The Value Chain of Locally Grown Japonica Rice in Mwea, Kenya
Round 1
Reviewer 1 Report
The typescript submitted for review represents a potentially interesting research problem, however I see some contradictory facts, therefore more information and clarifications are necessary.
The Introduction section generally lacks a well-defined research problem. What is the main objective, what do the authors want to study, with what methods (short presentation), what will be the added value of this study in relation to already existing studies/research in this area? Introduction should stating the purpose of the work in the form of the research problem supported by a hypothesis or a set of questions, explaining briefly the methodological approach used to examine the research problem, highlighting the potential outcomes your study can reveal, and outlining the remaining structure and organization of the paper.
If the japonica variety has a low yield and thus a high market price, why is it attractive? For whom? After all, if the price of such rice is higher, it will be all the more unaffordable for local people. So how will the production of this rice benefit food security. This needs to be explained precisely.
The Materials and Methods section:
- All the questionnaires used in the research should be presented in the Annex section.
- Line 222: Why have you used such formula for gross profit calculation? It is unclear. Please explain.
The Results and Discussion section:
Lines 237-239 and Figure 2: It is clear from Figure 2 that it would be more profitable to import rice from Uganda than to produce it in Kenya. The price range in Uganda is simply more favorable. Does it make sense to produce japanica rice in Kenya in this situation? Additional arguments are needed... Why should one choose to increase japanica rice production in Kenya despite the higher price?
Lines 393-395: Figure 7 shows that the final selling price of japanica rice produced in Kenya is much higher than that of conventional rice. How will such expensive rice find interest of the consumers?
Lines 451-454: Figure 2 shows that rice imported from Uganda is cheaper...
Lines 466-466: Why such conclusions, given the above conditions?
The Conclusion section:
Lines 521-524: Are you sure, given the final price the consumer will have to pay?
It is certainly an added value of this publication to present the value chain of japanica rice production in Kenya in a comprehensive manner. However, the conclusions that the authors formulate given the above comments are, in my opinion, not justified, they are simply too optimistic…
Author Response
Response to the Reviewer 1
We thank the Reviewer for this pertinent comment.
Comment 1): The Introduction section generally lacks a well-defined research problem. What is the main objective, what do the authors want to study, with what methods (short presentation), what will be the added value of this study in relation to already existing studies/research in this area? Introduction should stating the purpose of the work in the form of the research problem supported by a hypothesis or a set of questions, explaining briefly the methodological approach used to examine the research problem, highlighting the potential outcomes your study can reveal, and outlining the remaining structure and organization of the paper.
Response: We really appreciate this pertinent comment. According to the comment, we have modified the Introduction section as following.
- a) What is the main objective?
We have described this point as follows (P.2. L.76-P.2. L.79);
In this study, we focused on the locally grown japonica rice to establish a value chain that would create new value to strengthen domestic rice production. The objective of the study was to identify the market price, marketing benefits, and expansion potential related to locally grown japonica rice, which have not yet been clarified.
- b) What do the authors want to study?
We have described this point as follows (P.3. L.141-P.3. L.143);
Through this approach, we discussed the desirable establishment of locally grown japonica rice value chain and the potential for locally grown japonica rice production to contribute to the strengthening of domestic rice production.
- c) With what methods?
We have described this point as follows (P.3. L. 126-P.3. L.141);
A value chain analysis is a method of decomposing corporate activities into the individual activities of stakeholders at various points in the value chain, and clarifying how the activities contribute to the final value by quantitatively understanding the added value and cost of each activity [20]. The main components of a value chain analysis are the mapping and characterizing of stakeholders in the value chain, the evaluation of the relationships and coordination mechanisms that exist among the stakeholders, the calculation of the distribution of stakeholder benefits, and the analysis of further improvements with different stakeholders [21]. A value chain analysis can assess the structural aspects of the value chain, such as the structure of benefits and costs, the flow of products and their end points [18, 19]. The profitability of the value chain was evaluated through comparison of the value chain of locally grown japonica rice with that of conventional rice, using the approach of value chain analysis.
