Estimating overall returns to international agricultural research in Africa through benefit-cost analysis: a "best-evidence" approach

This study offers a "best evidence" approach to summarizing recent benefit-cost analyses of international agricultural research in Africa. First, from an extensive literature review and the resulting global inventory of impact studies, 23 studies are identified that calculate aggregate rates of return for Consultative Group on International Agricultural Research (CGIAR) and partner investments in Sub-Saharan Africa (SSA). These studies are then appraised against a review framework consisting of principles, criteria, and indicators for study rigor. Subsequently, the economic benefits reported by studies grouped on the basis of its analytical rigor are aggregated and set against total investment by the CGIAR and national agricultural research systems to determine if the total investment to date can be justified by documented benefits under a range of assumptions. As a result, the study finds that aggregate investment is justified under a fairly wide range of suppositions. Under all scenarios, the vast majority of documented benefits stem from a relatively limited array of activities with a majority of benefits stemming from biological control (80%). Close to 20% of total benefits result from crop genetic improvement, and less than 1% result from all other activities. The implications of these results for research investment strategies in SSA and impact assessment are discussed.     

A trait-based model of the potential demand for a genetically engineered food crop in a developing economy

We predict the potential demand of smallholder farmers for genetically transformed varieties of a food crop, the cooking banana of the East African highlands. Farmer demand for planting material is derived in an agricultural household model that accounts for variety traits and missing markets. The demand for candidate host varieties is predicted using a Zero‐Inflated Poisson (ZIP) regression system. The fitted model is used to illustrate the sensitivity of farmer demand for improved planting material to (a) investments in research and development, represented by the effectiveness of gene insertion and expression, and (b) other public investments in education, extension, and market infrastructure that support diffusion. By comparing the characteristics of agricultural households we demonstrate that the choice of host variety can have social consequences, favoring one rural population compared with another. Clients for transgenic banana planting material are likely to be poorer, subsistence‐oriented farmers in areas greatly affected by biotic constraints. A model of this type might be useful in assessing the investments needed to support the systematic dissemination of improved planting material. The approach can be generalized to other crop biotechnologies for smallholder farming systems, particularly in developing economies.     

The economic and poverty impacts of maize research in West and Central Africa

This article assembles the results of three multicountry surveys on variety performance and adoption patterns to measure the impacts of maize research in West and Central Africa from 1981 to 2005, and uses cost data since 1971 to compute social rates of return on public investments in maize research in the region. Adoption of modern varieties increased from less than 5% of the maize area in the 1970s to about 60% in 2005, yielding an aggregate rate of return on research and development (R&D) investment of 43%. The estimated number of people moved out of poverty through adoption of new maize varieties rose gradually in the 1980s to more than one million people per year since the mid 1990s. Over half of these impacts can be attributed to international maize research at IITA and CIMMYT. The article concludes with a discussion of strategic options to enhance the impacts of maize research in the region.     

Ex Ante Welfare Analysis of Technological Change: The Case of Nitrogen Efficient Maize for African Soils

This study evaluates the potential impacts of the Improved Maize for African Soils (IMAS) project in two countries of Africa: Kenya and South Africa. The IMAS varieties offer significant yield advantages for regions where low or no fertilizer is used. The analysis uses spatial production data and household data to account for the level of fertilizer use in different agroecological zones of the country as well as different types of maize producing households. Results suggest that IMAS will deliver a total of US$586 million in gross benefits with US$136 million and US$100 million of benefits to producers in Kenya and South Africa, respectively, and an additional US$112 million to consumers in Kenya and US$238 million to consumers in South Africa. These benefits could help more than 1 million people escape poverty in the two countries by 2025. Household level results suggest that small households in areas with relatively low levels of fertilizer use stand to gain significant benefits.     

