1. AWOTIDE, B.A., A. DIAGNE, T.T. AWOYEMI, T. NAKELSE, and O.S. OJO A contributed paper Submitted for Presentation at the 2nd International Conference on Sustainable Development in Africa, Dakar, Senegal, 26-27 November, 2015 Does Seed Certification Impact Smallholder Farmers’ Allocative Efficiency and Willingness-To-Pay for Certified Improved Rice Seed? Evidence from Nigeria.

2. INTRODUCTION Rice is a crop of major economic importance across the globe (Wailes, 2003; Griswold, 2006) It accounts for one in five calories consumed worldwide-FAO, (2006) Among the major staple foods in SSA, rice consumption is growing most rapidly (Diagne, 2010).

3. RICE CONSUMPTION PER CAPITA Source: Underlying data from FAO, 2012

4. PADDY PRODUCTION, AREA HARVESTED AND FERTILIZER CONSUMPTION Source: Underlying data from USDA, 2012

5. IMPORT QUANTITY: 1960-2011 Underlying data from USDA, 2012

6. According to Morris et al., (1999), of all the inputs required for agricultural production, none has the ability to affect productivity more than improved seeds: Almost 60 improved rice varieties have been developed and disseminated

7. SEED CERTIFICATION AND QUALITY IMPROVEMENT A legally sanctioned system for quality control of seed multiplication and production. Carried out to guarantee the quality of the seed and to ensure genetic identity and purity. A quality assurance system whereby seed intended for marketing is subject to official control and inspection. At its simplest, the system certifies that a sack/bag, packet or box of seed contains what is written on the label and that the seed was produced, inspected and graded, in accordance

8. OBJECTIVES OF SEED CERTIFICATION to supply high quality seed to farmers and other growers: true to identity high in purity and germination capacity free from certain pests and diseases

9. OBJECTIVES OF THE STUDY To access the farmers WTP for the certified improved seed Empirically determine the impact of seed certification on WTP and farmers’ allocative efficiency

10. DATA AND SAMPLING FRAMEWORK Study area: Nigeria Three states: Niger (Lowland), Osun (Upland), Kano (Irrigated) Data collected: 2008 (Baseline) and 2010 (post intervention) 600 rice farming households : treated and control group The control group (160 farmers) : received up to 20kg certified improved rice seed

11. Map of Nigeria Showing the Study Area Study Area: Osun, Kano, and Niger

12. ANALYTICAL TECHNIQUES WTP-single bounded referendum-style binary choice format –Hanemann (1984) Determinants of WTP: Probit Model - (1 if WTP>0 and 0 otherwise). - Allocative efficiency: stochastic frontier model (Frontier 4.1)- (Coelli, 1996) Impact Assessment: Local Average Treatment Effect (LATE) technique IV- Random assignment (Katz et al., 2001; Galasso et al., 2004; and Ravallion, 2005.

13. Results and Discussion

14. SOCIO-ECONOMIC CHARACTERISTICS OF THE RESPONDENTS BY TREATMENT STATUS Characteristics Treated (n=160) Control (n=403) Total (n=563) Difference Test Socio-demographic Variables Male farmers (%) Female farmers (%) Average age of household head Native of the study area (%) Number of years of residence in the village Average household size Agriculture as main occupation (%) Farmers with secondary occupation (%) 82.43 17.57 45.30 79.05 35.00 8.50 94.59 80.41 80.00 20.00 45.00 90.12 42.00 8.00 87.71 91.81 19.36 80.64 45.00 87.21 40.00 8.00 89.52 88.81 0.000 0.46 0.000 6.57*** 0.57 0.07 0.11*** Human Capital Variables No formal education (%) Primary school education (%) Secondary school education (%) Tertiary school education (%) Average number of years of education Experience in lowland rice farming (%) Experience in upland rice farming (%) Experience in irrigated rice farming (%) Attended vocational training (%) Years of experience in upland rice farming Average years of experience in lowland rice farming Average years of experience in irrigated rice farming 20.27 14.86 6.76 6.00 61.49 31.76 31.08 33.78 5.60 11.00 31.08 35.66 14.22 7.47 2.41 4.00 88.43 30.12 10.84 8.19 7.00 19.00 10.84 31.62 14.39 9.41 3.55 4.60 81.35 30.55 16.16 14.92 6.65 16.95 3.03 0.15*** 0.006 0.07 0.043 2.05 0.29*** 0.016 0.20 0.26 1.43* 7.99*** 3.69 Legend: Significance level **P<0.05, *P<0.10, *** P<0.01.

