1. Department of Agricultural Economics Purdue University Measuring Profitability of On- Farm Storage Pest Management in Developing Countries: The case of PICS and Maize in Africa Mike Jones Corinne Alexander Jess Lowenberg- Deboer April 2012

2. Will PICS be Profitable? 1.What are the returns to storage for PICS? 2.What are the competing storage technologies? Focus on marketing producers Would need a different analysis for producers who store for food security Department of Agricultural Economics Purdue University

3. Returns to Storage 1.Commodity price at harvest period (P 0 ) 2.Quantity to store (Q 0 ) 3.Length of storage period (t) 4.Price seasonality across the storage period (x) 5.Cost of storage technology (C) 6.Dry Weight Loss: quantity lost to insects (w) 7.Price discount for damaged grains (v) 8.Opportunity Cost of Capital (OCC) (r t ) Department of Agricultural Economics Purdue University

4. Economic Model Department of Agricultural Economics Purdue University

5. Economics Model Cont. Department of Agricultural Economics Purdue University 1)Financial rate of return to storage 2)Opportunity cost of capital adjusted for storage time R>0: Storage profit greater than returns from other investments R<0: Other investments more profitable

6. Profitable to Store Not Profitable to Store

7. Department of Agricultural Economics Purdue University

8. Department of Agricultural Economics Purdue University OCCs No Storage Technology Sofa- grain Actellic Super PICS Bags High losses Expected losses Low losses One Season Two Seasons (ave.) 25% (44.7%)(27.9%)(6.0%)9.2%(4.6%)29.7%44.7% 35% (51.4%)(34.6%)(12.6%)2.5%(11.2%)23.1%38.1% 45% (58.0%)(41.2%)(19.3%)(4.1%)(17.9%)16.4%31.4% 55% (64.7%)(47.9%)(26.0%)(10.8%)(24.6%)9.7%24.7% Average Return on Storage for Mbeya, Tanzania 2003/04 to 2007/08, selling eight months after harvest

9. Department of Agricultural Economics Purdue University