Breeding for Africa's new smallholder maize paradigm

This paper describes the evolution of a newly emerging smallholder maize paradigm in southern Africa beginning in 1996. This new paradigm involves the breeding, extension, and adoption of a new generation of open-pollinated ‘flinty’ maize varieties that specifically address the needs of southern African smallholder farmers for seed varieties that can be replanted (recycled) and that resist drought and low fertility problems increasingly common in southern Africa. The described mechanism is the extension and breeding work of the Southern Africa Drought and Low Fertility programme (SADLF) of the Centro Internationale por la Mejoridad de Maize y Trigo (CIMMYT). This paper explains the devolution of southern African maize production in the past two decades from centralized large-scale producers to smallholder farms, signalling a shift in research and plant breeding needs. The research/extension approach described here had profound consequences beyond the technical benefits of screening maize varieties for tolerance to stress; it empowered small-scale farmers to become informed consumers of agricultural technology. The transformation of the smallholder from a passive consumer to one actively seeking the best opportunity and seed to produce food, create economic opportunities and address local social conditions is an important development in the history and sustainability of maize production in southern Africa, and one consistent with modern African history of economic liberalization in the global food economy.     

Market imperfections,access to information and technology adoption in Uganda: challenges of overcoming multiple constraints

Limited empirical evidence exists on how multiple binding constraints influence the adoption of improved technologies by smallholder farmers. This article uses the case of groundnut variety adoption in Uganda to investigate the role of information, seed supply, and credit constraints in conditioning technology uptake. New data from a household survey in seven groundnut growing districts (n = 945) indicate that 8% of farmers lack information on new varieties, while 18% and 6% of farmers, respectively, cannot adopt mainly due to seed supply and capital constraints. A tobit‐type specification that considers all nonadopters as being uninterested in the technology (i.e., corner solutions) would lead to inconsistent parameter estimates and incorrect conclusions in this context. We therefore estimate a modified multi‐hurdle specification of demand for new varieties, taking into account how information, seed supply, and capital constraints jointly determine adoption probability and intensity. The study reveals new empirical insights on why agricultural technology adoption in Africa has lagged behind: slow uptake is not mainly due to a lack of economic incentives, but rather a reflection of information, seed supply, and credit constraints that prevent farmers from translating their desired demand into adoption of modern varieties. Policy implications are discussed.     

The adoption of intensive monocrop horticulture in southern Cameroon

Results from a 1997 survey of 208 households in the humid forest zone of southern Cameroon indicate that African policy makers seeking to intensify agricultural production should focus attention on the horticultural sub‐sector. The survey, which gathered information on horticultural production practices, found that the average expenditure on agro‐chemical inputs by horticultural producers using monocrop production systems was 190US$/ha, which greatly exceeds the FAO reported national average expenditure of 6.50 US$/ha. A logit model of monocrop adoption indicated that the size of land holding per household had a negative effect on adoption, congruent with population‐driven technical change and that increases in unit transportation costs significantly decreased the probability of adoption. These findings suggest that policy makers should target horticultural intensification in areas of higher population density and promote investment in rural roads. The age of the household head had a significant negative and elastic effect on adoption, which in combination with an increase in the cohort of younger farmers in the rural population induced by macro‐economic events contributed to the spread of intensified horticulture. In the study area, roughly two‐thirds of rural households also produce cocoa and the quantity of cocoa produced was positively associated with adoption of intensive horticultural systems suggesting that export crop promotion indirectly facilitated diversification of agriculture. Women's participation in intensive monocrop production was limited and efforts to promote their greater involvement are recommended.     

The transformation of the Indian agricultural input industry: has it increased agricultural R&D?

Indian agricultural input industries have gone through a major transformation in the last 40 years. State owned firms grew during the Green Revolution and then stagnated or declined. Indian corporations that were protected from foreign competition are now exporters of agricultural tractors and pesticides. Foreign multinational corporations are rapidly increasing their role in the seed, pesticide, and tractor industries. Entry by large Indian firms and multinationals has increased competition in the input industries. Private agribusiness R&D in India grew from $23 million in 1985 to $250 million in 2009 in 2005 US dollars. This is the same time period as a transformation in the agricultural input industry, rapid growth in demand for agricultural inputs, breakthroughs in information technology and biotechnology, and changes in intellectual property rights. An econometric model was used to test whether the transformation of agricultural input industry was a major factor in the growth of R&D expenditure or not. This article analyzes a unique, firm level sales and R&D data set from the seed, pesticide, tractor, and fertilizer industries in 2000–2009. The estimated model indicates that agribusiness firms' R&D expenditures from 2000 to 2009 were positively related to variables associated with industry transformation such as firm size, ownership by multinationals, and declining industry concentration. The model also indicates that strengthening patent policy as well as growth in the size of research‐intensive industries like the seed industry contributed to the growth of agribusiness R&D in India.     