15. SOCIO-ECONOMIC CHARACTERISTICS OF THE RESPONDENTS BY TREATMENT STATUS CONDT. Institutional Variables Contact with extension agents (%) Relationship with NCRI (%) Relationship with ADP (%) Relationship with AfricaRice (%) 95.95 14.19 78.38 3.38 46.99 24.34 20.96 16.87 59.86 21.67 36.06 13.38 0.49 0.10*** 0.57 0.13*** Social Capital Variables Member of any organisation (%) Post of responsibility in any organisation (%) Attended training organized by the organisation (%) 54.05 31.08 51.35 23.19 18.60 20.96 31.32 21.89 51.35 0.31 0.12 0.30 Legend: Significance level **P<0.05, *P<0.10, *** P<0.01. Source: field survey, 2010. Legend: Significance level **P<0.05, *P<0.10, *** P<0.01.

16. DESCRIPTIVE ANALYSIS :FARMERS’ WILLINGNESS-TO-PAY CERTIFIED IMPROVED RICE SEED Willingness-To-PayTreatedControlPooled data Proportion that are willing to pay58.0042.0067.00 WTP by Gender Males (%) Female (%) 43.00 38.00 76.00 77.00 67.00 68.00 WTP by Poverty Status Poor Non-poor 32.00 48.00 61.58 90.00 56.00 77.00 Educated Farmers (%)35.0074.0062.00 Farmers that have contact with extension agents (%)38.0095.0063.00 Mean WTP( N/kg)162.29158.77156.80 This value (N156.80/kg)sugg ests that, the farmers may not buy the seed if the price per kilogram is higher than ₦ 156.80/kg and will be willing to buy if the cost is less than this amount.

17. DETERMINANTS OF WTP FOR CERTIFIED IMPROVED RICE SEED VariableCoefficientStand. errort- statistic Marginal Effects Bids( Starting value)-0.010***0.002-6.71-0.004 Age (year)-0.4560.357-1.28-0.182 Gender (male=1)0.313*0.1751.790.124 Household size (number)0.058***0.0183.170.023 Education (Year)0.0100.0110.930.004 Credit (yes=1)0.149*0.0781.910.059 Received certified seed0.7670.7750.990.297 Perception about seed quality0.0890.7690.120.035 Income0.288***0.0913.170.115 Membership of association (yes=1)0.449***0.1622.770.176 Secondary occupation (yes=1)-1.451***0.257-5.64-0.451 Distance to seed source (Km)-0.001***0.015-6.59-0.258 Constant7.64*** 3.930.000 Number of observation Log Likelihood LR (Chi2(14) Prob>chi2 Pseudo R 2 540.00 -263.53 221.07*** 0.000 0.30 The result shows that the model has a good explanatory power

18. IMPACT OF SEED CERTIFICATION ON WTP FOR CERTIFIED IMPROVED RICE SEED EstimationParameterRobust Std. ErrorZ-valueP>|Z| Mean Difference Observed Difference Treated Control 23.718*** 142.37*** 118.66*** 3.26 3.12 0.93 7.28 45.60 127.80 0.000 Local Average Treatment Effect Estimation (LATE) LATE by WALD estimators LATE by LARF 26.34 33.41*** 228.496 3.53 0.12 9.46 0.908 0.000 LARF Estimates by Gender, Poverty and State Impact by Gender Male Female 26.69*** 61.38*** 3.69 7.16 7.22 8.57 0.000 Impact by Poverty Status Poor Non-poor 34.75*** 32.36*** 4.1 3.71 8.32 8.72 0.000 Impact by State Upland Irrigated Lowland 169.54*** 36.37*** 17.59*** 14.74 4.42 4.04 11.51 8.23 4.36 0.000

19. SUMMARY STATISTICS OF THE VARIABLES IN THE STOCHASTIC FRONTIER MODEL VariableMean% of Total Cost Average total cost of production (TC) N42289.29- Average Cost of seed6386.5515.10 Average cost of fertilizer15166.6135.86 Average cost of herbicide6889.6416.29 Average cost of labour13916.1932.90 Average age of farmers (year)45.00- Average educational level (years)5.00- Average household size (number)8.00- Average farming experience (years) Contact with extension agents(yes=1) Gender(male=1) 20.00 0.36 0.81 -