As an approach to the objective of this study, we clarified the demand of business consumers dealing with japonica rice, acceptability of locally grown japonica rice by general consumers, and examined the profitability of the value chain of locally grown japonica rice.
- d) What will be the added value of this study in relation to already existing studies/research in this area?
We have described this point as follows (P.2. L. 98-P.3. L.104);
The Kenyan rice value chain is faced with two major issues: production costs and potential difficulties in marketing. With regard to potential difficulties, it was also found that consumer acceptability was important to introduce new varieties. Regarding the production cost, it was clarified by Watanabe et al. [11]. This study clarified the potential demand for locally grown japonica rice, examined the potential profitability through an analysis of the profit and added value along the value chain, and determined the gap between the potential demand for locally grown japonica rice and the current value chain.
Comment 2): If the japonica variety has a low yield and thus a high market price, why is it attractive? For whom? After all, if the price of such rice is higher, it will be all the more unaffordable for local people. So how will the production of this rice benefit food security. This needs to be explained precisely.
Response: We thank the Reviewer for this pertinent comment. For producers of locally grown japonica rice, high market price may be attractive. However, as you pointed out, locally grown japonica rice is not affordable for many consumers. Therefore, we have added this point to the Discussion section as follows (P.17.L.627-P.17. L.631);
It is found that the consumers and the buyers of locally grown japonica rice are Kenyans and Japanese residents, and middlemen. Even though the current market of locally grown japonica rice is so small, producing it will provide a wider choice of rice for purchase, and in other word, support the diversification of food. Diversity in food crops will bring stability to domestic food production [36].
Comment 3): All the questionnaires used in the research should be presented in the Annex section.
Response: Thank you for the comment. We have added as follows and attached all the questionnaire to the Annex section (P.5.L.184-P5. L.185, P.5.L.201-P5. L.202, and Appendix A)
The questionnaire is shown in Figure A1. as Appendix A. (P.5.L.184-P5. L.185)
The questionnaire is shown in Figure A2. as Appendix A. (P.5.L.201-P5. L.202)
Comment 4): Line 222: Why have you used such formula for gross profit calculation? It is unclear. Please explain.
Response: Thank you for the comment. In the field of wholesale and retail business, gross profit is calculated by the following formula.
Gross profit=Sales-Cost of goods sold
We have corrected the formula and added an explanation on the use of this formula as follows (P.6.L.241, P.6.L.243-P.6. L.244);
Gross profit=Sales-Cost of goods sold (P.6.L.241)
In the wholesale and retail business, “the cost of goods sold” is used for the cost of good purchased, and therefore, we have uniformly used the cost of goods purchased. Sales is used selling price. (P.6.L.243-P.6. L.244)
Comment 5): Lines 237-239 and Figure 2: It is clear from Figure 2 that it would be more profitable to import rice from Uganda than to produce it in Kenya. The price range in Uganda is simply more favorable. Does it make sense to produce japonica rice in Kenya in this situation? Additional arguments are needed... Why should one choose to increase japonica rice production in Kenya despite the higher price?
Response: Many thanks you for the comment. Imported japonica rice from Uganda is purchased by one Japanese restaurants at 150 KSh/kg, the others at 200 KSh/kg. As you mentioned, Ugandan rice at 150 KSh/kg is cheaper than Kenyan rice. We have made the following correction (P.6.L.258-P.6. L.262);
Imported rice from neighboring Uganda was occasionally cheaper than locally grown japonica rice. One respondent answered that the procurement price was 150 KSh/kg (1.4 USD/kg), while others answered 200KSh/kg (1.9 USD/kg). The Ugandan rice at 150 KSh/kg was the cheapest, and Kenyan rice was the next cheapest.
Comment 6): Lines 393-395: Figure 7 shows that the final selling price of japonica rice produced in Kenya is much higher than that of conventional rice. How will such expensive rice find interest of the consumers?
