Comparative Economic Analysis of Rice Processing Methods In Otukpo Local Government Area of Benue State, Nigeria

Cite this article as: Okpeke, G. A., Francis O. O. & Adu, V. M. (2025). Comparative Economic Analysis of Rice Processing Methods In Otukpo Local Government Area of Benue State, Nigeria .Zamfara International Journal of Humanities,3(2), 93-104.www.doi.org/10.36349/zamijoh.2025.v03i02.011

COMPARATIVE ECONOMIC ANALYSIS OF RICE PROCESSING METHODS IN OTUKPO LOCAL GOVERNMENT AREA OF BENUE STATE, NIGERIA

Okpeke, G. A. 1
Ogebe Ozoko Francis 2
Adu, V. M 3

1, 3 Department of Agribusiness Management, Joseph Sarwuan Tarka University, Makurdi, Benue State

2Department of Agricultural Economics, Joseph Sarwuan Tarka University, Makurdi, Benue State

Abstract: Nigeria is a major producer, importer and consumer of rice in Africa. The country produces and milled about 60% 0f the quantity of rice being consumed by its citizens. Otukpo Local Government Area of Benue State is a significant producer of paddy rice in the North-Central Zone of Nigeria but unfortunately, the rice marketers were faced with a major problem of lack of access to credit and high cost of transportation The study examined the comparative economic analysis of rice processing methods in Otukpo Local Government Area of Benue State, Nigeria. Specifically, the study examines the socio-economic characteristics of respondents in the study area, estimate the costs and returns in processing rice; determines the marketing efficiency index of rice processors, describes the operations of the modern and traditional rice processing systems and identify the major factors militating against the modern rice processing methods. The study used primary data which were collected through structured questionnaires oral interviews. Five (5) districts were randomly selected, and a total of 115 rice processors/marketers were randomly selected from twenty (20) villages across the selected districts consisting 60 marketers using modern rice processing methods and 55 marketers using traditional rice processing method. The data were analyzed using descriptive statistics, gross margin and cobb-Douglas production model. The result of the descriptive analysis showed that the modern rice processors were dominated (75.0%) by male while the traditional were dominated (91%) by female. Majority (97%) of the respondents were literate with various levels of education attainment and are within economically productive age bracket. The gross margin for the modern rice processors was N25900.00 per 100kg of rice higher than the traditional rice processing method with N18600 per 100kg of rice. An average net income of N24600 and N18494.8 per100kg paddy rice was obtained for modern and traditional rice processors/marketers, with an average rate of return of 0.3 and 0.20, respectively implying that for every N1.00 invested, N0.32 (32kobo) and N0.21 (21kobo) was realized in the modern and traditional method, respectively. The marketing efficiency index in the modern and traditional rice processing methods were 4.03 and 4.20, respectively indicating that a profit of N4.03 and N4.20 was made from every one Naira spent on the marketing process. The milling capacity of the modern rice processing was 200 kg/min. as against 50 kg/min. in the traditional methods. The study identified lack of awareness, low capital, poor infrastructure, and lack of skilled technical workers as factors militating on the adoption of the modern methods. The study recommended that the government should subsidize the cost of modern technology equipment to enable processors replace their spoiled parts to put back their equipment to work and boost their business.

Keywords: Comparative, Economic, Analysis, Rice, Processing, Benue State.

Introduction

Rice is the most widely consumed food crop in the world, providing 21% of global human per capita energy and 15% per capita protein (Zalkuwi, 2019). It is a staple food for more than half of the world’s population and is essentially important for the global poor. Global demand for rice is expected to increase due to population growth and rising per capita consumption in certain regions (Zalkuwi, 2019).

In Nigeria, rice occupies an important place as one of the major staples which can provide the nation’s population with the nationally required food security minimum of 2,400 calories per person per day (Zalkuwi,2019). It is the second largest consumed cereal (after wheat) and provides for more than half of the world’s population with 80 per cent of its food calorie requirements (Inuwa et al., 2011).

