Abstract
Rice millers access paddy through private traders, cooperatives, individual farmers, and village agents. These methods determine the capacity utilization of the mills, costs incurred, and profitability of the rice milling business. This article aimed at determining the effect of paddy sourcing methods on the volume of rice milled by small and medium-scale rice millers in Kenya. Specifically, the study sought to determine the sourcing methods used, combinations of sourcing methods, and effects of these combinations on the volume of rice milled. A multistage sampling technique resulted to a total of 160 millers comprised of 90 and 70 small and medium-scale rice millers respectively. A multinomial endogenous switching regression (MESR) was used to determine the resultant effects of paddy sourcing methods on volume of rice milled. Results: The results show that sourcing paddy directly from individual farmers, individual farmers bringing paddy to the miller, buying from traders and sourcing through agents are the four paddy-sourcing methods used by rice millers. Factors that influence utilization of a combination of sourcing methods are age of the miller, ownership of the miller, unit price of paddy, distance from the mills, ownership of the mills, degree of competition, contract agreements, access to information and finance. The highest volume of paddy sourced was achieved using a combination of three paddy sourcing methods: buying from traders, direct sourcing from individual farmers and individual farmers bringing paddy to the miller (B(1)D(1)I(1)A(0)). This combination increases volumes sourced by 114.1 %. This underscores the sole vitality of a myriad of factors in determining the choice of utilization of a combination of paddy sourcing methods. This study can influence decisions and rice milling related policy formulation towards a sustainable paddy sourcing mechanisms and consistent rice milling business.