Response: We appreciate the highly suggestive comment. The consumer price of locally grown japonica rice was higher than that of conventional rice. However, there are still consumers of locally grown japonica rice. Giving such consumers a choice of rice to purchase is a way of showing food diversification, and food diversity has its advantages. We have described the advantages below (P.17.L.627-P.17. L.631) ;
It is found that the consumers and the buyers of locally grown japonica rice are Kenyans and Japanese residents, and middlemen. Even though the current market of locally grown japonica rice is so small, producing it will provide a wider choice of rice for purchase, and in other word, support the diversification of food. Diversity in food crops will bring stability to domestic food production [36].
In contrast, as you pointed out, it is desirable to lower the consumer price of locally grown japonica rice. Therefore, we have added to the following description of the potential for lower consumer prices and suggestions for lowing (P.1.L.26-P.1. L.28, P.1.L.28-P.1. L.29, P.13.L.492-P.14. L.500, P.15.L.545-P.15. L.578, and P.16.L.615-P.16. L.619);
In contrast, the consumer price of locally grown japonica rice was higher than that of conventional rice, indicating that there are challenges to be solved. (P.1.L.26-P.1. L.28)
We provided an approach for estimation to examine the targe values such as selling price in desired value chain. (P.1.L.28 -P.1. L.29)
The consumer price of locally grown japonica rice was higher than that of the conventional rice (250KSh/kg [2.4 USD/kg] for locally grown japonica rice compared to 170-175 KSh/kg [1.6-1.7 USD/kg] for conventional rice in Nairobi). To make locally grown japonica rice available to more general consumers, the consumer price should be more affordable. Based on the results of Watanabe et al. [11], the production cost can be reduced by 5 KSh/kg (2% of the consumer price). There are challenges that need to be improved not only in the production stage but also in other stages, such as the processing and distribution stage. We believe that such efforts are needed to lower consumer prices. (P.13.L.492-P.14. L.500)
We estimated reduction targets for each stakeholder in the value chain of locally grown japonica rice to obtain a similar level of reduction in the consumer price of locally grown japonica rice as conventional rice. The respective amounts for each stakeholder shown in Figure 7 are used for estimation. From the results of Watanabe et al. [11], it is found that a reduction in the labor cost by 5 KSh/kg (0.05 USD/kg) can be obtained by addressing bird damage at the production stage of locally grown japonica rice. Furthermore, since the value chain (5) involving MRGM has the largest net profit of 52.37 KSh/kg (0.5 USD/kg) for producers in the conventional rice value chain, we set the net profit to be not less than this net profit and set the selling price for producer to be 77 KSh/kg (0.7 USD/kg). When the producer sells at 77 KSh/kg (0.7 USD/kg) and the retailer sells at 175 KSh/kg (1.7 USD/kg), the respective value-added ratios of the rice mill and retail store as a function of the change in the selling price of the rice mill are shown in Figure 9. Assuming that the reduction rates of the net profit of the rice mill and the retail store are similar, the reduction rates of the net profit of the rice mill and retail store are 42% and 40% respectively. In this case, that of the producer is 13% and the selling price of the retailer is 125 KSh/kg (1.2 USD/kg)). With further reduction at the producer, the reduction rate at the rice mill and retail store can be mitigated. When reductions are made by each stakeholder, it is expected that consumer price will decline further.
The result of the calculation shown in Figure 8 used the real selling price of locally grown japonica rice in the value chain, which was 170 KSh/kg (1.6 USD/kg) at the rice mill (MIAD). The result of the estimation for the selling price at the rice mill regarding Figure 9 obtained 125 KSh/kg (1.2 USD/kg). The X-axis values in Figures 8 and 9 are the range where the net profit of both the rice mill and retail store are not negative. As a result of the calculation, the median value of the X-axis in Figure 8 is 170 KSh/kg (1.6 USD/kg) and that in Figure 9 is 127 KSh/kg (1.2 USD/kg). The median value obtained by the calculation and the actual selling price are the equal or close values. When this estimation is applied to the value chain (4) with which MRM is associated, the median value in the estimation is 119 KSh/kg (1.1 USD/kg), while the actual selling price of MRM is 115 KSh/kg (1.1 USD/kg). It was noted that it is important to have a balance between the net profit of rice mill and retail store. While further examination of the actual rice value chain is necessary, this result may provide a guide for determining that balance. In contrast, the value-added ratio tends to be low around the median value of the X-axis in both Figure 8 and 9. These suggest that the higher value-added ratio, the less influential it has when discussing the estimated selling price of the rice mill. (P.15.L.545-P.15. L.578)
In addition, in a desired value chain, regardless of type of rice, it is possible to estimate the selling price by setting conditions such as the net profit for each stakeholder, and these estimates can be used to calculate, for example, a target reduction rate for net profit. These results will provide a guide for examining the improvement of the rice value chain. (P.16.L.615-P.16. L.619)
Comment 7): Lines 451-454: Figure 2 shows that rice imported from Uganda is cheaper...
