ASSESSMENT OF PROSPECTIVE IMPACT OF
FRUITS AND VEGETABLES RESEARCH AT THE
INDUSTRY LEVEL IN THE PHILIPPINES: THE CASE
OF THE ACIAR – PCAARRD HORTICULTURE
PROJECT
Dr. Roehlano M. Briones and Ivory Myka R. Galang
Philippine Institute for Development Studies
Outline
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•
Objectives
Research and Development (R&D)
Assessment method
Results of the assessment
Analysis of the results
Objectives
• Analyze the contribution of the fruits and
vegetables subsector in agricultural
development.
• Evaluate the potential impact of R&D on
selected horticulture crops.
• Draw implications for investment allocation
and institutional framework for the
agricultural R&D system.
Research and Development
• Budgetary allocation trend
– Table 1. By Major Final Output (OPIF; World Bank ; in P millions)
2001
MFO 1 Support services
MFO 2 Regulations
20,199
2002
2003
2007
2008
2009
2010
21,758 18,702 14,748 20,803 36,006 33,858
512
2,257
2,244
689
1,186
1,197
1,353
MFO 3 Plans and policies
2,076
1,382
1,103
3,059
1,767
2,469
2,617
TOTAL
22,787
25,397 22,049 18,496 23,756 39,672 37,828
Research and Development
• Budgetary allocation trend
– Table 2. Breakdown of MFO 1 (OPIF; World Bank; in P millions)
2001
2002
2003
2011
Production Support Services
2,523
2,468
4,608
4,975
Market Development Services
267
143
115
242
Credit Facilitation Services
312
124
184
23
Irrigation Development Services
9,981
13,124
9,044
12,552
Other Infra and/or Post harvest Dev't Services
2,800
2,012
1,667
716
Extension Support, Education and Training Services
2,630
2,514
2,126
1,853
Research and Development
1,686
1,373
958
1,185
Research and Development
• Investment in agricultural R&D
– one of the major drivers of agricultural
productivity.
• Most of the agricultural research and
development efforts (funding) come from the
government agencies.
– Agricultural research as a public good
– Stakeholders (workers and farmers) are poor
Research and Development
• General trends
– Table 3. Global public agricultural research-intensity ratios, 1981-2000
Expenditures as a % of AgGDP
Region/country
Developing countries
Sub-Saharan Africa
China
Asia and Pacific
Latin America and Caribbean
Middle East and North Africa
Developed countries
Total
1981
0.52
0.84
0.41
0.36
0.88
0.61
1.41
0.79
1991
0.50
0.79
0.35
0.38
0.96
0.54
2.38
0.86
2000
0.53
0.72
0.40
0.41
1.16
0.66
2.36
0.8
Research and development
• Public-sector agri research intensity ratio,
2002
• PHILIPPINES: 0.46 %
– Higher than Vietnam [0.17 %], Indonesia [0.22 %], Laos
[24%]
– Lower than Malaysia [1.92 %]
– Higher than the overall average for Asia (2000) : 0.41 %
– Lower than the average for developing countries
(2000) : 0.53 %
Research and Development
Rice
Corn
Sugar
Coconut
Fiber Crops
Cotton
Abaca
Other fiber
crops
Vegetables
Tobacco
Livestock
Carabao
Other livestock
Fruits
Banana
Other fruits
Fisheries
excl. SEAFDEC
incl. SEAFDEC
Forestry
Source: David (1998)
Research Intensity Ratio
1994-1996
0.25
0.05
0.5
0.3
2.5-3.0
2.5
1
nil
1.1
0.15
3.6
0.02
nil
nil
0.12
0.35
3.5
Banana
Livestock
Poultry
2012
GVA Shares
6.93
12.79
7.47
Assessment Method
• Economic Surplus Approach
– Change in economic surplus arises from farm
productivity improvement due to innovation (kshift), which propagates by a diffusion process
– Together with research cost, permits calculation of
measures of project worth
• Net present value (NPV)
• Benefit-cost ratio (BCR)
• Internal rate of return (IRR)
http://www.web-books.com/eLibrary/NC/B0/B63/032MB63.html
Assessment method
• K-shift  NPV, BCR, & IRR
• Unable to get good estimates of k-shift
Reverse
• NPV, BCR, and IRR  threshold k-shift
– minimum value to justify the amount invested in the
research
– NPV=0, BCR=1, IRR= discount rate
A model named ‘welfare impact simulator for evaluating
research’or WISER has been developed to
automatically calculate the prospective impact of a
new technology generated from fruit and vegetable
R&D.
Philippines Horticulture Program
• Fruits
– C1: Analysis of Papaya supply chain constraints
– C2: Durian/Jackfruit Phytophthora Integrated Management
– C3: Papaya Integrated Crop Management
– C4: Improved and Sustainable Mango Value Chain
• Vegetables
– C1: Integrated soil and crop nutrient management
– C2: Development of a cost-effective protected cropping system
– C3: Management of bacterial wilt and other wilting diseases in
Solanaceous crops
– C4: Analysis of selected vegetable value chains
• Fruits and vegetables
– C5: Economic impacts of new technologies and policy constraints
•
Research cost: financing by the Australian Centre for International Agricultural
Research (ACIAR) and in-kind contribution by the Philippines.
Assessment method
Assumptions to calibrate the diffusion process:
• High adoption scenario
– admax (maximum adoption): 20 %
– adop20 (adoption after 20 years) : 15 %
• Low adoption scenario
– admax : 5 %
– adop20 : 4 %
Assessment method
• Table 4. Research cost (over 4 years)
Durian
Jackfruit
Mango
Total investment in
Philippines inthe Philippines, in
kind, in AUSD$
AUD$
18,200
201,345
TOTAL
219,545
"
"
"
430,091
56,504
486,595
Preliminary results
• Table 5. Threshold k-shift estimates in percent
IRR 0.05
Durian
Jackfruit
Mango
IRR 0.15
LOW
adoption
HIGH
adoption
LOW
adoption
HIGH
adoption
2.4
8.5
0.8
0.8
2.8
0.3
11.4
30.7
4.2
4.9
15.6
1.7
NPV=0; BCR=1
(Evenson, 2003)
Pearl millet
Sorghum
Groundnut
k-shift (%)
18 to 59
12 to 26
15
Analysis of the Results
• Modest levels of k-shift are needed to justify
research investment
• It is expected that the actual k-shifts of the
research project would be higher than the kshift estimates in this study.
• The computed k-shifts can help the research
stakeholders to potential benefit of research
to society via farm-level productivity
improvement