Abstract

Rice processing is constrained by lack of modern equipment, low value addition and post-harvest losses. This study examined the profitability of value addition in traditional rice processing. A sample of 120 rice processors were randomly selected using structured questionnaire. The data were analysed using descriptive statistics, budgetary technique and Cobb-Douglas production model. The results show that 80.8% of the respondents was <50 years-old, male (89.2%), married (77.5%) while 46.7% had no formal education. The average rice processing experience was 15 years; mean household size was 5 persons while 51.2% did not participate in cooperative. The total cost constituted paddy (46.7%), value addition operations (16.8%) and labour (15.1%). The gross margin was N315,261.26 with profitability index of 0.56. Major constraints include poor processing/ storage facilities (80.0%), high cost/ scarcity of paddy (75.0%) and output price fluctuation (68.3%). Age of processors (0.146) and sex (0.762) significantly enhanced profitability while experience (-0.100), low formal education (-0.201) and manual labour (-0.056) reduced profitability level. Therefore, the rice processors should be educated through extension services about processing of quality and competitive or polished rice. Modern equipment should be provided to reduce manual labour and increased quantity of locally processed rice.

Key Words:Paddy rice, Value addition, Profitability, Determinants, Constraints