Response: We thank the Reviewer for this pertinent comment. Only one Japanese restaurant purchased at 150 KSh/kg, while the others purchased at 200 KSh/kg. We have added that some Ugandan rice is excluded as follows (P.13.L.465-P.13. L.469);
We found that the procurement price of locally grown japonica rice was around 40% cheaper than that of imported japonica rice at stores selling japonica rice in Nairobi (190 KSh/kg [1.8 USD/kg] for locally grown japonica rice compared to 200-350 KSh/kg [1.9-3.4 USD/kg] for imported japonica rice excluding some Ugandan rice).
Comment 8): Lines 466-466: Why such conclusions, given the above conditions?
Response: We really appreciate this pertinent comment. We have added to the following description of the profitability of locally grown japonica rice and the price of imported japonica rice. Furthermore, as you pointed out, the consumer price of locally grown japonica rice should be lower than the current price. Therefore, we have added below he potential for lower consumer prices and suggestions for lowing (P.1.L.23-P.1. L.25, P.13.L.479-P.13. L.484, P.1.L.26-P.1. L.28, P.1.L.28 -P.1. L.29, P.13.L.492-P.14. L.500, P.15.L.545-P.15. L.578, and P.16.L.615-P.16. L.619);
The net profits for locally grown japonica rice were higher than those of conventional rice at the production, processing, and distribution stages, which is an advantage for producers. (P.1.L.23-P.1. L.25
The results showed that the value chain of locally grown japonica rice was more profitable for the producers than that of conventional rice. Moreover, locally grown japonica rice was the next cheapest after Ugandan rice, which is the cheapest at 150 KSh/kg (1.4 USD/kg). As the demand for locally grown japonica rice increases, the market is expected to expand and the number of relevant stakeholders in each stage will grow. (P.13.L.479-P.13. L.484)
In contrast, the consumer price of locally grown japonica rice was higher than that of conventional rice, indicating that there are challenges to be solved. (P.1.L.26-P.1. L.28)
We provided an approach for estimation to examine the targe values such as selling price in desired value chain. (P.1.L.28 -P.1. L.29)
The consumer price of locally grown japonica rice was higher than that of the conventional rice (250KSh/kg [2.4 USD/kg] for locally grown japonica rice compared to 170-175 KSh/kg [1.6-1.7 USD/kg] for conventional rice in Nairobi). To make locally grown japonica rice available to more general consumers, the consumer price should be more affordable. Based on the results of Watanabe et al. [11], the production cost can be reduced by 5 KSh/kg (2% of the consumer price). There are challenges that need to be improved not only in the production stage but also in other stages, such as the processing and distribution stage. We believe that such efforts are needed to lower consumer prices. (P.13.L.492-P.14. L.500)
We estimated reduction targets for each stakeholder in the value chain of locally grown japonica rice to obtain a similar level of reduction in the consumer price of locally grown japonica rice as conventional rice. The respective amounts for each stakeholder shown in Figure 7 are used for estimation. From the results of Watanabe et al. [11], it is found that a reduction in the labor cost by 5 KSh/kg (0.05 USD/kg) can be obtained by addressing bird damage at the production stage of locally grown japonica rice. Furthermore, since the value chain (5) involving MRGM has the largest net profit of 52.37 KSh/kg (0.5 USD/kg) for producers in the conventional rice value chain, we set the net profit to be not less than this net profit and set the selling price for producer to be 77 KSh/kg (0.7 USD/kg). When the producer sells at 77 KSh/kg (0.7 USD/kg) and the retailer sells at 175 KSh/kg (1.7 USD/kg), the respective value-added ratios of the rice mill and retail store as a function of the change in the selling price of the rice mill are shown in Figure 9. Assuming that the reduction rates of the net profit of the rice mill and the retail store are similar, the reduction rates of the net profit of the rice mill and retail store are 42% and 40% respectively. In this case, that of the producer is 13% and the selling price of the retailer is 125 KSh/kg (1.2 USD/kg)). With further reduction at the producer, the reduction rate at the rice mill and retail store can be mitigated. When reductions are made by each stakeholder, it is expected that consumer price will decline further.