In the West African sub-region, Nigeria is the largest producer of rice with 5.4 million metric tons of rice is consumed annually in Nigeria (Oyinbo et al., 2013). This is because most people in sub-Saharan Africa particularly West Africa had decreased their consumption of cereals mainly sorghum and millet while that of rice has continued to increase as a result of shift in consumers’ preference, its palatability and ease of digestion. Increasing rice production could therefore, contribute to domestic food security and foreign exchange earnings for the nation (Cadoni and Angelucci, 2013). The domestic consumption of rice rose from 5kg /person/week in 2012 to about 10kg/person/week in 2013 (Okafor and Chima, 2014).Currently, annual per capita consumption of milled rice is 25kg/person/month (Musa,2014).The relative ease of its preservation and cooking has influenced the processing trend in its consumption.

The quality of rice has become an important issue among Nigerian consumers who clearly show strong concern for imported rice, because of its quality in terms of cleanliness and this has brought about competition of imported rice and locally processed rice (West Africa Rice Development Association, 2015). The low quality of locally processed rice reflects low level of improved processing technology. This can reduced the efforts in achieving progress of raising output to meet the consumers demand. The difficulty of processors in Nigeria to adopt and develop modern technology is due to inadequate resources. One of the major problems of rice processing in Nigeria is to develop appropriate technology. If the cost and returns of processing locally produced rice is known, it will be easy to address the problem of quality in locally processed rice. Rice processing in Nigeria contributes to food security, employment, poverty reduction and national development (Ugwuanyi et al., 2020). Rice processing is increasingly creating employment for new processors while the old processors have diversified into processing tree crops like cocoa and rubber in which their prices are unpredictable over years now. Income and employment generation in rice processing has been substantial (Msendoo, 2016).

Currently, the Nigerian government is putting everything in place to increase local rice production such as Agricultural Transformation Agenda which aimed to make Nigeria self-sufficient in rice production by 2015, Anchor Borrowers Program which provides loans and technical advice to rice farmers, Systems of Rice Intensification (SRI) and make the country self-sufficient in the face of the frightening projection which puts Nigerian’s demand for milled rice at 36 million metric tons in 2050, an increased demand that will be driven majorly by population increase and urbanization (Doreo-partners 2013). With these plans of increasing local production of rice, attention should also be imperatively given to the aspect of Nigeria’s rice processing usually using modern and traditional rice processing methods. One of the businesses thriving in Benue State is the Otukpo rice milling industry. Unfortunately, a major problem affecting Otukpo rice mill is the crude methods used to process rice locally. This makes the rice not to be stone free, making customers prefer imported rice to locally processed ones. The broad objective of the study is to analyze comparative economic analysis of rice processing methods in Otukpo Local Government Area of Benue State, Nigeria. The specific objectives were to:

           i.            describe the socio-economic characteristics of the respondents in Otukpo Local Government Area of Benue State;

         ii.            determine the cost and returns in modern and traditional rice processing method,

       iii.            determine the marketing efficiency index of processors in the study area,

       iv.            assess the operations of the modern and traditional rice processing method

         v.            ascertain efficient use of resources by the processors, and

       vi.            identify the factors militating against the adoption of the modern method of rice processing in the study area.

Methodology

The study was conducted in Otukpo Local Government Area of Benue State, Nigeria. The local government has a population of two hundred and sixty-six thousand, four hundred and eleven (266, 411) people with a projected population of three hundred and eighty- four thousand, six hundred (384,600) people (NPC, 2022) and consists of four (4) districts namely; Otukpo, Ugboju, Adoka and Akpa. Geographically, the Local Government Area is located between Latitudes 7⁰ and 25⁰ N, Longitudes 8⁰ and 15⁰E of equator. The average temperature ranges from 27°C- 37°C while annual rainfall ranges from a minimum of 768.5mm to a maximum of 1188.3mm. The dry season is from November to March making it conducive for agro-processing.

