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A Combined Ex-Post/Ex-Ante Impact Analysis for Improved Sorghum Varieties in Ethiopia

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A Combined Ex-Post/Ex-Ante Impact Analysis for Improved Sorghum Varieties in Ethiopia Socioeconomics Discussion Paper Series Series Paper Number 22 A combined ex-post/ex-ante impact analysis for improved sorghum varieties in Ethiopia Albert Gierend, Alemu Tirfessa, Bedru Beshir Abdi, Beyene Seboka, Amare Nega ICRISAT, Nairobi, Kenya, [email protected] 10/17/2014 Disclaimer This paper is part of ICRISAT Socioeconomics Discussion paper series. This series disseminates the findings of work in progress to encourage the exchange of ideas about a wide array of issues in the area of agriculture for development. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. Any comments and suggestions are more than welcome and should be addressed to the author who’s contact details can be found at the bottom of the cover page. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Crops Research Institute for the Semi- Arid Tropics and its affiliated organizations. About ICRISAT The International Crops Research Institute for the Semi-Arid Tropics (lCRISAT) is a non-profit, non-political organization that conducts agricultural research for development in Asia and sub-Saharan Africa with a wide array of partners throughout the world. Covering 6.5 million square kilometers of land in 55 countries, the semi-arid tropics have over 2 billion people, of whom 644 million are the poorest of the poor. ICRISAT innovations help the dryland poor move from poverty to prosperity by harnessing markets while managing risks – a strategy called Inclusive Market- Oriented development (lMOD). ICRISAT is headquartered in Patancheru near Hyderabad, Andhra Pradesh, India, with two regional hubs and five country offices in sub-Saharan Africa. It is a member of the CGIAR Consortium. www.icrisat.org CGIAR is a global agriculture research partnership for a food secure future. Its science is carried out by 15 research Centers who are members of the CGIAR Consortium in collaboration with hundreds of partner organizations. www.cgiar.org This work has been undertaken as part of the A combined ex-post/ex-ante impact analysis for improved sorghum varieties in Ethiopia Acknowledgment The authors like to express their gratitude and thanks to Dr. Alastair Orr, Assistant Director at ICRISAT Nairobi Office who supervised the impact study, provided the necessary financial resources and gave valuable advice on the scope of analysis, methodology and structure of this report. Our special thanks go to all scientists from the Ethiopia Institute of Agricultural Research EIAR at Melkassa Agricultural Research Center who participated in the three days impact assessment workshop in Melkassa in September 2013 and the second one day workshop in June 2014. Our thanks also go to ICRISAT staff at the Ethiopian country office in Addis Ababa, namely Dr. Karuturi Rao (Head of ICRISAT office), Dr. Abdalla Mohamed Hassan, and Ms. Tigist Abrham for providing the organisational support for the two workshop events in 2013 and 2014. This study could not have been undertaken without their enthusiasm, profound knowledge of all aspects of the sorghum sector in Ethiopia and their commitment in elaborating the underlying economics and adoption information from all sorghum regions. ICRISAT - Socioeconomics Discussion Paper Series 2 A combined ex-post/ex-ante impact analysis for improved sorghum varieties in Ethiopia Executive Summary This country-level impact study for Ethiopia combines ex-post and ex-ante estimation of research gains from improved sorghum varieties developed by the National Breeding Program of Ethiopia in collaboration with partners from international research institutions and universities. The methodological framework for the study is the standard economic surplus concept embedded in the DREAM model within a multiple domestic market configuration, price spill-overs, and separate impact parameters (adoption path and yield differentials) for each improved sorghum variety under consideration. Several model scenarios are developed and applied to test the robustness of impact parameters and portray components of ICRISAT’s development approach in the socioeconomic domain. One group of scenarios refers to ICRISAT’s traditional breeding and crop management activities. The other group captures elements of ICRISAT IMOD strategy (Inclusive Market Oriented Development) by defining various markets and trading frameworks. A three days impact assessment workshop was conducted in September 2013 in Melkassa, Ethiopia and organised by the Ethiopian Institute of Agricultural Research. Sorghum breeders, agronomists and socio-economists were invited to elaborate on the necessary information for a model based impact assessment study, and guided by an ICRISAT facilitator through an eight-stage data elicitation process. A second one-day workshop followed in June 2014 to complete the pending tasks. The Ethiopian breeding program is structured around specific agro-ecologies: the