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Details: Category: Economics and marketing | Published: 17 June 2013 | Hits: 779

Importance of economics

Is the process of evaluating the value of rice in terms of inputs and output.

Inputs involved in rice production( Variables)

Production Costs

Introduction

 

Making profits in rice farming like in other crop is a goal every farmer is aspiring to attain. The profit margin a farmer gets however depends on how much he/she spends on farm inputs.

 

Cost of producing irrigated rice variety Basmati (BS370) and rainfed rice variety NERICA1 both of which have a romatic characteristic are presented below

 

 

      Inputs                                                                                Costs   (KES)                          

 

                                                                             Irrigated (BS370)           Rainfed (NERCA1)

 

Land preparation                                              4,500                            4,500

 

Nursery preparation                                          3,500                            0

 

Total cost of seed                                             1,600                            3,100

 

Cost of transplanting fertilizer (DAP, MAP)      4,000                           4,000

 

Cost of top dressing fertilizer (SA, CAN)         4,000                           4,000

 

Pesticide costs                                                900                               900

 

Water Management                                         2000                             0

 

Labour costs paddling/leveling                        3,000                            0

 

Labour costs for sowing/transplanting            4,800                            4,800

 

Labour costs for fertilizer application              600                               600

 

 Labour costs for weeding                              7,200                            7,200

 

Labour costs for pesticide application             600                               600

 

Labour costs for bird scaring                         9,000                            9,000

 

Labour costs for harvesting, stacking            6,000                            6,000

 

Labour costs on loading/offloading                 2,600                            1,800

 

Labour costs for cleaning and drying             2,600                            1,800

 

Cost of bags                                                   1,300                            900

 

Transport costs                                              2,600                            1,800

 

TOTAL                                                                  60,800                          51,000

 

 

MARKETING

 

Introduction

 

Marketing is a process involving buying and selling of paddy rice (unmilled) and milled rice in their respective markets.     Paddy rice, milled rice and rice by products markets spread in different rice growing regions in Kenya are highlighted below.

 

Paddy Rice markets

 

 

 

Milled Rice Markets

 

 

 

Markets for by-products

 

 

 

Markets for value added products

 

 

 

Prices   (These can change any time)

 

 

 

 Prices for milled rice

 

 

 Prices for by products

 

 

CHARACTERISTICS OF RICE MARKETS

 

There are three types of rice markets namely Local, National and Regional. The markets have distinct characteristics which define their functions. The characteristics are listed below.

 

 

Local

 

 

       Liberalized market

 

National

 

 

       Liberalized market

 

Regional

 

 

       Liberalized

 

GROSS MARGINS (GM)

 

 

Introduction

 

Gross margin is the difference between total costs that vary as farming activities are expanded. Negative GM indicates that a farmer is not making profits but if it is positive it means a farmer is making profit. It is calculated per unit area.  Gross Margin per acre (in KES) for irrigated and rainfed rice is shown below.

 

 


Item                                                     Irrigated                                   Rainfed

                                                            Variety: Basmati370                   Variety: NERICA1

Gross output (Q)(80Kgbag)                    26                                             18

Price (P)/80Kgbag                                 4,500                                        3,600

Total Variable Costs (TVC)                     60,800                                      51,000

Revenue (QxP)                                      117,000                                   64000

GM (QP-TVC)                                        56,200                                      13800

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