54 Brown Rice Market Chain and Marketing Practices, Luzon, Philippines Isabelita M. Pabuayon * and Antonio Jesus A. Quilloy Department of Agricultural Economics, College of Economics and Management, University of the Philippines Los Baños, College, Laguna, Philippines * Author for correspondence; e-mail address: isabelitampabuayon@yahoo.com; Tel./Fax: 63-049-536-3292 The study involved an analysis of the brown rice market in selected provinces of Luzon, Philippines. Brown rice comprised a small portion of the rice market with 10 producers included in the study, having an annual output of approximately 397 metric tons only. The market chain consisted of producers, market intermediaries and consumers. Scale of production varied considerably, from small individual farmers to large cooperatives. The market chains were relatively simple involving at most two market intermediaries, i.e., the wholesaler/distributors and the retailers. Big producers were linked to markets via established and extensive marketing networks of NGOs while the small ones sold to households within their respective localities. Value-addition in the form of grading/ quality control, re-packaging, labeling or delivery to higher-level markets was done mainly by those who carried a brand name or sold in established wholesale and retail markets. Such value-addition provided financial incentives as reflected in the price increase through the chain. Except for one, the market participants earned positive net returns, given the current scale of operation and market capacity. Estimated monthly consumption of brown rice was low at 6.75 kg per household. Non-use or discontinued use of brown rice was due to its high price, not being readily available, poor eating quality and the limited information about it among consumers. Constraints in the supply chain were related to the lack of drying facility for palay (paddy rice) during unpredictable weather conditions, lack of rice mills specifically designed for brown rice and the limited local market for small producers. Key Words: brown rice, constraints, market chain, price INTRODUCTION As defined by the Asia Rice Foundation (ARF), “brown rice is unpolished whole grain rice that is produced by removing only the hull or husk using a mortar and pestle or rubber rolls” (www.asiarice.org/sections/whatsnew/ brbulletin.html). The brownish coating of the dehulled rice grain is rich in nutrients. Based on the various ARF reports, brown rice has several advantages over white or polished rice (www.asiarice.org/sections/chapters/.../ ARF-Phil-Prog.html). Its milling recovery is 10% higher than that of white rice, thus aggregate rice supply could potentially increase with more production of brown rice. Milling involves lower energy cost due to shorter milling process which could increase financial returns to producers. Finally, higher consumption of brown rice could contribute to improved nutrition due to its health benefits. Despite these benefits, brown rice currently comprises a very small share of the household rice basket. One reason is the apparent lack of information about brown rice. Cuyno (2003) noted several drawbacks in the brown rice business. Brown rice is more expensive than white rice, is not readily or conveniently available, has a shorter shelf life and gets rancid if stored beyond 4– 6 wk due to the high fat content in the bran, has a coarse texture and a “dirty” look, is susceptible to storage weevil and entails longer cooking time. In her study of consumers in Los Baños, Laguna, Reforma (2007) reported that there is limited knowledge on the exact nutritional benefits from brown rice and where the product could be sourced. On the whole, the market chain of brown rice is not well understood. Pabuayon et al. (2009) indicated that analysis of the market chain could identify the key production and marketing constraints and provide recommendations for improving the distribution ISSN 0031-7454 PHILIPP AGRIC SCIENTIST Vol. 94 No. 1, 54-65 March 2011 The Philippine Agricultural Scientist Vol. 94 No.1 (March 2011)