Bairagi - Agriculture

1. Costs and Benefits of Investment in
Agricultural Research and Development
(R&D) in Haiti
Subir Bairagi
Postdoctoral Fellow, International Rice Research Institute (IRRI), Philippines
Haïti Priorise conference, Port-au-Prince
May 1-3 2017

2. I. Description of problem
• Key facts:
• Food shortages are common in Haiti
• One-half of Haitian is hungry and undernourished
• Depth of the food deficit (2013-15): 546 kcal/capita/day
• Around 22% and 12% of total children under 5 years of age are stunned and
underweight, respectively
• The country is failing to produce enough food because of the many
existing supply-side problems
• Haiti imports most of the country’s staple food, particularly rice.
• As most Haitians are poor, they might not be able to afford the
imported staple food at the market price
AgR&D in Haiti 2

3. I. Description of problem
• The main cereal crops grown in Haiti are maize, rice, and sorghum,
supplying around 38% of the total energy consumption
• These crops are cultivating in more than 50% of the country’s arable
land
• Productivity (yield) of these crops are among the lowest in Latin
America, and have been declining since the 1990s
• Improving crop productivity could help improve food and nutritional
security, and alleviate rural poverty for Haitian
• The investments in agricultural R&D could help increase crop
productivity, generate billions of dollars social benefits, and alleviate
poverty and hunger
AgR&D in Haiti 3

4. II. Solution: Agricultural R&D
• The suggested intervention is to establish an agricultural research
institution
• to help transfer cutting-edge agricultural technology to Haiti’s farmers,
starting in 2020, reaching its maximum level of benefits in 2040.
AgR&D in Haiti 4

5. III. Costs of the intervention
• The annual spending could be between $15.13 and $36.50 million (mean is
$25.50 million)
• The estimation is based on the four following assumptions:
• 1.0% of the total agricultural GDP (AgGDP) is spent on agricultural R&D,
• $3.32 million is spent per million of the country’s population,
• per researcher $0.15 million for 165 FTEs is spent, and
• $4.14 million is spent for per 100,000 farmers
• This would be used for salaries, program operating costs, and capital
investments
• Finally, a one-time fixed set-up cost (i.e for building and materials) of
around $5 million is assumed
AgR&D in Haiti 5

6. IV. Benefits of the intervention
• The investment is expected to increase 210%, 109%, and 104% in
maize, paddy, and sorghum yields, respectively, than the current
levels.
• To estimate the future benefits (2020-2050), the IMPACT model was
simulated incorporating these yield gains. This model projects
production, consumption, and prices up to 2050.
• The aggregate benefits were then estimated as:
AgR&D in Haiti 6
𝐵𝑡 = 𝑝𝑖𝑡
𝑠
𝑞𝑖𝑡
𝑠
3
𝑖=1
− 𝑝𝑖𝑡
𝑏
𝑞𝑖𝑡
𝑏
3
𝑖=1
(1)

7. IV. Benefits of the intervention
-20% 0% 20% 40% 60% 80%
Rice
Maize
Sorghum
Rice
Maize
Sorghum
ProductionPrice 60% adoption 50% adoption
AgR&D in Haiti 7
• By 2040 rice production in
Haiti could increase by:
• Rice: 55-66%
• Maize: 10-12%, and
• Sorghum: 6-7%.
• The price effect is not
significant
• Nonetheless, consumption
of these commodities would
increase

8. V. Impact on society (discounted benefits: 2017-2050)
Discount rate, 𝛿 Investment decision criteria Investment in Ag. R&D with
50% adoption 60% adoption
𝛿 = 3% Benefits ($ million) 719 871
Costs ($ million) 544 544
NPV ($ million) 175 327
BCR 1.32 1.60
𝛿 = 5% Benefits ($ million) 487 589
Costs ($ million) 418 418
NPV ($ million) 69 172
BCR 1.16 1.41
𝛿 = 12% Benefits ($ million) 146 177
Costs ($ million) 212 212
NPV ($ million) -66 -35
BCR 0.69 0.83
AgR&D in Haiti 8

9. Thanks for your attention
Questions and comments are welcome!
Email: s.bairagi@irri.org
AgR&D in Haiti 9