Burkart, Stefan

Charry, Andrés

Enciso, Karen

Sotelo Cabrera, Mauricio Efren

CGSpace

IntroductionEx-ante evaluation of the economic impact of adopting improved foragesin the Colombian Eastern Plains» Forage-based cattle systems play a key role in rural economies of developing countries in terms of food security and poverty alleviation.» However, they are often related to being a major cause of negative environmental impacts by contributing to increased greenhouse gas (GHG) emissions, land degradation, and reduction of biodiversity.» Large amounts of resources have been allocated to research and development (R&D) for forage material improvement and a broad range of improved materials were released showing superior characteristics in terms of productivity and environmental impacts.» However, data are still scarce on both the economic and environmental “yields” of these investments.ObjectiveMethodologyResultsThrough an ex-ante evaluation, this study aims at estimating the potential “yields” of the investment in R&D of the improved forage variety Brachiaria brizantha 26124 in the Eastern Plains region of Colombia.1. Private investor economic evaluationCompared to the base scenario, the adoption of the variety allows for: • Avg. yearly increases of 39% in gross income and 225% in net income.• Reducing the risk of economic loss by 80%Conclusions» B. brizantha 26124 proved to be an alternative to improve production efficiency and profitability of livestock farms.» From a social point of view, it was found that if adopted, the increase in productivity of B. brizantha 26124 could generate a displacement in the meat supply, which would be associated with important economic benefits at the regional and national levels.» The potential success of the technology depends mainly on productivity and adoption rate. It is therefore key to develop an adequate accompanying mechanism during the release process, in order to provide cattle producers with sound extension strategies and training programs that focus e.g. on pasture sowing and maintenance. It is also key that adequate dissemination mechanisms are being established through a well-functioning seed system. This poster is licensed for use under the Creative Commons Attribution 4.0 International license (CC BY 4.0) 2018-09. Design: JL Urrea (CIAT)AcknowledgementsThis work was undertaken as part of the Projects “Evaluación y desarrollo de materiales forrajeros para integrarlos a los sistemas de producción ganaderos de la Orinoquia” and “Estrategias para mejorar la competitividad y sostenibilidad de los sistemas de producción de leche y/o carne en el Caribe Húmedo, Caribe Seco, Valles Interandinos, Orinoquía y trópico alto colombiano”. We acknowledge financial support from the Colombian Ministry of Agriculture and Rural Development and the National Cattle Fund (Fondo Nacional del Ganado, FNG). This work was done as part of the CGIAR Research Program on Livestock. We thank all donors that globally support our work through their contributions to the CGIAR system.ReferencesAlston JM, Norton GW, Pardey PG. 1995. Science under scarcity: Principles and practice for agricultural research evaluation and priority setting. Cornell University Press, Ithaca, USA. http://ebrary.ifpri.org/cdm/ref/collection/p15738coll11/id/6TROPENTAG2018Poster presented at:Enciso, Karen; Charry, Andrés; Sotelo, Mauricio; Burkart, StefanInternational Center for Tropical Agriculture (CIAT), Tropical Forages Program. CONTACT: s.burkart@cgiar.orgData sources: Field measurements; expert consultations; secondary data and literature reviewThe analysis used two evaluation methodologies:1. To determine the impact on a productive unitA discounted free cash flow model and a Monte Carlo simulation were carried out with the simulation software @Risk.• 5.000 simulations and confidence level 95%• Random variables: live weight gain per animal and year, investment costs, maintenance costs, purchase price per kg of live weight, and sales price per kg of live weight.2. To determine the potential social benefits of the evaluated technology and their distribution among producers and consumersAn economic surplus model was developed and a sensitivity analysis was carried out, considering changes in adoption rates and productivity levels.