ACIAR’s Contribution to Lowland Rice Technologies in Laos
No 285044, 2019 Conference (63rd), February 12-15, 2019, Melbourne, Australia from Australian Agricultural and Resource Economics Society (AARES)
The lowland rice industry in Laos experiences dry conditions regularly. Rice producers also face rising labour costs as the Lao economy grows. Much of the crop is consumed by the farm households who grew it. Between 1997 and 2012 ACIAR co-funded a set of three projects with the main outcomes being the development of rice varieties more tolerant of dry conditions and direct seeding technologies to replace traditional hand transplanting. Human capacity and scientific knowledge were other significant outcomes from the projects. Direct seeding allowed the release of family labour for other on- and off- farm and household activities. Assessing ACIAR’s contribution to the economic and social impacts from this set of projects was difficult because of the length of time since the projects began, because of the lack of data about the adoption of the technologies and because the University team funded by ACIAR were not the only research team working on these technologies. We focussed on estimating the economic impact of the two technologies applying welfare analysis in a farm level market model of the Lao rice industry and on describing gains in scientific capacity and knowledge. Potential social impacts from the releasing labour from transplanting were also described. Given the uncertainties created by inadequate data, care was taken to develop plausible causal pathways between project research activities and economic and social outcomes. The present value in 2017 of the investment in the three projects by ACIAR and partners was estimated to be $A14.1m (all monetary values in 2017 $AUD and applying ACIAR’s 5% discount rate). The present values in 2017 of the streams of measurable benefits from the adoption of more drought tolerant varieties and direct seeding technology were $A18.5m and $A44.1m respectively, for a total of $A62.6m. The net present value of these streams of benefits and costs in 2017 was $A48.5m. The benefit cost ratio was 4.44:1 and the internal rate of return was 16.0%. The modified internal rate of return, MIRR was 11.5% assuming that the net benefit stream can be reinvested through the life of the investment at a rate of 5%. By these three measures the set of three projects, whose impact has been assessed here, are likely to have been a good investment from ACIAR’s perspective. This conclusion is quite robust to the uncertainty surrounding our assumption about the rates of adoption of the technologies and the share of benefits from the two technologies attributable to the ACIAR projects. If both these parameters are halved (approximately) for both technologies, an unlikely scenario in our view, the investment in the projects still earns the required rate of return.
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