20. MAXIMUM-LIKELIHOOD ESTIMATES OF PARAMETERS OF THE COBB-DOUGLAS FRONTIER FUNCTION FOR SMALLHOLDER RICE FARMERS IN NIGERIA VariableCoefficientsStandard Errort-ratio General Model Constant Cost of seed Cost of fertilizer Cost of herbicide Cost of labour 0.601*** 0.299*** 0.182*** 0.311*** 0.016 0.041 0.021 0.009 0.001 14.61 25.89 18.66 31.89 1.59 Cost inefficiency Model Contact with extension agents(yes=1) Gender (male=1) Age (years) Farming experience (Years) Household size(Number) Formal education (Years) 0.556*** -0.278*** -0.010*** -0.012*** 0.053*** 0.009*** 0.042 0.033 0.002 0.001 0.004 0.002 13.83 -8.43 -4.56 -9.19 13.75 4.44 Variance Parameters Sigma-square Gamma Log likelihood function 0.109 0.989 726.40 0.004 0.001 30.00 875.00 Seed, Fertilizer and herbicide are important inputs in rice production in Nigeria. Female farmers are more cost efficient than the male counterpart

21. Distribution of Allocative efficiency among the Farmers Efficiency levelFrequencyRelative efficiency (%) 1.0-1.09455.0080.82 1.1-1.1969.0012.26 1.2-1.2928.004.97 1.3-1.397.001.24 1.4-1.664.000.71 Total563.00100.00 Maximum1.66 Minimum1.00 Mean Standard Deviation 1.07 O.074 The mean allocative efficiency of the farms was estimated as 1.07: an average rice farm in the area has costs that are about 7% above the minimum defined by the frontier.

22. Impact of Seed Certification on Allocative Efficiency EstimationParameterRobust Std. ErrorZ-valueP>|Z| Local Average Treatment Effect Estimation (LATE) LATE by WALD estimators LATE by LARF 0.023 0.025*** 1.86 0.009 0.01 2.78 0.990 0.005 LARF Estimates by Gender, Poverty and State Impact by Gender Male Female 0.023 0.031 0.0097 0.023 2.35 1.31 0.019 0.189 Impact by Poverty Status Poor Non-poor 0.117 0.0344 0.0104 0.011 1.13 3.26 0.258 0.001 Impact by State Upland Irrigated Lowland 0.034 0.021 0.024 0.010 0.011 0.009 3.37 1.91 2.50 0.001 0.056 0.012

23. Determinants of Allocative Efficiency among the Rice Farmers in Nigeria Coefficient Std. Errort-statisticsP>|t| Coefficients of the Non-interacted Terms Received certified seed0.049*0.0291.700.089 Age0.001**0.0002.560.011 Gender0.0140.0091.470.143 Household size0.003***0.0013.510.000 Education-0.0010.001-0.220.826 Years of experience in upland farming-0.002***0.001-3.960.000 Years of experience in lowland farming0.001 0.820.412 Farm size-0.0030.002-1.140.256 Coefficient of the Interacted Terms Age-0.0010.001-1.540.124 Gender-0.0240.018-1.330.185 Household size-0.0020.002-0.910.362 Education0.002*0.0011.740.083 Years of experience in upland farming0.003***0.0013.180.002 Farm size0.0010.0040.160.876 R-squared Adjusted R-squared Wald test for the coefficient of the non-interacted terms Wald test for the coefficient of the interacted terms 0.99 54*** 3.07***

24. SUMMARY AND CONCLUSION The results of the analysis reveal that mean WTP was N156.80/kg. The male-headed households expressed higher WTP for the seed certified seed than the female counterparts. Headed households and as household size increases the probability that farmers would be willing to pay for the seed quality improvement also increases Access to credit significantly influenced the farmers’ WTP for the seed quality improvement. The study reveals further that the higher the income of the farmers, the more they are likely to answer yes to the offered sum in the choice question.

25. The result of the LATE by LARF which is the only one that has any causal interpretation in this study reveals that the amount the farmers are willing to pay for the seed quality improvement increased by N33.4 as a result of the access to certified seed through the seed voucher. Furthermore, seed certification has a higher impact on the amount the poor farmers (N34.80) are willing to pay than the non-poor (N 32.40) counterparts Summary and Conclusion CONTD.

26. POLICY RECOMMENDATIONS Inclusion of seed certification as part of the agricultural development efforts in Nigeria The seed certifying agency should be properly funded and monitored to ensure that improved seed released by the breeders are adequately certified before handling them down to the farmers Farmers access to good quality certified seed should be enhanced through the seed subsidy program and other strategies Rural farmers should be educated more on the seed handling techniques to reduce the use of low quality seed

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