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.