CCAFS Science Meeting B.2 Dave Harris - The Profitability of Rainfed Crop Production

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CCAFS Science Meeting presentation by Dave Harris - "Limits to agricultural development from a smallholder household perspective: The profitability of rainfed crop production and how it affects intensification."

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CCAFS Science Meeting B.2 Dave Harris - The Profitability of Rainfed Crop Production

  1. 1. Limits to agricultural development from a smallholder household perspective:The profitability of rainfed crop production and how it affects intensification. Dave Harris ICRISAT Nairobi
  2. 2. We all concentrate on increasing the productivity of (rainfed) crops.However, it is the net benefit (profitability) from investments (cash, labour,time, etc) that may be important to a farming household and could influenceadoption of new technologies.
  3. 3. Net returns* are expressed on a ‘per hectare’ basis.However, poverty levels are generally expressed on a per person, per day basis, e.g.the widely used threshold value of “$ 1 per person per day”*’income’, ‘gross margins’ and ‘net returns’ in this analysis include monetized benefits such as foodconsumed directly.
  4. 4. The amount of land required for any household to achieve a given value of incomeper person from crop production depends on:The profitability of any cropping enterprise, and;The number of people in the household.To achieve $1 / person / day, the relationship is: y = (365/x) * nWhere:y = land required per HH (hectares)x = net returns from the enterprise ($ / ha)n = number of persons in the HH
  5. 5. Land per HH required to give $ 1 per person per day for a given net return (per hectare) from crop production, for various HH sizes. (Note: one season per year) 50 45 6 persons / HH Land per HH (hectares) 40 35 30 Relation holds for ANY crop, combination of crops or ANY land-based enterprise. 25 4 persons / HH 20 15 2 persons /HH 10 5 1 person / HH 0 0 50 100 150 200 250 300 350 400 Net returns from crop production ($ per hectare per year)
  6. 6. How much can new agricultural technology raise income?
  7. 7. Literature survey - criteria for inclusion in the analysis:1. Published since 2000.2. Rainfed cropping – no irrigation.3. Gross margins (benefits minus variable costs) reported for entire enterprise (or data available to calculate).4. Cost of labour (including family labour) included.5. A comparison of a ‘base’ case (farmers’ current practice or an experimental control) and one or more improved technologies.
  8. 8. Sixty-nine cases reported in the literature since 2000Including the following crops:Barley, blackgram, chickpea, cocoa, coffee, common bean, cotton, cowpea,fodder, groundnut, lentil, maize, mungbean, mustard, niger, pearl millet, peas,pineapple, rapeseed, rice, sesame, sorghum, soybean, sunflower, toria, vanilla,vetch, wheat, yam.And technologies:Tillage, rotations, fallows, intercropping, relay cropping, agroforestry,fertilizers, soil amendments, foliar sprays, pest- and disease control, newvarieties, etc.From the following countries:Burkina Faso, Benin, Cameroon, India, Kenya, Malawi, Niger, Nigeria, Sudan,Syria, Tanzania, Turkey, Uganda, Zambia, Zimbabwe.
  9. 9. Effect of improved technology on rainfed crop profitability $ per hectare per season 800 700 600 500USD/ha/season 400 300 200 100 0 -100 -200 Improved Current From: Dave Harris and Alastair Orr (2012). Is Rainfed Agriculture Really a Pathway from Poverty? Agricultural Systems (submitted).
  10. 10. Median value for the ‘base’ case = $84 per hectare per seasonMedian value for the ‘improved’ case = $268 per hectare per season (220 % increase)Median value for the B:C ratio of the improved technologies = 2.1Upper limit around $700 per hectare per season?
  11. 11. 80 % of farms in SSA are now below 2 ha (Nagayets, 2005).
  12. 12. Land per HH required to give $ 1 per person per day for a given net return ($268 ha-1) from crop production, for various HH sizes and countries. (Note: one season per year) 40 HH=20 35 Mali (20.3 HH-1) 13.3 ha Land per HH (hectares) 30 Ethiopia (6-4 HH-1 ) HH=15 2.4 ha Nigeria (9.4 HH-1) 25 8.4 ha Malawi (4.8 HH-1) 20 HH=10 1.05 ha 15 HH=6 10 HH=4 5 HH=2 HH=1 0 0 100 200 300 400 500 600 700 Net returns from crop production ($ per hectare per year)