Most of the people are farmers and about 80% of the population is estimated to earn their living from agricultural production (Benue Agricultural and Rural Development Authority, 2015). The predominant crops grown in the area are rice, sorghum, millet, yam, cassava maize, groundnut and soya-beans. Citrus, sugar cane, oil-palm and banana are other cash crops as well as livestock rearing such as cattle, sheep, goats, pigs and poultry are also practiced in the area. More importantly, a major businesses thriving in the area is the Otukpo rice mill industry, accommodating well over 200 rice processors and marketers (personal communication from Otukpo Rice Millers Association). The contributory role of this industry in terms of food provision for the populace and foreign exchange earnings to the nation at large justified the selection of this LGA for the study area.

Data for this study were obtained from both primary and secondary sources. Secondary data were obtained from books, journals, magazines, proceedings, internet and document which were relevant to the study. Primary data were collected by survey using structured questionnaires which were validated and administered randomly. Multi-stage sampling technique was used to select the respondents. The first stage involved purposive selection of four (4) districts namely: Otukpo, Ugboju, Adoka and Akpa. The second stage involved purposive selection of twenty (20) villages across the selected districts. The third stage involved a random selection of 115 rice processors/marketers using a sampling proportion of 5% from a sample frame of 2300 respondents consisting 60 marketers using modern rice processing methods and 55 marketers using traditional rice processing methods. The list of rice processors/marketers (sample frame) was provided by the Rice Millers Association of Otukpo Local Government Area. Data were analyzed using simple descriptive statistics such as frequency, percentages and average. Gross margin was also employed to determine the profitability of the enterprise while Cobb-Douglas production function model was used to determine the efficient use of resources by the processors. The ordinary least square (OLS) was used for estimating the parameters in line with different independent variables.

Model Specification

The model is specified as follows:

Y=a.X₁ ^c1, X₂ ^c2, X₃ ^c3, X₄ ^c4, d^c5 …………….. (1)

Where:                       

Y= output from capacity of processed rice

 a=constant

X₁=cost of paddy rice/ 100kg of processing

 X₂ =cost of firewood/100kg of processing

X₃= cost of labor /100kg of processing

X₄= cost of water used/100kg of processing

C = capacity (100kg bag)

d = dummy

Budget analysis was used to determine the difference between the total revenue and total variable cost for the processors.

GM=TR-TVC … …………………………… (2)

Where:

GM=Gross margin

TR= total revenue

TVC= Total variable cost

The Net Income was calculated as follows:

NI = GI-TC… ……………………………… (3)

Where:

NI = Net Income (N)

GI = Gross Income (N)

TC = Total Cost (N)

The Net income (NI) or profit is the difference between the gross margin and total fixed cost of the rice processors.

NI =GM-TFC … ……………………………… (4)

Where:

NI= Net income

TFC= Total fixed cost

π = TC-TR … ………………………………… (5)

Where:

π=profit

TC=Total cost

TR=Total revenue

The profitability of marketing milled rice was determined using the following:

 …………………………….... (6)

Where:

NI = Net income

TC = Total cost

…………………………………… (7)         

Where:

TC = Total cost

GI = Gross income

The Marketing Efficiency Index was measured as follows:

…………………………………………… (8)        

Where:

MEI = Marketing Efficiency Index

NI = Net income

MC = Marketing cost

 

Results and Discussion

3.1 Socio-economic Characteristics of Rice Marketers in the Study Area

Table 1 shows that the male constitute majority (75.0%) in the modern rice processing method while the female constituted 91.0% to form the majority in the traditional rice processing method. The reason could be that the technology involved in the modern rice processing method requires training to handle, maintain and operate them for effective performance. The men could accept the responsibility as an occupation but the female may not because of their position in the family as mothers and would not want to waste time in training before handling the equipment. The female had the highest (91.0%) over the male (9.0%) in the traditional rice processing method because the traditional rice processing method is not complex and does not require special training to operate. This gives the female the advantage to dominate it. This is in agreement with Tondo (2017) who confirmed in their study that male were more than the female in the modern rice processing enterprise while the female were more than the male in the traditional rice processing enterprise in Benue State, Nigeria.

