IFPRI- Are farmers willing to pay for drought tolerant rice

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IFPRI researchers Patrick Ward and David Spielman discusses their recent study examining farmers’ willingness to pay for drought tolerant rice in three drought-prone districts in rural Bihar, India. …

IFPRI researchers Patrick Ward and David Spielman discusses their recent study examining farmers’ willingness to pay for drought tolerant rice in three drought-prone districts in rural Bihar, India. Their findings shed light on how the gains from such technologies might be distributed among farmers, and have implications for future public and private sector R&D investments in drought tolerant technologies.
Read more about the study: http://southasia.ifpri.info/2014/01/07/farmer-preferences-for-drought-tolerance-in-hybrid-versus-inbred-rice/

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  • 1. Context Introduction Methodology Data Results Are farmers willing to pay for drought tolerant rice? Evidence from Bihar, India Patrick S. Ward David J. Spielman International Food Policy Research Institute 26 February 2014 Conclusions
  • 2. Context Introduction Methodology Data Results Conclusions Cereal Systems Initiative for South Asia Goal:To increase food, nutrition, and income security at scale in South Asia through sustainable intensification of cereal-based systems Three countries: Bangladesh, India, Nepal Two donors: USAID, BMGF Duration: Phase I: 2009-2012; Phase II: 2012-2015 Website: http://csisa.cimmyt.org The impact challenge: catalyzing durable change with millions of small and medium-scale farmers
  • 3. Context Introduction Methodology Data Results Conclusions CSISA’s policy research agenda Policy analysis and outreach to... Encourage private investment and public-private partnerships in pro-poor technology development and delivery Address changing labor, gender, assets, and migration dynamics related to pro-poor technology development and delivery Website: http://www.ifpri.org/book-736/node/8754
  • 4. Context Introduction Methodology Data Results Conclusions CSISA’s policy research Seeds, traits, and fertilizer Industry structure and biotechnology sector in India, Bangladesh, and Nepal Hybrid rice in India and Bangladesh Abiotic stress tolerance traits in rice in Bihar and Odisha, India Promoting balanced chemical fertilizer use using soil test-based recommendations Machinery and equipment Market strategies for laser land levelling in easter Uttar Pradesh, India Labor and gender dimensions of mechanized rice transplanters in Bihar Industry structure and market power in India’s agricultural equipment sector Impact of MGNREGA on farmers’ adoption of production technologies in India Crop management Drought tolerant rice and weather index insurance in Bangladesh and Odisha, India Impacts of shocks and vulnerability on input use and farm management practices
  • 5. Context Introduction Methodology Data Results Conclusions Are farmers willing to pay for drought-tolerant rice? Evidence from Bihar, India Aims and objectives Estimate demand for drought-tolerant rice in Bihar using well-structured discrete choice experiments Gain a better understanding for the traits valued by farmers in choosing rice seeds Explore variation in demand and the potential for market segmentation, subsidy targeting, etc. Analyze potential for private/public sector involvement in the delivery of pro-poor technologies
  • 6. Context Introduction Methodology Data Results Motivation How do we combine efforts to incentivize private sector innovation with efforts to reach small-scale, resource-poor farmers? Humanitarian use exemptions Ex: Golden Rice for Vitamin A-deficient women and children Technology subsidies Ex: Human and animal vaccines Technology embodiment Ex: open-pollinated varieties of Bt eggplant Market segmentation Ex: Microfinance services Conclusions
  • 7. Context Introduction Methodology Data Results Conclusions Droughts and rice production in India Droughts present a significant constraint to rice production (Pandey et al., 2007; Serraj et al., 2009) India has 22.3 million ha of unfavorable areas: 6.3 million ha. of upland rice 16 million ha. of rainfed lowland rice 20% of India’s total land area is drought prone Evidence suggests that droughts have been occurring with greater frequency in India since the beginning of the 20th century (World Bank, 2008) When droughts occur, rice production is significantly affected
  • 8. Context Introduction Methodology Data Results Droughts and rice production in India Conclusions
  • 9. Context Introduction Methodology Data Results Droughts and area under rice production Conclusions
  • 10. Context Introduction Methodology Data Droughts and rice yields Results Conclusions
  • 11. Context Introduction Methodology Data Results Conclusions Social consequences of droughts Direct effects are often accompanied by secondary effects: Lower farm incomes Higher food prices for consumers Increased indebtedness Asset depletion Poverty and malnutrition Drought risk reduces productivity even in favorable years because farmers avoid investing in inputs when they fear crop loss (Pandey et al., 2007)
  • 12. Context Introduction Methodology Data Results Conclusions Drought-tolerant rice: Current developments and challenges DT rice may present a means of avoiding the increasing threats of droughts Productivity-enhancing (yield variability reducing)rather than purely productivity-increasing (yield increasing) IRRI Sahbhagi dhan: Released in 2009 in Jharkhand and Odisha Tolerant under drought stress Yield advantage of 29% and 19% over check varieties in rainfed drought-affected conditions Maintains yield advantage even under severe drought No yield penalty under normal conditions Yield advantage of 23% and 31% over check varieties under non-stressed conditions
  • 13. Context Introduction Methodology Data Results Conclusions Challenges to DT adoption Benefits of DT may not be evident at all levels of stress Under normal or irrigated conditions, DT may not perform differently than non-DT At severe stress levels, DT may be indistinguishable from non-DT Moderate drought stress is best for learning about benefits Complicates learning about DT
  • 14. Context Introduction Methodology Data Results Methodology Choice experiments are designed to Ascertain how consumers evaluate purchasing options Evaluate demand for goods that consumers may not be familiar with or for which markets do not exist Closely simulate real-world purchasing decisions Conclusions
  • 15. Context Introduction Methodology Data Choice tasks Results Conclusions
  • 16. Context Introduction Methodology Data Results Conclusions Risk and loss aversion experiments Lottery-based experiments used to gauge aversion to risk and losses
  • 17. Context Introduction Methodology Data Sample Districts Results Conclusions
  • 18. Context Introduction Methodology Data Results Rainfall Deficiencies–2012 Kharif Conclusions
  • 19. Context Introduction Methodology Data Results Conclusions Results: Willingness to pay for rice seed characteristics
  • 20. Context Introduction Methodology Data Results Preference heterogeneity Wide variation in farmers’ preferences for seed characteristics Controlling for risk aversion increases valuation of DT yields Conclusions
  • 21. Context Introduction Methodology Data Results Conclusions Demand for DT Hybrid and DT Inbred Attribute WTPs can be summed to generate WTP for seeds that represent bundles of attributes
  • 22. Context Introduction Methodology Data Results Conclusions Observations Demand for DT hybrid far less sensitive to price than demand for DT inbred Small reduction in price for DT hybrid not likely to have a large effect on DT hybrid demand Significant differences in demand patterns for two seeds Demand for DT hybrid reveals much greater variation Demand for DT inbred does not vary a great deal Potential market segmentation Roles for both public and private sector engagement in discovery, development and delivery of DT seeds
  • 23. Context Introduction Methodology Data Results Conclusions Conclusions Farmers in our sample prefer reduction in yield variability offered by DT seeds. They are also willing to pay more for seeds that offered yield advantage even under normal conditions (no yield penalty). A significant segment of the market values the yields and lower seeding rates conferred by hybrid seeds, and the market for inbreds and hybrids can coexist. Results imply a role for both private sector DT hybrids and low-cost DT inbreds through public sector R& D.
  • 24. Context Introduction Methodology Data Thank you! p.ward@cgiar.org d.spielman@cgiar.org Results Conclusions