AGRICULTURAL TECHNOLOGY ADOPTION & FOOD SECURITY IN AFRICA - - PowerPoint PPT Presentation

AGRICULTURAL TECHNOLOGY ADOPTION & FOOD SECURITY IN AFRICA EVIDENCE SUMMIT JUNE 1-2, 2011 – WASHINGTON, DC

Panel Discussion on: Strategies for increasing adoption of profitable agricultural technology: Role of policies, institutions, social networks, and supply chains

STRATEGIES FOR INCREASING ADOPTION OF PROFITABLE AGRICULTURAL TECHNOLOGY: ROLE OF POLICIES, INSTITUTIONS, SOCIAL NETWORKS, AND SUPPLY CHAINS

Panel Chair and Moderator: Mywish Maredia (MSU) Panel members: Norm Uphoff (Cornell)

Experience with multi-sectoral strategies for disseminating a proven agricultural technology

Ruth Vargas Hill (IFPRI)

Informal risk-sharing groups and rainfall insurance

Duke Burruss (DAI)

Market development, supply chains, private sector linkages

Technology Supply vs. Effective Demand: Facts and Reality

Facts on the Supply side:

• Growing evidence of increasing availability of

new technologies to farmers in Africa

• Annual Reports of some African NARS provide

impressive lists of technologies developed by them

• Many technologies ‖in the pipeline‖ or already made

available to African farmers today than ever before

Demand side reality:

• Increasing supply of new technologies has not

met increasing acceptance by producers (as reflected by low adoption rate)

Low effective demand for technology by African farmers: What does it imply?

• It implies one or all of the following:

It implies that a technology developed by the research system:

• Does not reach the end users
• Is not affordable by them
• Has not proven profitable for them
• This panel is focused on the last two implications

and addresses the evidence question:

• What role do policies, institutions, social networks,

and supply chains play in increasing the affordability and expected profitability of improved technologies (to increase adoption)?

Concepts

• Affordability:
• Relates to the cash requirements for adopting a

technology

• Expected profitability:
• Relates to profitability ‗expectations‘ in farmer’s physical,

social, and economic environment—not the researcher controlled experiments (which are risk free)

• Is assessed in relation to alternate opportunities (including

production with current technology); and

• Requires a threshold level of incremental profits to entice

an individual to adopt

Concepts (cont‘d)

• Adoption decision faced by individual farmer
• Adopt a technology if: E(Пn) - E(Пa) > α > 0
• Threshold level of incremental profits (α):
• Captures farmers‘ risk attitudes towards a new

technology

• It is not uniform across all adopters and regions.
• It depends on :
• Profiles of technology users (social status, gender, education)
• Economic status (smallholder versus commercial farmers)
• Type of technology (mechanical versus agronomic practices)

What influences ―expected profitability‖ of technology?

• (Un)certainty of variables that determine the

profitability outcome (e.g., Input and output prices)

• which are influenced by non-technology factors such as government

policies, infrastructure development, other institutional conditions, rainfall, farmer‘s ability to store the final output for several months, etc.

• Probability that the technology will yield a

minimum level of net revenue, which depends on

• expectations about the adaptability of a technology to the local

climatic conditions,

• expectations about the timely availability of inputs and other

technology components (an efficient inputs market)

• expectations about access to output markets
• expectations about the functioning of a credible credit system,
• well-functioning insurance/compensation system that protects them

against undue risks

Key Messages

• Both technological considerations (e.g., performance and

adaptability of technology) and non-technological considerations (institutions, policies, infrastructure, social networks, etc.) play important roles in the realization of profits and the decision to adopt or not to adopt a technology

• Improved policies, infrastructure and institutions minimize

risks/uncertainty and increase the probability of realizing higher profitability from adopting a technology

What is the evidence on the role of ‗non- technological‘ factors in increasing profitability (and thus adoption) of technology?

This is the question focused by the three panel members

• Ruth – examines the role of insurance and informal

groups in the uptake of fertilizer in Ethiopia

• Duke – presents a case study of Ghana on how

innovations like ‗commercial frameworks‘ that link farmers with private sector partners, and associated infrastructure development help in mitigating risk and technology adoption throughout the value chain.

• Norm—gives several examples of multi-sectoral

approaches used in the dissemination of SRI technology

But let‘s first review (briefly) the evidence found in the literature…

What is the evidence on the role of ‗non- technological‘ factors in increasing profitability?

Results of a Systematic Review conducted by Maredia and Del Carpio (IEG/World Bank, 2011)

• The review includes 14 observations across 10 studies

that use rigorous IE methodology to address this question

• The studies look at impacts of wide ranging interventions

that promote linkages with buyers and sellers, enable farmers to engage in contracts, benefit consumers through better pricing, and provide incentives for group formation and social learning

• Some interventions in this category aim to relieve

constraints on farmers, producers, and sellers to increase productivity throughout the value chain

Results of the Systematic Review

Major findings:

• Cooperatives and farmer associations function as

coordinating mechanisms for linking farmers to markets.

• Several contract arrangements influence the use of

modern production inputs more broadly—for both commercial and noncommercial crops.

• Lack of market information, financial risks, and access to

markets reduce farmers‘ incentives to adopt high-value crops and to participate in marketing schemes

Overall positive results from available evidence

Explanatory variables (Participation in) Impact indicators measured

Number of IEs with evidence of impact

• n the indicator

– + Contract Gross margins 2 1 3 Contract for expt crops Yields of food crops 1 Interlinked input-

• utput-credit

arrangements for export crops Value of harvested produce 1 Value of harvested produce 1 Fertilizer on food crops 1 Special output marketing channels Price of the produce 3 Household income 1 Total observations 2 3 9