Majority (42%) of the respondents falls within the age range of 21-40 years in the modern rice processing method, while 46% were between 41 years and above constituting majority in the traditional rice processing method. Overall, the average age was 40.4 years meaning that they can actively and effectively use their energies on agricultural and other economic activities such as rice processing which is tedious and laborious. This agrees with the findings of Akarue and Ofoegbu (2015) in Udu Local Government Area of Delta State, Nigeria. The success or failure of rice processing depends largely upon how labor and other associated resources are efficiently utilized. Tondo (2017) and Agyo and Ornan (2021) confirmed in their studies that young people within the age bracket of 20-40 years dominated the modern rice processing enterprise. The table also shows that 37% of the respondents in the traditional rice processing method had no formal education while 47% of the modern rice processing had tertiary education with others having various level of educational attainment. This implies that majority of the respondents in the modern rice processing method are literate and can easily adopt modern rice processing method if provided with adequate capital.

The table revealed that 42% of the modern rice processing spends between 11-20 years processing rice while 37% of the traditional rice processors had between 21-30 years of experience in rice processing. This implies that rice processing seems to be a profitable business in the study area, since there is a general believe that nobody will spend several years in an unprofitable business. The table also shows that 67% of the processors in the modern rice method had between 1-5 household size while 46% of processors in the traditional rice processing method had between 10 and above household size. This indicated that the traditional rice processors use members of their household to increase labor that is unpaid, to maximize profit.

Nevertheless, this large size could positively or negatively affect productivity/income generation and expenditure depending on the age structure and financial demands of the individual members of the household. Adult members of a household contribute positively to family income while household composing majorly of children will reduce family income through payment of school fees, medical bills, and other expenses (Ogebe et al., 2019). The study found that the mean quantity of paddy rice processed was 25 metric tons in a trading season which stretches over a period of 6 months (December to May).. It is noted that traders hardly find rice to buy as from the month of May so they return to their farms.

Table 1: Socio-economic Characteristics of Respondents in the Study Area (n=115)

Variables	Modern Processing Method		Traditional Processing Method
	Frequency	Percentage	Frequency	Percentage
Sex Male Female Total	45 15 60	75 25 100	5 50 55	9 91 100
Age (years) 20-30 31-40 41-50 < 50 Total Mean= 40.4	20 25 10 5 60	33 42 17 8 100	10 15 25 5 55	18 27 46 9 100
Marital status Married Single Others Total	45 10 5 60	75 17 8 100	40 10 5 55	73 18 9 100
Educational level Primary Secondary Tertiary Non-formal Total	10 20 28 2 60	17 33 47 3 100	16 15 4 20 55	29 27 7 37 100
Household size (number) 1-5 6-10 > 10 Total Mean= 10	40 15 5 60	67 25 8 100	10 20 25 55	18 36 46 100
Marketing experience (years) 1-10 11-20 21-30 >30 Total Mean= 11	5 25 15 15 60	8 42 25 25 60	15 15 20 5 55	27 27 37 9 100
Quantity (tons) processed per season (6months) 1-10 11-20 21-30 31-40 41-50 >50 Total Mean= 25 metric tons	10 15 30 5 2 0 60	17 25 50 5 3 0 60	15 10 25 3 2 0 55	27 18 45 6 4 0 100

Okpeke, G. A., Francis O. O. & Adu, V. M.

