Rice seed production and marketing practices in Nepal

Production and marketing of rice seed involves activities and actors in seed value chain. This study aims to investigate practices and pattern of rice seed production and marketing in Nepal employing survey of 270 seed producers and 240 seed dealers and retailer covering most of the terai and market accessible hills. The finding showed that seed business activities are concentrated on later generation seeds produced by diverse actors but marketed mainly through seed dealers and retailers. The most popular varieties with highest seed sales are Radha -4, Sabitri and US 312 (hybrid) respectively. Seed dealers selling hybrids receive higher benefits due to their higher market margins. The major constraints faced by seed actors are low profit margins in seed marketing of domestic varieties as compared to exotic hybrids. Improving rice seed business requires strengthening seed production and marketing of domestically developed varieties through entrepreneurship development, networking and policy support.

Introduction

Seed system is one of the most vital components of agricultural system that involve activities associated with seed production, multiplication, processing and marketing to ultimate seed use by farmers. An efficient and effective seed system is expected to provide seed of adopted time and place at an affordable price to farmers. Time supply of sufficient quantity of quality seeds of high yielding varieties increase crop yields by 15 – 25 % ( Thompson, 1979) and it can be further raises up to and it can be further raises up to 45% with timely applications and efficient management of other inputs such as fertilizer , irrigation water and pesticides. An estimated 50% of the global increase in yields over the past 50 years has been derived from genetic progress and seed quality, in addition to agronomic improvement and phytosanitary product uses ( FAO , 2011 ). Fresh replacement of quality seed of improved varieties increases not only yields but also reduces cost of production due to lower seed rate requirement and disease free status of the good quality vigorous seeds. Use of quality seeds also enhances efficiency and productivity of other key inputs such as fertilizers, irrigation and human labour.

Methodology

This study involved a nationally representative sample survey of 270 seed producing and marketing locations of terai ( east of jhapa to far west in kailali ) and accessible regions of central and western hills and mountains. In addition, the survey was supplemented by institutional survey of selected seed companies, cooperatives and community-based seed producer (CBSP) groups from selected seeds producing and marketing centers. The survey covered 10 key seed producing districts of terai ( Morang, siraha, Rautahat, chitwan, Rupendehi, Dang, Bardiya) and hills ( Kavre, Tanahun, Syangja ) in 2011/12 and 2012/13 for collecting information about rice seed production, while it covered 30 districts ( 20 Terai, 9 hills and 1 mountain districts ) for seed dealers – retailers Agrovets to collect marketing information seed marketing survey covered hilly districts mainly from centers and western region and one mountainous district ( Jumla ) from mid – western region. The seed producing districts were chosen based on the dominance of seed production activities of the seed actors ( presence of CBSP groups, cooperatives, contract seed production activity of seed companies ). For the selection of seed producers first 2 dominant seed producing villages from each district were selected from where 25- 35 seed producers farmers affiliated with CBSP groups, cooperatives or seed companies were randomly interviewed. For seed marketing related information, we selected Agrovets where they were engaged in rice seed marketing. The sample size ranged 5- 10 Agrovets in the Hill ( where presence of Agrovets were limited ) and 10 – 20 Agrovets in the Terai districts ( where their presence was higher ). The actual sample size represented about 20 – 30% of the total sample size of produces and traders and covered representation of different ecology ( hills, Terai) production systems ( main season and spring rice ) and market centers ( Urban, rural ) and seed actors type ( producer cum dealer, trader only ). The survey information covered institutional profile, business operations and practices of seed actors, existing marketing systems and market networks, type of rice varieties and hybrids produced, sold and marketed and their market price including major bottlenecks and gaps in seed production, marketing and supply.

Results and discussion

SEED ACTORS AND THEIR SOCIOECONOMIC FEATURES

Broadly three types of seed actors were common in Nepal in terms of their real involvement with seed enterprise and production led seed business motives. These include seed companies, cooperatives and CBSP groups who had a practice of contracting or engaging farmers for rice seed production. The unique feature and similarity of all of these three actors was that they all were involving individual farmers in producing seeds whether by bringing them to group or cooperative members or in contractual mode of seed production with seed companies, thus providing smallholder farmers an opportunity to earn cash income and livelihood by growing seed crops.

PRODUCTION SHARE AND MODE OF PRODUCTION

Seed business activities in rice during survey were led by three key actors mainly CBSP, Cooperatives or seed company and they were involved in membership or contractual mode of seed production with farmers. The seed types, production shares by seed actors for rice seed production is presented in Table 1. The findings showed that seed actors are mainly concentrated on commercial or later generation ( certified or improved ) of seeds.

These include :
1. Certified seed (CS),
2. Truthfully labeled (TL),
and improved seeds.

Table 1: Seed production share (%) by class of seeds and contractual modes of production.

Source: Field survey

A large proportion (90%) of seed business by sample seed producers involved quality assured seeds, either certified or truthfully labeled ( CS/TL), and the rest 10% accounted for improved seeds (IS) which were not quality assured (CS/TL) seeds. Contractual mode of seed production among Seed producers varied with the type of seed actors. More than three-fourth of the seed producer farmers associated with CBSP groups and two- third of Cooperatives had adopted verbal mode of contract, while about half of the seed producers associated with seed company adopted written contractual mode for producing quality seeds. The contract mechanism for seed production was mainly done for the period of one crop season. Seed testing, certification, seed tagging and bagging are essential functions of seed actors for maintaining quality and marketing of seeds.

Table 2: sale of rice varieties and hybrids by dealers and retailers ( N = 240 ) in Nepal.