Ex post impacts of improved maize varieties on poverty in rural Ethiopia

Public agricultural research has been conducted in Africa for decades. While many studies have examined its aggregate impacts, few have investigated how it affects the poor. This paper helps fill this gap by applying a new procedure to explore the ex post impacts of improved maize varieties on poverty in rural Ethiopia. Plot‐level yield and cost changes due to adoption are first estimated using instrumental variable and marginal treatment effect techniques where possible heterogeneity is carefully accounted for. A backward derivation procedure is then developed to link treatment effect estimates with an economic surplus model to identify the counterfactual household income that would have existed without improved maize varieties. Poverty impacts are finally estimated by exploiting the differences between observed and counterfactual income distributions. Improved maize varieties have led to a 0.8–1.3 percentage drop of poverty headcount ratio and relative reductions of poverty depth and severity. However, poor producers benefit the least from adoption due to the smallness of their land holdings.     

Potential impacts of Bt eggplant on economic surplus and farmers' health in India

In this article, the potential impacts of Bt eggplant technology in Indian agriculture are analyzed. Several proprietary Bt hybrids are likely to be commercialized in the near future. Based on field trial data, it is shown that the technology can significantly reduce insecticide applications and increase effective yields. Comprehensive farm-survey data are used to project farm-level effects and future adoption rates. Simulations show that the aggregate economic surplus gains of Bt hybrids could be around US$108 million per year. Consumers will capture a large share of these gains, but farmers and the innovating company will benefit too. As the company has also shared its technology with the public sector, Bt open-pollinated varieties might become available with a certain time lag. This would make the technology more accessible, especially for resource-poor farmers, entailing further improvements in welfare and distribution effects. The wider implications of the private–public technology transfer are discussed. Furthermore, the potential benefits for farmers' health resulting from reduced insecticide applications are examined, using an econometric model and a cost-of-illness approach. These benefits are worth an additional $3–4 million per year, yet they constitute only a small fraction of the technology's environmental and health externalities. More research is needed for comprehensive impact analysis.     

The roles of public sector versus private sector in R&D and technology generation: the case of maize in Asia

This paper reports the findings of a study whose objectives were to compare and contrast the public and private sectors in Asia in terms of their (1) estimated level of investment in maize breeding research; (2) germplasm outputs; and (3) nature and extent of roles played in the maize seed industry. Since the 1960s, yield gains, rather than area expansion, have fuelled increases in maize production in Asia. Yield gains, in turn, have been due to the shift in maize cultivation from mostly open‐pollinated varieties (OPVs) to mostly hybrids. This transition also shifted the locus of modern maize breeding research from government research organisations to private national and multinational seed companies. In countries where both the public and private sectors participated in maize research, private sector research investment far exceeded that of the public sector. With more aggressive marketing programmes, the private sector captured 89% of the Asian maize seed market in the late 1990s. National public seed research agencies (including universities and cooperatives) developed and produced more maize OPVs than hybrids, mass‐produced and distributed seed cheaply, addressed location‐specific production problems, and provided agricultural extension services. The private seed companies developed, produced, sold and promoted their own proprietary hybrids. The reluctance of the private sector, however, to address the needs of marginal maize farmers should encourage the public sector to continue playing an active role in maize research and development (R&D), seed production and modern maize technology dissemination, especially with adequate support from appropriate government policies.     

Roundup Ready soybeans in Argentina: farm level and aggregate welfare effects

Although adoption rates of genetically modified crops have been staggering in some countries, there is still comparatively little evidence about biotechnology impacts under diverse agroecological and institutional conditions. These knowledge gaps lead to an overly precautious attitude among policy makers and the public. This article analyzes the effects of Roundup Ready (RR) soybeans in Argentina, the country with the second biggest transgenic area worldwide. Based on recent survey data, it is shown that the technology increases total factor productivity by 10% on average, with cost savings being somewhat more pronounced for smaller than for larger farms. The reduction in use of toxic herbicides and of tillage operations entails positive environmental repercussions. Aggregate welfare effects are computed over the 1996–2001 period with a three-region, partial equilibrium model, comprising Argentina, the United States, and the rest of the world. In 2001, RR soybeans created more than US$1.2 billion of economic surplus at the global level. The largest share went to consumers (53%), followed by seed and biotechnology firms (34%), and agricultural producers (13%). Due to comparatively weak intellectual property protection, and thus only small technology mark-ups in seed prices and widespread adoption, Argentine soybean growers receive 90% of the benefits in that country. This demonstrates that farmers in developing countries can gain considerably when they obtain access to suitable foreign innovations through technology spill-overs.     

