Examining the marketing margins of the rice supply-chain uncovers truths about the cost distribution and value addition within the chain. It also determines who has the power and how it affects the distribution of risks and gains across the chain and among its participants.
- High margins in postproduction. A significant portion of the marketing margins are at the postproduction levels – processing, milling, and transportation.
- High margins for retailers. Even though a considerable share of the margins goes to retailers, the prices are not that inflated since this does not only cover rent but also the cost of meeting consumers’ demand for shopping convenience.
- Price premium of organic rice. Organic rice commands a price premium over the conventional ones. This is reflected by the higher share of the margins at the retailers’ point of the chain as compared to the conventional one.
- Higher farmers’ share for organic rice. Farmers of organic rice enjoy a higher share in the rice supply chain (67%) than the conventional farmers (60-64%).
- Higher overall share for organic rice. All participants in the nonconventional (organic) rice supply chain all enjoy a share from the higher price that their product commanded. This is evidenced by the higher margins across all participants.
- Opportunity to cut cost. Cost reduction in the postproduction but pretrading activities will be beneficial to the sustainability of the supply chain and its participants because the bulk of the margins go to these activities.
- Opportunity to enhance chain share. Farmers would enjoy a better share in the supply chain if they did postproduction but pretrading activities. However, they must be capable to undertake these activities to be able to enjoy sustainability and benefits.
Source:
Casiwan, Cheryll, Nerlita Manalili, Locel Ann Tumlos, “Supply-Chain Perspective”, Securing Rice, Reducing Poverty, (CSEARCA, 2006), pp. 260-261.
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