Details: Category: Economics and marketing | Published: 17 June 2013 | Hits: 1595

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



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 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





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.






       Liberalized market





       Liberalized market












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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