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David Mather, Richard Bernsten () and Mywish Maredia

No 11542, Staff Paper Series from Michigan State University, Department of Agricultural, Food, and Resource Economics

Abstract: This report presents a summary of the results of an ex-ante socioeconomic assessment of the potential impacts of the improved cucurbits germplasm in Indonesia and South Africa. The cucurbits technology was developed by Cornell University through support from the USAID-funded Agricultural Biotechnology Support Project (ABSP). The objectives of these assessments were to: a) investigate the current status of the cucurbits subsector in Indonesia and South Africa; b) evaluate and quantify potential/projected benefits and costs of the cucurbits technology to seed companies, producers, and consumers in Indonesia and South Africa; and c) identify key issues that ABSP researchers, the ABSP management team, and USAID need to take into account in the development and transfer of technology to developing countries in order to fully reap the potential benefits and minimize costs. This study provides several key insights with respect to the characteristics of the cucurbit subsector in Indonesia and South Africa, the performance of Cornell's disease-resistant germplasm in recent in-country field trials, the potential farm- and market-level economic impact of this germplasm, institutional lessons, and opportunities to increase the impact of Cornell's collaboration with seed firms in these countries. Preliminary field tests of the Cornell materials demonstrate that their sources of resistance appear to be valuable in the growing environments of Indonesia and South Africa. Analysis of the farm-level benefits of disease-resistant cucurbits show that adopting farmers in both countries would likely pay higher input costs, but would enjoy higher net revenues. Using assumed adoption rates-based upon subsector analysis of each cucurbit-the farm-level benefits are aggregated to the market level using a standard economic surplus model. These aggregate benefits are then compared in a benefit-cost framework with past and (assumed) future investment costs borne by ABSP and private sector seed companies in the development of these varieties. Under the baseline scenario, the internal rate of return to ABSP's investment in Indonesia and South Africa is 46.5% and the net present value (discounted net social gains) is US$47.3 million. The collaborating seed companies in Indonesia and South Africa could potentially increase their gross revenues by US$4.5 million, as a result of incorporating disease-resistance into their future cucurbit varieties. Sensitivity analysis demonstrates that when using 50% of the baseline adoption rates and 50% of the baseline farm-level expected yield gain from disease-resistant cucurbit varieties, the rate of return is still favorable at 27.1% and the net present value is US$6.9 million. With respect to poverty alleviation, the distribution of benefits and labor generation in Indonesia is ideal, as cucumber is produced by small-scale farmers throughout the country and consumed by all Indonesians. Although melon is produced by small-scale yet higher-resource farmers, it is consumed primarily by higher-income Indonesians. By contrast, the distribution of benefits in South Africa is less than ideal, as zucchini, cucumber, and melon are produced by large-scale (white) farmers and consumed by high-income whites. While these crops do generate labor for black women, they are not traditionally grown by small-scale (black) farmers. Furthermore, the constraints that small-scale (black) farmers face in producing these high-value crops cannot be alleviated solely through varietal improvement. An exception to this is butternut, which is grown by both white and black farmers and is consumed by all South Africans. Keys to increasing future ABSP impact in cucurbits include: performing socioeconomic assessment of cucurbit subsectors in target countries to help set collaborative breeding priorities; encouraging Cornell to collaborate with several firms in each country (in order to avoid monopoly pricing of new technologies), and, in South Africa, working with cucurbits that small-scale farmers traditionally produce and consume-primarily pumpkins.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 88
Date: 2002
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DOI: 10.22004/ag.econ.11542

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