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The purpose of this paper is to examine the characteristics of rice cultivation and rural rice market in the post-trade-liberalisation era. The study used mainly primary data collected through a field survey. It found that agricultural trade liberalisation facilitated rice farmers with access to cheaper inputs such as irrigation, fertilisers, pesticides and HYV seeds, and led to the technological transformation in rice cultivation. The technological transformation in agricultural production led to major structural changes in agriculture and the rural economy, resulting in a substantial increase in productivity of rice. Average yields per hectare and total rice production increased significantly, leading to a substantial increase in the supply of rice in the domestic market which resulted in significant reductions in rice prices. The average production cost of rice per acre in terms of input use varied across the three rice crops as well as across the various stages of rice cultivation. All rural households were involved with rice market as sellers or buyers or both. The study identified market failure in the rice market in the form of controls over the rice market by syndicates of rice traders. The study argues that small farmers experienced a higher loss than that of large farmers from this market imperfection as they mostly sold rice during the peak season at lower prices and bought rice during the lean season at higher prices. The study recommends the formulation of government regulatory framework as a tool for market intervention to support small farmers and poor households.


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