MOST POPULAR MARKETED VARIETIES

Seed dealers cum retailers ( Agrovets ) marketed more than 100 rice varieties and hybrids across Terai and market accessible favourable regions of lower hills of Nepal . About half of them were only officially notified, which included half of the released inbred varieties (35 out of 69 inbred varieties ) and 17 hybrids that were registered in Nepal. The ten most popular varieties with highest seed sales is presented in figure 1.

Figure 1 : Dominant varieties marketed by seed dealers.

Source : Field survey

Radha -4 variety had the largest seed sales followed by Sabitri and then US 312, which is registered hybrid. Ramdhan and Hardinath -1 ranked fourth and fifth, Gorakhanath hybrid sixth and makawanpur -1 in seventh position. Shamba mahsuri sub 1 ranked eighth which has been gaining popularity due to its good grain quality, higher market price and its higher demand in the market. Among 10 important ranked varieties, three were hybrids recently registered in Nepal. In addition, data showed that varieties such as Radha-12 was popular in the eastern region, Masuli in the Terai and lower altitudes of hills and Khumal-4 in the mid hills across Nepal. Estimates showed that one – third of the total estimated share of formal sector seed was marketed through dealers cum retailers ( Agrovets ).

VALUE OF SEED MARKET

The value of rice seed market in Nepal accounted for over NRs. 600 million by combining total seed marketed and distributed through formal sector only. The total formal rice seed marketed and distributed is estimated about 10000 t with 9000 t of improved inbred varieties and about 1000 t of hybrids contributing about 12 % seed replacement rate ( SRR ). The value of improved inbred varieties formally marketed in Nepal was estimated to be NRs. 320 million with seed sale price ( NRS.35/ kg ) . The value of hybrid rice seeds with average price of NRS.300/ kg accounts for NRS. 300 million in the current price. The total value combining improved inbred and hybrids accounted for NRs.620 million ( US $ 6.2 million ) . This value of seed market account only for formal sector supply but does not include seeds supplied informally through farmers own savings and exchanges. Estimates showed that there is a higher demand of formal rice seed market to the amount of 20000 t annually in the country as estimated recently by Nepal seed producer Association of Nepal ( SPAN, 2014). This indicates that the formal system currently supplies only half of the total actual quality seed demand for rice crop in Nepal. This assessment showed that the potential formal seed market value of quality improved rice seed in Nepal was of about NRs 1 billion ( US $. 10 million ).

GAPS AND ISSUES IN PRODUCTION AND MARKETING.

The field survey observations and assessments showed that rice seed production and marketing was not a prioritized activity in overall rice seed system in Nepal. Production and marketing of rice seed face several constraints and bottlenecks for efficient supply and farm level deployment of choice varieties. The major gaps and issues in current seed production and marketing system obtained from survey were:

1. Low profit margin for marketing of domestic inbred varieties

2. Slow multiplication of quality seeds of farmers preferred varieties in seed chains with limited policy support and seed networking

3. Mis- match in demand and supply of source seeds as a result of poor integration of variety development, seed multiplication and marketing chains,

4. Inadequate training, networking and capacity of building of seed actors in quality seed production and marketing of domestically developed inbred varieties,

5. Inadequate seed storage, processing and marketing infrastructure and 6. Problems in seed marketing and market networks with dominance of unregulated market supply.

Furthermore, marketing of good quality seeds of domestic improved inbred varieties were constrained by poor market information and absence of proper packaging, labelling, branding and seed marketing campaigns. Seed dealers also lacked proper public sector support, awareness level, training and networking in promotion and marketing of domestically developed varieties. Hence, at the farm level, farmers had limited choice of seeds of improved varieties and constraints in timely access of quality seeds.

Conclusion

Seed business is emerging as a viable and sustainable enterprise in Nepal. The main actors in seed production are individual seed producers, CBSP groups, Cooperatives and Seed companies. Seed production was done either through contractual mode or membership based production by the groups or cooperatives. However, seed marketing was done by a range of seed actors such as Agrovets ( dealers- cum retailers ), seed companies, cooperatives and CBSP groups. Seed business activities were mainly concentrated on commercial or later generation of seeds are done mainly through dealers and retailers ( Agrovets) and to some extent directly to users. About one – third of the total estimated share of formal sector seed is marketed through dealers cum retailers ( Agrovets ). Non- market channels are also prominent among CBSP groups and cooperatives selling their Seeds through own informal channels and District Agricultural Development offices. Agrovets market more than 100 rice varieties and hybrids, out of which about half of them are only officially notified. The most popular varieties with highest seed sales in order fourth of the total sales made by Agrovets accounted for hybrid seeds. Recently flow of hybrid rice seeds is expanding with higher profit margin for Agrovets and increasing trend for market oriented production in favourable rice producing domains of terai and the hills. Seed dealers selling hybrids receive higher benefits due to higher sale price and profit margins for hybrids as compared to inbred rice varieties.

Presently, seed marketing is not a prioritized activity in overall rice seed system in Nepal. Moreover, seed production and marketing system face several constraints and bottlenecks for efficient supply and farm level deployment of choice varieties. Furthermore, marketing of good quality seeds of domestic improved inbred varieties are constrained by low profit margins and absence of proper packaging, labelling, branding and seed marketing campaigns. This can be made through

1. Improving information flow of the quality assurance of domestic improved varieties in the market

2. Proper linkage of varietal development and seed multiplication chains with marketing to reduce mis- match in demand and supply,

3. Strengthening market and seed infrastructure facilities for production, packaging, labelling and branding with adequate for rice seed production.

Writer: Sonu Kumar Sah (Student, IAAS, Paklihawa Campus)