.... 25 Years of Improvement

Part VIII. Developing Country Gains from CGIAR Crop Research


PRICE TRENDS OF CGIAR-MANDATED FOOD CROPS

Food crop production increases achieved over the past quarter century served to match supply with growing food demand. Under free market conditions, food commodity prices should have decreased wherever supply exceeded demand, thus providing a measure of how crop improvement work benefited consumers in developing countries and helped alleviate hunger and poverty.

In fact, the trend of world market prices for selected food crops between 1970 and 1994 (see annex) shows declines for all crops of between 26 and 53 percent. Yet, as far as competitive commodities (produced in both Northern and Southern countries) are concerned, world market prices have been more influenced by Northern surplus disposal policies than by increased farm productivity in the South.

Price declines in complementary commodities (those which are mainly or exclusively produced in the South) such as rice (-42 percent, 1970-94) and bananas (-38 percent) are somewhat more significant for assessing crop productivity in the South. However, the volume of world rice trade is very small compared to production and therefore of limited significance, and the world banana trade has more the character of a cash crop market than a food market.

To assess the price trends of food crops would require a study of the long-term development of country level producer and consumer prices. Unfortunately, country-level price data are scarce and usually distorted by government food policy interventions. Attempts have been made to "decontrol" price data, i.e., to estimate prices as they would have been without government intervention. An example of that is available for Tanzania (annex) where decontrolled producer prices have decreased by an average of 46 percent over a 15-year period. The reductions were strongest among the country's main staple crops.

This suggests that increased staple crop productivity heavily benefited poor consumers. Where-as in large parts of Africa-two thirds of disposable household income is spent on food, a 46 percent reduction in food costs effectively boosts household purchasing power by some 30 percent, a significant advance in poverty reduction. Food price reductions might in fact be the single most effective way of alleviating poverty, apart from directly increasing the incomes of the poor.

A similar study for Niger (annex) showed an average producer price increase of 6 percent over a 12- year period; since 1985, however, food crop prices dropped at rates similar to those observed in Tanzania. In Mexico (annex), "guaranteed" (controlled) producer prices dropped by an average of 19 percent over 22 years.

Government controlled farmgate and retail rice and maize prices in the Philippines (annex) showed a decline of 30 percent over 17 years. Indonesia (annex) offers the exception to the rule: While the (controlled) rice consumer price declined by 12 percent over 15 years, other staple crop consumer prices rose, resulting in an average food price increase of 39 percent over the period. Interesting in the case of Indonesia is the observation that the difference between consumer and producer price (distribution cost) decreased in the (government-favored) rice sector but increased for the bulky and quickly spoiling cassava.

Overall, the limited available data seem to suggest that, as a rule, producer and consumer prices for important CGIAR-mandated staple crops decreased over the period under consideration, although to different degrees, and with strong variations among countries. Generally, country level price reductions observed were less pronounced than those registered in the world markets. This indicates that country-level prices were more stable due to the ability of governments to effectively insulate domestic prices against world market trends. There is some reason to assume that producer prices fell less than productivity increased, indicating that benefits from more productive technologies were somehow shared between producers and consumers, providing the farmer with a higher income while, at the same time, increasing the purchasing power of poor consumers by cutting the household food bill. However, it also appears that consumer food prices generally declined less than producer prices because of the rising cost of distribution. Retail prices in many countries might actually have remained more or less stable while producer prices decreased (Donald O. Mitchell and Merlinda D. Ingco: The World Food Outlook. World Bank 1993, 14-19).

The higher productivity of modern grain varieties triggers change which goes beyond price and income effects. Land values, for instance, are going up where more productive varieties and related cultivation methods (e.g., irrigation) are introduced. This increases the farmers' working capital and collateral for credit; it attracts infrastructure and services investments, and in-migration from less-favored areas. Out-migration from less-favored areas benefits the latter with enlargement of farm size, higher labor demand and more income from migrants' remittances, thus spreading the benefits from better grain production technology equitably through the rural areas (Cristina C. David and Keijiro Otsuka, eds: Modern Rice Technology and Income Distribution in Asia. IRRI 1994).

Gains from CGIAR-Originated Germplasm
Another way of assessing the impact of international crop research is by estimating the contribution of the improved plant germplasm originating from CGIAR Centers to crop production in developing countries (see annex). The estimates given below attempt to separate the productive contribution of improved germplasm from other improvements, such as better crop management, higher inputs of fertilizers, pesticides, water, mechanization and labor. The estimated benefits international agricultural research is bringing to developing country farmers and consumers are therefore to be considered net gains.

WHEAT

In the case of wheat, about 22 percent of the developing world's production increase resulting from higher yields is attributed to the gradual spreading of modern or high yielding varieties (MVs).

The average share of CGIAR-originated germplasm, for all developing regions, in these MVs has been estimated at 49 percent. This translates into a $1.6 billion annual value at (the low) 1994 world market prices of the part of developing country wheat output attributable to the use of germplasm of CGIAR origin (CIMMYT). However, with domestic wheat prices in developing countries being generally higher than world market prices, the actual gain of these countries-shared between producers and consumers-is probably substantially higher than the above estimate of $1.6 billion per annum.

MAIZE

A similar calculation for maize indicates that the developing country gains from the estimated 25 percent share of CGIAR-originated germplasm (again CIMMYT) is worth $1.5 billion a year at 1994 world market prices. Again, domestic maize prices in developing countries tend to be above world market levels, although less so than in the case of wheat. The developing world's gain from CGIAR maize germplasm is therefore likely to be well above $1.5 billion a year.

RICE

No comprehensive estimates are available for the impact of CGIAR rice improvement work, carried out at three centers (IRRI, WARDA, CIAT), on developing country agriculture. However, the developing countries produce double as much rice as wheat; the share of MVs in developing country rice production is high, and the share of CGIAR-improved germplasm in currently used MVs is high in several subregions, lower in others, estimated to average 20 percent. It can thus be assumed that the total annual benefits of developing countries from CGIAR rice germplasm should be to the tune of $1.5 billion a year.


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