The result of the calculation shown in Figure 8 used the real selling price of locally grown japonica rice in the value chain, which was 170 KSh/kg (1.6 USD/kg) at the rice mill (MIAD). The result of the estimation for the selling price at the rice mill regarding Figure 9 obtained 125 KSh/kg (1.2 USD/kg). The X-axis values in Figures 8 and 9 are the range where the net profit of both the rice mill and retail store are not negative. As a result of the calculation, the median value of the X-axis in Figure 8 is 170 KSh/kg (1.6 USD/kg) and that in Figure 9 is 127 KSh/kg (1.2 USD/kg). The median value obtained by the calculation and the actual selling price are the equal or close values. When this estimation is applied to the value chain (4) with which MRM is associated, the median value in the estimation is 119 KSh/kg (1.1 USD/kg), while the actual selling price of MRM is 115 KSh/kg (1.1 USD/kg). It was noted that it is important to have a balance between the net profit of rice mill and retail store. While further examination of the actual rice value chain is necessary, this result may provide a guide for determining that balance. In contrast, the value-added ratio tends to be low around the median value of the X-axis in both Figure 8 and 9. These suggest that the higher value-added ratio, the less influential it has when discussing the estimated selling price of the rice mill. (P.15.L.545-P.15. L.578)
In addition, in a desired value chain, regardless of type of rice, it is possible to estimate the selling price by setting conditions such as the net profit for each stakeholder, and these estimates can be used to calculate, for example, a target reduction rate for net profit. These results will provide a guide for examining the improvement of the rice value chain. (P.16.L.615-P.16. L.619)
Comment 9): Lines 521-524: Are you sure, given the final price the consumer will have to pay?
Response: We appreciate the highly suggestive comment.
Regarding the price you pointed out, it is desirable to lower the consumer price of locally grown japonica rice. Therefore, we have added to the following description of the potential for lower consumer prices and suggestions for lowing (P.1.L.26-P.1. L.28, P.1.L.28 -P.1. L.29, P.13.L.492-P.14. L.500, P.15.L.545-P.15. L.578, and P.16.L.609-P.16. L.619);
In contrast, the consumer price of locally grown japonica rice was higher than that of conventional rice, indicating that there are challenges to be solved. (P.1.L.26-P.1. L.28)
We provided an approach for estimation to examine the targe values such as selling price in desired value chain. (P.1.L.28 -P.1. L.29)
The consumer price of locally grown japonica rice was higher than that of the conventional rice (250KSh/kg [2.4 USD/kg] for locally grown japonica rice compared to 170-175 KSh/kg [1.6-1.7 USD/kg] for conventional rice in Nairobi). To make locally grown japonica rice available to more general consumers, the consumer price should be more affordable. Based on the results of Watanabe et al. [11], the production cost can be reduced by 5 KSh/kg (2% of the consumer price). There are challenges that need to be improved not only in the production stage but also in other stages, such as the processing and distribution stage. We believe that such efforts are needed to lower consumer prices. (P.13.L.492-P.14. L.500)
We estimated reduction targets for each stakeholder in the value chain of locally grown japonica rice to obtain a similar level of reduction in the consumer price of locally grown japonica rice as conventional rice. The respective amounts for each stakeholder shown in Figure 7 are used for estimation. From the results of Watanabe et al. [11], it is found that a reduction in the labor cost by 5 KSh/kg (0.05 USD/kg) can be obtained by addressing bird damage at the production stage of locally grown japonica rice. Furthermore, since the value chain (5) involving MRGM has the largest net profit of 52.37 KSh/kg (0.5 USD/kg) for producers in the conventional rice value chain, we set the net profit to be not less than this net profit and set the selling price for producer to be 77 KSh/kg (0.7 USD/kg). When the producer sells at 77 KSh/kg (0.7 USD/kg) and the retailer sells at 175 KSh/kg (1.7 USD/kg), the respective value-added ratios of the rice mill and retail store as a function of the change in the selling price of the rice mill are shown in Figure 9. Assuming that the reduction rates of the net profit of the rice mill and the retail store are similar, the reduction rates of the net profit of the rice mill and retail store are 42% and 40% respectively. In this case, that of the producer is 13% and the selling price of the retailer is 125 KSh/kg (1.2 USD/kg)). With further reduction at the producer, the reduction rate at the rice mill and retail store can be mitigated. When reductions are made by each stakeholder, it is expected that consumer price will decline further.