  13. 13. There are not many rural households that are entirely dependent on their own agricultural production.
  14. 14. Land required to produce an individual income of $1 per day, as a function of net returns fromcrop production, for two proportions of the contribution of crop production to total householdincome. Values calculated using Equation 1 and assuming household size = 5.
  15. 15. ‘ DIRT POOR: The key to tackling hunger in Africa is enriching its soil. The big debate is about how to do it.’ 29 MARCH 2012 | VOL 483 | NATURE | 525 “Eneless Beyadi appears through a forest of maize clutching an armful ofvegetables and flashing a broad smile. Beyadi cultivates about half a hectare ofplots in the village of Nankhunda, high on the Zomba plateau in southernMalawi. She gets up at 4 a.m. every day to tend her gardens, as she lovinglycalls them, before heading off to teach at a school.”
  16. 16. Intensification?Depends on where you are and who you are (or what you have).
  17. 17. 80 Response to increasing 70 net returns - four contrasting sitesHHs with $1/person/day (%) 60 50 Limuru 40 Matopos 30 Makueni Kaffrine 20 10 0 0 200 400 600 800 Net return ($/ha/season) Site Makueni Limuru Matopos Kaffrine HH size - mean 6.2 4.7 6.4 17.4 Farm size - mean 3.55 0.54 1.34 14.60 HHs with less than 2 ha (%) 39 99 81 0 Rainfall (mm/year) 611 854 567 593 No of seasons 2 2 1 1
  18. 18. high value 80 maize x = $520 x = $300 70 sorghum/millet 60 x = $176HHs with $1/person/day (%) 50 Limuru 40 Matopos Makueni 30 Kaffrine 20 10 0 0 100 200 300 400 500 600 700 800 Net return ($/ha/season)
  19. 19. Conclusions (1)With a range of technologies in a wide variety of crops and countries, agriculturalresearch can substantially increase (by 220%) the net returns from rainfed cropproduction, from a median of $84 / ha / season to $268 / ha /season ( n = 69)There seems to be an upper limit of net returns from rainfed crop production of around$700 / ha / season. Returns near this limit are rare.Given the limited range of profitability of rainfed cropping enterprises and the smallfarm sizes that are characteristic of resource-poor farm households, absolute values ofincome will remain small for the majority of smallholders even if there is widespreadadoption of improved technologies.For any given level of return, farmers in areas where there are two- or three seasonsper year can potentially gain more benefit from crop production than those in single-season areas. Irrigation can facilitate additional cropping seasons.
  20. 20. Conclusions (2)Adaptation requires adoption. We must not continue to assume that our target HHs arefull-time farmers. The available additional returns to investment in crop production aresmall, and their decisions may be influenced by other, non-farm, opportunities (trade-offs).The potential for impact from agricultural intensification depends on HH characteristicsas well as agro-ecological potential. Some communities in high potential areas will neverbe able to benefit directly from agricultural intensification. This should be taken intoaccount when targeting interventions.
  21. 21. Effect of a technology package on productivity and gross margins of sorghum in Uganda (Tororo, Pallisa, andSoroti Districts). Data from Sorghum Production Technology Transfer Project in Eastern and Northern Uganda: ABaseline Survey. Final Report, May 2011, by Gabriel Elepu, J. Mark Erbaugh and Donald W. Larson.Variable Non-participant Participant Difference farmers farmers (Participants- Non)Household size 7 8 1Annual farm income ($/HH)ƚ 131 150 19Annual off-farm income ($/HH)ƚ 47 119 71Total HH income ($/HH)ƚ 178 269 90Total land per HH (ha) 1.21 1.78 0.57Land area planted to sorghum (ha/HH) 0.36 0.45 0.08Sorghum output (kg/HH) 164 351 187 (114%)Sorghum yield (kg/ha) 504 739 235 (47%)Total value ($/ha) 40.31 55.31 15.00 (37%)Production costs ($/ha)§ 36.39 45.65 9.26 (25%)Gross margin ($/ha) 3.92 9.66 5.74 (146%)Gross margin ($/HH) 1.43 4.30 2.87 (200%)Per capita income from sorghum ($/day) 0.0006 0.0015 0.0009 (150%)

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