Ex ante analysis of the benefits of transgenic drought tolerance research on cereal crops in low-income countries

This article develops a framework to examine the ex ante benefits of transgenic research on drought in eight low-income countries, including the benefits to producers and consumers from farm income stabilization and the potential magnitude of private sector profits from intellectual property rights (IPRs). The framework employs country-specific agroecological–drought risk zones and considers both yield increases and yield variance reductions when estimating producer and consumer benefits from research. Benefits from yield variance reductions are shown to be an important component of aggregate drought research benefits, representing 40% of total benefits across the eight countries. Further, estimated annual benefits of US$178 million to the private sector suggest that significant incentives exist for participation in transgenic drought tolerance research.     

Economywide effects of climate‐smart agriculture in Ethiopia

Climate‐smart agriculture (CSA) is an approach for transforming and reorienting agricultural systems to support food security under climate change. Few studies, however, quantify at the national scale CSA's economic effects or compare CSA to input‐intensive technologies, like fertilizer or irrigation. Such quantification may help with priority setting among competing agricultural investment options. Our study uses an integrated biophysical and economic modeling approach to quantify and contrast the economywide effects of CSA (integrated soil fertility management in our study) and input‐intensive technologies in Ethiopia's cereal systems. We simulate impacts for 20‐year sequences of variable weather, with and without climate change. Results indicate that adopting CSA on 25% of Ethiopia's maize and wheat land increases annual gross domestic product (GDP) by an average 0.18% (US$49.8 million) and reduces the national poverty rate by 0.15 percentage points (112,100 people). CSA is more effective than doubling fertilizer use on the same area, which increases GDP by US$33.0 million and assists 75,300 people out of poverty. CSA and fertilizer have some substitutability, but CSA and irrigation appear complementary. Although not a panacea for food security concerns, greater adoption of CSA in Ethiopia could deliver economic gains but would need substantial tailoring to farmer‐specific contexts.     

Diffusion and spillover of new technology: a heterogeneous-agent model for cassava in West Africa

Understanding what determines the geographic spread of innovations can help guide the funding and implementation of research and extension programs. Our approach uses household survey data as model parameters, to simulate behavior across the entire surveyed population and avoid the aggregation bias associated with representative‐farm models. Such a “heterogeneous agent” approach allows us to infer the distribution of a technology's impacts across one set of households, and predict the potential for spreading to another set that shares similar characteristics with respect to natural resource endowments and farming systems. We apply the technique to new cassava varieties in West Africa, finding a strongly poverty‐alleviating impact, with substantial spillover potential from Nigeria to neighboring countries.     

Ex Ante Impact Assessment under Imperfect Information: Biotechnology in New Member States of the EU

Some argue that the lack of modern agricultural development in the former socialist countries of Central and Eastern Europe has made cutting‐edge biotechnology attractive. However, enthusiasm for planting genetically modified (GM) crops varies greatly in the enlarged European Union (EU) and especially among the New Member States (NMS); the Czech GM maize area is progressively growing whereas Hungary imposed a de facto ban on GM crops. Remarkably, the Hungarian ban was not supported by any cost–benefit assessment. In the literature, ex ante impact assessments of monopolistically priced technologies are often based on cross‐sectional comparisons of average cropping budgets. Such assessments ignore heterogeneity of farmers and underestimate the true impact of these technologies because of homogeneity bias. Therefore, we propose an improved method by explicitly modelling farmer heterogeneity under imperfect information, and assess the potential value and benefit sharing of GM crops in the two NMS using a stochastic partial equilibrium model. The total potential value of GM crops is estimated at €82 million for both countries, of which €60 million (73%) accrues to farmers and €22 million (27%) to the gene developers and the seed industry. This is in line with the literature on global benefit sharing of first‐generation GM technologies.     