The result of the calculation shown in Figure 8 used the real selling price of locally grown japonica rice in the value chain, which was 170 KSh/kg (1.6 USD/kg) at the rice mill (MIAD). The result of the estimation for the selling price at the rice mill regarding Figure 9 obtained 125 KSh/kg (1.2 USD/kg). The X-axis values in Figures 8 and 9 are the range where the net profit of both the rice mill and retail store are not negative. As a result of the calculation, the median value of the X-axis in Figure 8 is 170 KSh/kg (1.6 USD/kg) and that in Figure 9 is 127 KSh/kg (1.2 USD/kg). The median value obtained by the calculation and the actual selling price are the equal or close values. When this estimation is applied to the value chain (4) with which MRM is associated, the median value in the estimation is 119 KSh/kg (1.1 USD/kg), while the actual selling price of MRM is 115 KSh/kg (1.1 USD/kg). It was noted that it is important to have a balance between the net profit of rice mill and retail store. While further examination of the actual rice value chain is necessary, this result may provide a guide for determining that balance. In contrast, the value-added ratio tends to be low around the median value of the X-axis in both Figure 8 and 9. These suggest that the higher value-added ratio, the less influential it has when discussing the estimated selling price of the rice mill. (P.15.L.545-P.15. L.578)
In contrast, for consumers, the price of locally grown japonica rice is disadvantageous because its price is higher than that of conventional rice. How to lower the consumer price of that rice is a critical challenge. In solving this challenge, it is necessary to improve each stage of the value chain, such as reducing the production costs at the production stage. Furthermore, the establishment of a desired value chain, that is, a value chain without middlemen, can be one of the measures to lower the consumer price. In addition, in a desired value chain, regardless of type of rice, it is possible to estimate the selling price by setting conditions such as the net profit for each stakeholder, and these estimates can be used to calculate, for example, a target reduction rate for net profit. These results will provide a guide for examining the improvement of the rice value chain. (P.16.L.609-P.16. L.619)
Author Response File: 
Author Response.docx
Reviewer 2 Report
The subject of the manuscript is relevant although it is only partially within the scope of the journal.
The manuscript is well written and in relation to the English language does not seem to need major corrections.
Some data, namely in relation to rice prices (with values of 2 and 3 USD / Kg) seem unrealistic, in particular for the African reality (for example in Europe you can buy 1 Kg of rice for less than 1 USD).
Several comments can also be found in the PDF of the review.
Comments for author File: 
Comments.pdf
Author Response
Please see the attachment.
Author Response File: Author Response.docx
Round 2
Reviewer 1 Report
The authors responded to all submitted comments in a comprehensive manner. I accept the paper for publication.
Author Response
Thank you very much.
Reviewer 2 Report
The new version of MS has been changed quite a bit from the initial version and is sometimes hard to understand.
Some changes, especially in the introduction, seem to lack a logical sequence, especially in relation to the objectives of the work.
I think a general revision of the MS and the availability of a "clean" final version would be helpful.
See also some comments in the review pdf.
Comments for author File: Comments.pdf
Author Response
Please see the attachment.
Author Response File: Author Response.docx