January, 2025

93-104

Source: Authors’ Computation, 2024.                                                                     

3.2 Gross Margins per 100Kg of Rice in Modern and Traditional Rice Processing Methods

Costs and returns analysis for milled rice traders in Otukpo LGA is presented in Table 2. The average variable cost of processing and marketing 100kg paddy rice was N83, 400 in the modern processing method and N80, 505.5 in the traditional method with the cost of purchasing paddy rice at N76,000. The fixed cost consists of depreciation on parboiling using drums, basket, mats, spades and rakes. The average gross income of N108, 000 and N99, 000 were obtained from the modern and traditional rice processing method, respectively. The Average net income of N26, 400 was realized from processing 100kg paddy rice in the modern rice processing and N18, 494.80 in the traditional method. This translated to an average annual net income of N6, 150,000 and N4, 623,700 per milled rice /trader for a trading season of about six months. An average rate of return of 0.32 was realized for processing 100kg paddy rice in the modern rice processing and 0.21 in the traditional method implying that for every N1.00 invested, N0.32 (32kobo) and N0.21 (21kobo) was realized in the modern and traditional rice processing method, respectively. The average gross ratio of 0.83 was obtained from both modern and traditional rice processing methods in the study area and since these values are less than 1, profit was made.

Results in Table 2 also showed that the gross margin from the modern rice processing method in the study area was ₦25,900 higher than the traditional rice processing method by ₦18,600 per 100kg. This may be as a result of adopting the modern technology in processing rice. Despite the fact that the modern rice processing activities add cost to processors, the products could be sold at a fixed price. The result shows that the modern rice processing method is more profitable than the traditional rice processing method in the study area.

Table 2: Gross Margins per 100Kg of Rice in Modern and Traditional Methods in the Study Area

	Modern Processing Method	Traditional Processing Method
Rice items	Amount (N)	Amount (N)
Variable cost	(N100Kg bag)	(N100Kg bag)
Purchase of paddy rice	76,000	76000
Transportation of paddy rice	500	500
Fire wood	700	1200
Water	400	400
Parboiling/drying	500	500
Cost of bags, needles and thread	1000	-
Bagging and sewing	800	-
Loading and offloading	500	500
Transportation of parboiled rice	500	500
Produce/haulage	200	200
Milling cost /destoning	1000	600
Depreciation of parboiling items	1300	105.2
Average total expenditure	83400	80505.2
Average selling price/Bushel	36000	33000
Average gross income (3Bushels)	108000	99000
Average Net income	24600	18494.8
Average Annual Net income	6,150,000	4,623,700
Average rate of return	0.30	0.2
Average gross ratio	0.8	0.8
Gross margin	25900	18600

·         Output of 100Kg Paddy rice =65Kg Milled rice

·         1 Bushel of Milled rice = 23Kg

·         Average quantity of Paddy rice processed per annum/trader = 25tons, i.e. 25000Kg

   Source: Authors’ Computation, 2024.

3.3 Marketing Efficiency Index of Rice Processors in the Study Area

The cost components of processing and marketing 100kg/paddy rice in Otukpo LGA of Benue State are presented in Table 3. The total average cost of processing and marketing of 100kg/paddy rice in the modern processing method was N6100 while that of the traditional method was N4400 with the cost of milling (16.39%), and transportation (16.39%) constituting the highest cost factors in the modern rice processing method. In the case of traditional processing method, cost of fire wood constituted the highest cost (27.27%). This finding agrees with Ugwuanyi et al. (2020) and Ojumu et al. (2014) who recorded high milling cost component for rice marketing in UzoUwani LGA of Enugu State. Other costs include bagging and sewing (13.12%), parboiling and drying (8.20%). The marketing efficiency index in the modern and traditional rice processing methods were 4.03 and 4.20, respectively indicating that a profit of N4.03 and N4.20 was made from every one Naira spent on the marketing process.