• B. brizantha 26124 allows changes per hectare in animal productiv- ity between +15% and +31% compared to the base scenario (live weight gains per animal: 332 kg/ha/y versus 274 kg/ha/y).• The maximum expected adoption rate for the base scenario was 2.22% at regional and 2.8% at national level.• Elasticity of supply and demand: 0.7 and 1.17, respectively.• Estimated R&D costs: US$ 412,409.• Discount rate: 12%.• R&D period: 2011–2015, as part of a project financed by the Colombian Ministry of Agriculture and Rural Development (MADR) and executed by AGROSAVIA and CIAT (see acknowledgements).• Year of variety release: 2019.Figure 1: Eastern Plains of Colombia.Location: Eastern Plains of Colombia.Technology to be evaluated: B. brizantha 26124. Identified as promising material given its adaptation to acid soils, high forage production and high palatability. This technology was compared to a base scenario with Brachiaria decumbens and Brachiaria humidicola in a bovine meat production system.• At the individual investment level of the primary producer and under specific management assumptions in terms of rotation and fertilization, the adoption of B. brizantha 26124 would have positive impacts on the profitability indicators and risk levels.• An animal productivity below 280 kg/ha/y results in negative performance indicators for B. brizantha 26124.• Profitability indicators are highly sensitive to meat sales price variations.2. Economic surplus modelDecision criteriaNPVIRRCost/Benefitratio5IndicatorMean1SD2CI (95%)3Prob. NPV<04MeanCI (95%)MeanCI (95%)B. brizantha 26124US$334US194(US$192)–US$85910.61%23%12%–30%1.070.96–1.16Base scenario(US$231)US$140(US$231)–US$15354.7%15%5%–24%0.950.87–1.03Table 1: Performance indicators of the economic evaluation1Mean value of the NPV obtained through the simulation (5,000 repetitions); 2Standard Deviation with regard to the NPV mean value; 3Minimum and maximum values for a confidence interval of 95%; 4Probability of the NPV being below 0 (with regard to the NPV mean value); 5Quotient between the benefits and discounted costs.Indicator NPVIRRNPVIRRNPVIRRRegional levelBase scenario12,31926%Optimistic scenario26,98633%Pessimistic scenario352118%National level15,69439%42,77548%3,19628%Table 2: Results of the economic surplus model (US$ in thousands)1A maximum adoption rate of 2.22% at regional and 2.8% at national level is assumed and at both levels a probability of success of 80% and an increase in productivity of 21%;  2A maximum adoption rate of 3.3 % at regional and 4.2% at national level is assumed and at both levels a probability of success of 100% and an increase in productivity of 31%; 3A maximum adoption rate of 1.1% at regional and 1.4% at national level is assumed and at both levels a probability of success of 50% and an increase in productivity of 15%.• Composition of the total surplus: 63% producer and 37% consumer• Increases of 1% in the max. adoption rate and 5% in productivity with respect to the baseline scenario, result in increases of the profitability indicators of more than 10% and 8%, respectively.Figure 2: Heat map for the sensitivity the IRR (total surplus basis) with respect to changes in the adoption rate and productivity level.0 10%15%20%25%30%1%0.150.180.190.210.222%0.190.220.230.250.263%0.220.240.260.270.294%0.230.260.280.290.315%0.250.270.290.310.32Adoption rate (Regional level)1%0.250.270.290.310.322%0.290.320.340.360.373%0.320.350.370.390.404%0.340.370.390.410.435%0.360.390.410.430.45Adoption rate (National level)Change inproductivity

Ex-Ante evaluation of the economic impact of adopting improved forages in the Colombian eastern plains

https://cgspace.cgiar.org/bitstream/10568/97079/4/Enciso%20K%20et%20al.%202018.%20Ex-Ante%20Evaluation%20of%20the%20Economic%20Impact%20of%20Adopting%20Improved%20Forages%20in%20the%20Colombian%20Eastern%20Plains_web.pdf

Ex-Ante evaluation of the economic impact of adopting improved forages in the Colombian eastern plains

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