highlands, intermediate attitude, moist lowlands in the western part of Ethiopia and the dry lowlands covering large areas in the Northern and Eastern parts of the country. The EIAR sorghum scientists at the workshops identified 23 improved sorghum varieties which are already released onto the market. Some varieties were omitted as they were considered as inferior compared to other varieties. Out of the 23 varieties, 4 open pollinating varieties (OPV) are destined for the highlands, 6 OPV varieties for the intermediate altitudes, 1 OPV variety for the moist lowlands, 7 OPV and 3 hybrid varieties for the dry lowlands. Profitability of the improved varieties measured as gross margin/ha varies considerably between 250 USD for the dry lowland striga resistant varieties and 1,000 USD for the highland varieties. The major reasons are large regional variations in the yield level caused by variety specifc yield potentials and diverse growing conditions across agro-ecologies. All improved varieties are superior to local varieties at a margin of 40-50% in terms of revenue, but incur higher 10- 25% higher production costs compared to local varieties. Ethiopia’s sorghum sector is still dominated by local varieties. Based on the availabilty of improved from formal seed channels and farmers’ own seed production, the current share of production which comes from improved varieties is estimated at around 5%. The experts increased this rate to around 8% by an upward adjustment of farmer’s own seed production. The intermediate altitudes show an adoption rate of 2% (in terms of production share) and 15% in the dry lowlands. Both agro-ecologies together produce around 90% of all sorghum in the country. The EIAR scientists’ held an optimistic view with regard to a continuing strong growth and modernisation dynamic of Ethiopia’s cereal sector and concluded that adoption rates in 15 years’ time may reach 50% in the dry lowlands and 10% in the intermediate altitudes, which sums up to a national adoption level of improved varieties at around 30%. ICRISAT - Socioeconomics Discussion Paper Series 3 A combined ex-post/ex-ante impact analysis for improved sorghum varieties in Ethiopia Research costs are calculated in a simplified budget format at around 360,000 USD/year, then deflated for each year in the ex-post analysis and subdivided among the improved varieties according to their period under research. The economic performance of the Ethiopian sorghum breeding program in the baseline scenario is impressive. Overall research gains account for 760 million USD between 1971 and 2040 which translates into 40 million USD on an annual base. There is a strong research bias in favour of the dry lowlands. Only a small fraction of the research gains (11%) are targeted at the intermediate altitudes while the bulk of gains are allocated in the moist and dry lowlands. Thus, the Ethiopian breeding program as it stands now discriminates heavily against the ‘intermediate altitudes’ which produce around 45 % of the national sorghum but receive little attention in genetic improvements. Shakeholders needs to assess carefully the implications of a likely shift in sorghum production away from the intermediate altititudes towards the dry lowlands that will occur if the spread of improved varieties gain momentum in the future. One of the key question is certainly the extend to which sorghum production become riskier and more exposed long period of dry spells if part of the production is moved to the high-risk dry lowlands. The sorghum breeding program favours farmers more than consumers under the assumptions made in the DREAM model with rather high S&D price elasticity values taken from IFPRI. Eighty percent of the gains are captured by producers. Older, first generation varieties tend to be economically inferior with lower IRR (8-20%) and higher research costs than the more recently released varieties. This reflects the challenging environment and learning process in a breeding program that took off in the 70s in east Africa. Underperforming varieties, low adoption rates, slow breeding process and time delays in market release are reasons to explain the rather modest share of research gains in the past (only 20%) while over 80% of the research gains (600 million USD) are predicted to occur in the future until 2040. Four market and trade scenarios were conducted. The ‘high-market integration’ scenario’ which mimicries better market efficiency and integration results in a higher share of the research gains captured by Ethiopian farmers as a consequence of limited price pressure. Hoever, the diversion of gains towards famers was much less pronounced if compared with similar scenarios from other impact studies conducted in Uganda and Tanzania. Inspection of the trade scenarios shows that the effects of cross border trade at a large scale does increase the size of the overall research gains but at a modest level. Those additional gains are fairly equally distributed between producers (larger sorghum market and reduced price effects) and consumers (larger sorghum supply and lower market prices).
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