Table 3: Marketing Efficiency Index of Rice Processors in the Stud Area

Components	Modern Processing	Traditional Processing
	Amount (N)	Amount (N)
Transportation of paddy rice	500	500
Fire wood	700	1200
Water	400	400
Parboiling/drying	500	500
Cost of bags, needles and thread	1000	-
Bagging and sewing	800	-
Loading and offloading	500	500
Transportation of parboiled rice	500	500
Produce/haulage	200	200
Milling charge	1000	600
Total Average Cost	6100	4400
Average Net income	24600	18494.8
Marketing Efficiency Index	4.03	4.20

Source: Authors’ Computation, 2024

3.4 Operations of the Modern and Traditional Rice Processing Methods

The result in Table 4 shows that the modern rice processing method milled more (200 kg) quantity of rice at a time compare to the traditional method that milled only 50 kg at a time. The benefits of the modern rice processing method include higher (200 kg) quantity of paddy milled at a time with modern performance operations such as cleaning with water before soaking, parboiling, drying, milling, destoning, grading and packaging. These operations are not practiced in the traditional system thus resulting in broken grains thereby reducing its quality and value.

The modern method soaked paddy for only 7 hours because of its use of hot water while the traditional method takes 24 hours resulting to fermentation of grains giving it an odour after milling. The milling time is shorter (35mins.) in the modern method giving it a high turnover and improved quality as compared to the traditional milling process.

Table 4: Operations of the Modern and Traditional Rice Processing Methods

Parameters	Modern system	Traditional system
Maximum capacity	200	50
Number of Kg/day(6 working hours =1day)	1200	300
Cleaning operation time (minutes)	60	-
Soaking time (hours)	7	24
Steaming time (minutes)	38	60
Drying time (hours)	4	6
Milling time (minutes)	35	45
De-stoning (minutes)	22	-
Grading (minutes)	6	-
Packaging	6	-

Source: Authors’ Computation, 2024.

3.5 Efficiency use of Resources by the Processors in the Study Area

The major inputs used in processing rice outside the processing equipment are, Paddy rice, slab for drying, firewood, water, labour, transportation, drums, rakes and sieves. Table 5 shows the estimates of regression in the modern and traditional rice processing methods. The result of Cobb-Douglas production function was fitted to find out the relationship between the output of paddy and the independent variables. The coefficient of the multiple determinations R² of the function was 0.568, which shows that 58.7% of the variation in output was explained in the independent variables included in the model.

In the modern rice processing method, cost of firewood and labor were significant at 5% and 1%, respectively implying that the cost of labor and firewood dominated the processing cost with the processors spending more on these variables. The coefficient of the cost of firewood and labour showed that there was 5% and 1% increase in expenditure from its mean level to have a negative effect on output or revenue, while the cost of milling was insignificant. The increase in the cost of firewood and labour will have a negative effect on revenue. However, the cost of water may not affect revenue negatively; but the quantity and quality of water may affect the quality of rice which may in turn affect the revenue.

In the case of the traditional rice processing method, the coefficient of multiple determination R² of the function was 0.600, indicating 60% of the variation in revenue or output was explained by the independent variables included in the model. The cost of firewood used in the traditional rice processing system was significant at 5%, while water, labour and milling were insignificant. The coefficient indicated increase in the cost of firewood by 1% indicating 35% decrease in revenue without equal increase in the quantity of paddy from its mean. Water, labour and milling cost were insignificant indicating these variables had no significant influence on output or revenue in the study area. The cost of water was negligible because most of the processors had their own sources of water supply. It was the quality of water used that affect the quality of rice which in turn affects the revenue.

Table 5: Estimates of Regression of Modern and Traditional Rice Processors

	Modern rice Processing Method			Traditional Rice Processing Method
Variable	Coefficient	Std. error	t-table	Coefficient	Std. error	t-table
Intercept (A)	10.54	29.40	0.458	20.89	40.08	0.534
X1(Cost Paddy(Kg)	4.30	0.46	8.245	0.0037	0.008	2.284
X2( firewood)	-5.60*	0.64	-2.895*	-0.350*	0.038	-1.834*
X3(Cost of water)	6.70	0.36	-1.683	0.308	0.041	1.596
X4(Cost of labor)	9.41**	0.43	2.905**	0.218	0.018	1.684
X5(Cost of milling)	-7.50	0.49	-1.954	0.421	0.043	1.754
R2	0.568			0.600
Adjusted R2	0.567			0.599

Note: *, ** denotes significant at 5% and 1%, respectively.

