing of the mechanism at the level of the processor could reduce the positive effects of the results of the advocacy for the subsidy at the purchase price of the paddy. This is where the suggestion of a risk-reducing mechanism came from. Furthermore, during the workshop, the actors recommended holding regular meetings between the actors in order to resolve the difficulties the mechanism might face.

According to the statement published on the website of the Presidency of the Republic of Senegal, the decision to subsidise the price of paddy as well as third-party ownership aims to “encourage and support local rice production".

The collateral management is the value of rice stocks guaranteed at the level of banks to obtain bank loans to finance the rice value chain in Senegal. This value was 1,000,000 CFA francs. To facilitate the access of processors to bank credit, the USAID project subsidised 80% of this value, i.e. 800,000 CFA francs from the bank.

The subsidy is not the end point

CIRIZ is ready to play a major role in the implementation of the 2022–2026 programme of Rikolto in West Africa. “We highly appreciate the collaboration with Rikolto. Thanks to you, we were able to take the steps towards an executive secretariat and this subsidy.”

In addition to the subsidy, CIRIZ's will continue to take actions to strengthen the competitiveness in the local rice sector. The members of the industry organisation intend to encourage producers to boost the productivity of their farms, which will improve the operation of rice mills and bolster investment in the rice sector.

CIRIZ also intends to collaborate with Rikolto in the future, on educating farmers on ways to master sustainable production techniques, improving the quality of rice processing procedures, and generating a greater interest for local rice consumption in Senegalese consumers.

"We hope to always be able to support the rice sector in Senegal. CIRIZ must master production statistics to strengthen its services to producers, processors, traders and also Senegalese consumers so that they have better information helping them to improve the availability of rice in the market."

Mame Birame Ndiaye Director of the Rice programme in West Africa