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

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                                  Number of IEs with
variables             Impact indicators      evidence of impact
                                              on the indicator
(Participation in)    measured
                                              –      0      +
Contract              Gross margins           2      1      3
Contract for expt     Yields of food crops                  1
crops
Interlinked input-    Value of harvested             1
output-credit         produce
arrangements for      Value of harvested                    1
export crops          produce
                      Fertilizer on food                    1
                      crops
Special output        Price of the produce                  3
marketing channels Household income                  1
               Total observations             2      3      9