ECONOMIC EVALUATION OF IMPROVED GRAIN STORAGE TECHNOLOGY IN TANZANIA Hanney Mbwambo, Bekele Kotu and Zena Mpenda Africa RISING Writeshop White Sand Hotel – Dar es Salam 30 June - 2 July 2016

Outline Introduction Methods Results Conclusion

PH losses are substantially high among smallholder farmers in SSA The losses vary by counties, seasons, and among crops They range 20-40% To mitigate this problem farmers had to sale grain at a very low price after harvest and then buy it later at higher prices They are also forced to consume low quality grains

This high loss suggests the need for greater attention PH losses in order to address the problem of hh food insecurity Addressing the problem from the other side To address this problem, several storage technologies have been introduced to farmers through AR project. The technologies have been tested and found to be technically effective in reducing PH grain loss.

Maize stored in Hermetic bag Vs non hermetic bag

However, their economics is little known This study was initiated to address this gap. We do the analysis considering maize because maize is the most important food crop in Tanzania

We compare Purdue Improved Crop Storage (PICS) with polypropylene bags Polypropylene bags were selected because they are commonly used by farmers

Data collection We used mainly primary data in this study Conducted focus group discussion and household survey Group discussion conducted with farmers who have used both the improved storages and traditional ones

Both with female and male farmers Helped to elicit losses

We also conducted a household survey constituting 200 randomly selected households We used the data from hh survey to determine the technology of focus, estimate average maize production and consumption and categorize farmers (among others).

Data analysis Partial budget approach was used for data analysis Used three economic parameters to compare the technologies (net benefit, benefit-cost-ratio, and internal rate of return) Benefits and costs have been discounted to take into account time value of money (20% discount rate)

Conducted sensitivity analysis to check the stability of the conclusions This was done with respect to change in maize grain price and storage prices We varied the prices by 20% and checked the feasibility of the new storages

Total storage costs includes Cost of labor Cost of storage bags and maintenance Depreciation cost Cost of chemical

Results (production and storage) Farmers’ category Quantity produced (kg) Estimated surplus (deficit) Storage needs (number of 100-kg- bags) Number of storage months (own produce) Low producers335(577)35 Lower middle producers741(171)710 Medium producers Upper middle producers Top producers Average (typical)

Adoption of improved storage technologies is limited in the area 24.6% of the sample households use PICS Average storage capacity owned is 104Kg, while the average maize produced is 1826Kg Average farmer store only 6% of his produce in PICS

Storage losses Farmers’ category Quantity produced and stored (kg) Quantity of loss (kg) Polypropylene (PPB)PICS Low producers (0.5%)0 (0%) Lower middle producers74175 (10.1%)0.9 (0.1%) Medium producers (19%)2.6 (0.2%) Upper middle producers (19%)4.5 (0.2%) Top producers (19.2)10.7(0.2%) Average (typical) (19.4%))4.1(0.2%)

Financial benefits, if PICS is adopted Farmers CategoryNet return (Tzs/hh/season)BCRIRR (%) Low producers (1,650) 0.5(10) Lower middle producers12, Medium producers41, Upper middle producers71, Top producers178, Typical farmer67,

Sensitivity Analysis Sensitivity analysis of financial benefits from adoption of PICS ChangeDecision Criteria Net returnBCRIRR Maize price down by 20% ↓25% ↓22% 243->186 Storage price up by 20%↓2.6% ↓15% 243->202

Conclusion Results suggest that it is profitable to invest in the new storage technology However, benefits vary by household categories Top maize producers benefit the most while the low maize producers can lose from the investment.

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