Source: Authors’ Computation, 2024.

3.5 Factors militating against the Adoption of Modern rice Processing Methods

Table 5 shows the factors militating against the adoption of modern rice processing method in the study area, indicating that 34.78% of the rice processors lack awareness of the modern method of processing rice. The same (36.52%) of processors suffered from low capital.

Poor infrastructure and high cost of equipment were among the factors militating against the adoption of the modern method of processing rice constituting 27.83%. Processors that lack loan facilities to support their business constituted 17.39%, while 24.35% of processors lacked technical skills in handling the modern rice processing equipment.

Table 5: Factors militating against the Adoption of Modern rice Processing Method

Factors	Frequency	Percentage
Lack of loan facilities	20	17.39
Poor infrastructure	32	27.83
Lack of awareness	40	34.78
High cost of equipment	30	26.09
Lack of technical skills	28	24.35
Low capital	42	36.52
Total	115	166.96

Total percentage>100% due to multiple responses

Source: Authors’ Computation, 2024.

 

IV. Comparison of Mean Profit of Rice Processing Methods in the Study Area

The t-test was used to test the hypothesis. The mean profit of modern rice processing method was estimated N24, 600 while that of traditional method was N18, 494.80. The difference in the mean profit was N6, 105.20. The t-value (0.000) is significant, indicating that there is significant difference in the profit levels of modern and traditional rice processing methods in the study area. Thus, the null hypothesis is rejected, and the alternative is accepted.

Table 6: Differences in Profit of Rice Processors using Modern Traditional Processing Methods

                  

Variable	Mean profit	Mean Diff.	t-value	Sig.(2tailed)
Modern processing method	N24,600.00	N6,105.20	0.6381	0.000
Traditional processing method	N18,494.80

 Source: Authors’ Computation, 2024.

 

IV. Conclusion and Recommendations              

The study revealed that the modern and traditional rice processing methods were practiced in the study area. The modern rice processing methods had higher (200kg\min.) capacity of milling rice than the traditional (50kg\min.) method and is more efficient though underutilized due to inadequate supply of paddy rice. The study also revealed that the cost of paddy rice dominated the processing cost which means that, the processors spend more on purchasing paddy rice. The gross margin for the modern rice processing method was ₦25900 per 100kg of rice higher than the traditional (₦18600 per 100kg) method. This shows a clear result of adopting the modern rice processing method. The modern rice processing method had a higher (200kg\min.) capacity of milling rice than the traditional with the capacity of milling 50kg\min. of rice. The modern rice method soak paddy in a mechanically hot water tank for 6 hours and dry for 40 minutes before milling. While the traditional method manually soak paddy in cold water for 24 hours resulting in fermentation of the paddy giving it an odour after milling which lead to reduction in quality and revenue of rice.

The study also identify factors that are militating against the adoption of the modern rice processing method to include lack of awareness, low capital, and poor infrastructures. The study concluded that rice processing in the study area is a profitable business that can create employment to reduce the rate of unemployment in Nigeria. It also provide revenue through tax to the government, generate income for the owner, contribute in addressing the social needs of the society and above all, address the problem of food insecurity in Nigeria. Based on the findings, the following recommendations are pertinent:

        i.             There is need for the government to encourage rice processing business, most especially the modern method in Nigeria. This could be achieved by providing counterpart funds to financial institutions to loan to rice processors who have seen the need to adopt the modern method of processing rice for higher capacity. This may contribute in addressing the shortage of locally processed rice in Nigeria.

      ii.            The government should also provide basic infrastructures such as storage houses, good rural roads to help reduce cost on the side of the processors

   iii.             Government should also help to subsidize the cost of modern equipment to enable processors replace their spoiled parts to put back their equipment to work.

    iv.             The processors should form cooperative groups to help train their members to acquire technical skills that will help them handle their equipment efficiently and effectively. The cooperative groups will also help their members to access inputs and other resources that will help to boost their business.

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