Impacts of prices and transactions costs on input usage in a liberalizing economy: evidence from Tanzanian coffee growers

Despite improvements in production incentives, agricultural output in Africa remained sluggish through the 1990s. Low use of purchased inputs may be part of the cause of persistently low productivity in African agriculture. This article analyzes the roles of relative prices and transactions costs in explaining low use of chemical inputs among Tanzanian coffee growers. A sample selection model indicates that output prices exert great influence on input purchases and that both fixed and variable transactions costs affect input use decisions. Travel costs in input and output markets have distinct effects on input usage, implying distinct avenues for interventions to promote more intensive use of agricultural inputs.     

Economic growth,convergence, and agricultural economics

After nearly two centuries of lagging behind the industrial countries, growth in many developing countries has surged since the early 1990s. This outperformance has major implications for almost all areas of agricultural economics and, if continued, will likely do so into the future. This article aims to identify the key ways in which the changes in rich and poor country growth rates matter for agricultural economists, as a basis for formulating better research agendas. A key impact arises through sharp increases in demand for agricultural resources as demand for livestock products increases. This changing structure of food demand has important implications for nutrition studies and policies, with the emergence of a double burden of malnutrition. On the supply side, growth in developing countries tends to increase domestic food supply, which is also boosted by increases in research and development spending. Growth in developing countries both stimulates and benefits from increases in infrastructure investment, evaluation of which requires new analytical tools. Negative impacts include the contribution of increased demand for livestock products to global greenhouse gas emissions. In terms of trade policy, growth in developing country is tending to lead to convergence of agricultural policies with the pattern of assistance seen in today's developed countries, raising concerns about the future need to deal with collective action problems, particularly those that increase the volatility of world prices.     

Toward a green revolution in Africa: what would it achieve,and what would it require?

The current global food crisis has reemphasized the costliness of Africa's failure to achieve food security and poverty reduction. The instrument by which other more successful developing countries achieved these outcomes was a “Green Revolution” in agriculture. While previous research has provided largely discursive appraisals of the viability of an African Green Revolution, this article adopts a more rigorous methodology to address that question. First, an economy‐wide multimarket model, augmented with existing poverty–growth elasticities, is developed to assess the likely impacts of a rapid acceleration in food production (of the kind witnessed in previous Green Revolutions) on food prices, consumption and demand, farmer revenue, and poverty. Our results suggest that a rapid growth in staple production, together with more integrated regional markets, would reduce food prices by roughly 20–40% for consumers and 10–20% for producers among the major crops. This translates into a large rise in farm revenues, annual agricultural growth rates of 6.5% or higher, broader income growth and food security, and over 70 million Africans being lifted out of poverty. The article concludes by emphasizing the kinds of fundamental policy actions and resources that would be required for achieving these outcomes.     

The economic impact of cowpea research in Senegal: an ex-post analysis with disadoption

This study evaluates the impact of a long‐term research collaboration between the Senegalese Institute for Agriculture Research (ISRA), and the Bean/Cowpea Collaborative Research Support Program (CRSP) funded by the U.S. Agency for International Development (USAID). Adoption of the primary outputs from this collaboration, a nonchemical cowpea storage method and two short‐season cowpea varieties, were tracked through a series of farmer interviews in 1996, 1997, and 2004 in the main cowpea growing area of Senegal. Combined with information from an impact assessment in the late 1980s, this study draws on ex‐post adoption data from most of the product life cycle for the storage technology. The 2004 survey found that 60.4% of cowpea production in the main cowpea growing area of Senegal is stored in metal drums and that 69% of households use this storage technology; ISRA/CRSP improved short season varieties were determined to account for 3.6% of cowpea production. Baseline economic analysis of the most recent survey data, which includes benefits and costs of the storage technology and improved varieties, reveal an IRR to donor funding of 13%. The benefits of these technologies appear to be evenly distributed in the rural population on the basis of gender and ethnic background. Comparison of the rates of technology adoption over time, however, reveals that use of the storage technology may be decreasing; inclusion of this technology disadoption trend reduces the IRR by only 0.4% from the baseline estimate. Overall, estimated returns reveal that this collaboration has been a good investment for the U.S. and Senegalese governments, and other donors.