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Bairagi - Agriculture
- 1. Costs and Benefitsof Investment in Agricultural Research and Development (R&D) in Haiti Subir Bairagi Postdoctoral Fellow, International Rice Research Institute (IRRI), Philippines Haïti Priorise conference, Port-au-Prince May 1-3 2017
- 2. I. Description ofproblem • Key facts: • Food shortages are common in Haiti • One-half of Haitian is hungry and undernourished • Depth of the food deficit (2013-15): 546 kcal/capita/day • Around 22% and 12% of total children under 5 years of age are stunned and underweight, respectively • The country is failing to produce enough food because of the many existing supply-side problems • Haiti imports most of the country’s staple food, particularly rice. • As most Haitians are poor, they might not be able to afford the imported staple food at the market price AgR&D in Haiti 2
- 3. I. Description ofproblem • The main cereal crops grown in Haiti are maize, rice, and sorghum, supplying around 38% of the total energy consumption • These crops are cultivating in more than 50% of the country’s arable land • Productivity (yield) of these crops are among the lowest in Latin America, and have been declining since the 1990s • Improving crop productivity could help improve food and nutritional security, and alleviate rural poverty for Haitian • The investments in agricultural R&D could help increase crop productivity, generate billions of dollars social benefits, and alleviate poverty and hunger AgR&D in Haiti 3
- 4. II. Solution: AgriculturalR&D • The suggested intervention is to establish an agricultural research institution • to help transfer cutting-edge agricultural technology to Haiti’s farmers, starting in 2020, reaching its maximum level of benefits in 2040. AgR&D in Haiti 4
- 5. III. Costs ofthe intervention • The annual spending could be between $15.13 and $36.50 million (mean is $25.50 million) • The estimation is based on the four following assumptions: • 1.0% of the total agricultural GDP (AgGDP) is spent on agricultural R&D, • $3.32 million is spent per million of the country’s population, • per researcher $0.15 million for 165 FTEs is spent, and • $4.14 million is spent for per 100,000 farmers • This would be used for salaries, program operating costs, and capital investments • Finally, a one-time fixed set-up cost (i.e for building and materials) of around $5 million is assumed AgR&D in Haiti 5
- 6. IV. Benefits ofthe intervention • The investment is expected to increase 210%, 109%, and 104% in maize, paddy, and sorghum yields, respectively, than the current levels. • To estimate the future benefits (2020-2050), the IMPACT model was simulated incorporating these yield gains. This model projects production, consumption, and prices up to 2050. • The aggregate benefits were then estimated as: AgR&D in Haiti 6 𝐵𝑡 = 𝑝𝑖𝑡 𝑠 𝑞𝑖𝑡 𝑠 3 𝑖=1 − 𝑝𝑖𝑡 𝑏 𝑞𝑖𝑡 𝑏 3 𝑖=1 (1)
- 7. IV. Benefits ofthe intervention -20% 0% 20% 40% 60% 80% Rice Maize Sorghum Rice Maize Sorghum ProductionPrice 60% adoption 50% adoption AgR&D in Haiti 7 • By 2040 rice production in Haiti could increase by: • Rice: 55-66% • Maize: 10-12%, and • Sorghum: 6-7%. • The price effect is not significant • Nonetheless, consumption of these commodities would increase
- 8. V. Impact onsociety (discounted benefits: 2017-2050) Discount rate, 𝛿 Investment decision criteria Investment in Ag. R&D with 50% adoption 60% adoption 𝛿 = 3% Benefits ($ million) 719 871 Costs ($ million) 544 544 NPV ($ million) 175 327 BCR 1.32 1.60 𝛿 = 5% Benefits ($ million) 487 589 Costs ($ million) 418 418 NPV ($ million) 69 172 BCR 1.16 1.41 𝛿 = 12% Benefits ($ million) 146 177 Costs ($ million) 212 212 NPV ($ million) -66 -35 BCR 0.69 0.83 AgR&D in Haiti 8
- 9. Thanks for yourattention Questions and comments are welcome! Email: s.bairagi@irri.org AgR&D in Haiti 9