Limits to agricultural development from a smallholder household perspective:

The profitability of rainfed crop production and how it affects intensification.

Dave Harris

ICRISAT Nairobi

We all concentrate on increasing the productivity of (rainfed) crops.

However, it is the net benefit (profitability) from investments (cash, labour,

time, etc) that may be important to a farming household and could influence

adoption of new technologies.

Net returns* are expressed on a ‘per hectare’ basis. However, poverty levels are generally expressed on a per person, per day basis, e.g. the widely used threshold value of “$ 1 per person per day” *’income’, ‘gross margins’ and ‘net returns’ in this analysis include monetized benefits such as food consumed directly.

The amount of land required for any household to achieve a given value of income per person from crop production depends on: The profitability of any cropping enterprise, and; The number of people in the household. To achieve $1 / person / day, the relationship is:

y = (365/x) * n Where: y = land required per HH (hectares) x = net returns from the enterprise ($ / ha) n = number of persons in the HH

0

5

10

15

20

25

30

35

40

45

50

0 50 100 150 200 250 300 350 400

Land per HH required to give $ 1 per person per day for a given net return (per hectare) from crop production, for various HH sizes.

(Note: one season per year) La

nd

pe

r H

H (

he

ctar

es)

Net returns from crop production ($ per hectare per year)

1 person / HH

2 persons /HH

4 persons / HH

6 persons / HH

Relation holds for ANY crop, combination of crops or ANY land-based enterprise.

How much can new agricultural

technology raise income?

Literature survey - criteria for inclusion in the analysis: 1. Published since 2000.

2. Rainfed cropping – no irrigation.

3. Gross margins (benefits minus variable costs) reported for entire

enterprise (or data available to calculate).

4. Cost of labour (including family labour) included.

5. A comparison of a ‘base’ case (farmers’ current practice or an experimental control) and one or more improved technologies.

Including the following crops: Barley, blackgram, chickpea, cocoa, coffee, common bean, cotton, cowpea, fodder, groundnut, lentil, maize, mungbean, mustard, niger, pearl millet, peas, pineapple, rapeseed, rice, sesame, sorghum, soybean, sunflower, toria, vanilla, vetch, wheat, yam.

From the following countries: Burkina Faso, Benin, Cameroon, India, Kenya, Malawi, Niger, Nigeria, Sudan, Syria, Tanzania, Turkey, Uganda, Zambia, Zimbabwe.

Sixty-nine cases reported in the literature since 2000

And technologies: Tillage, rotations, fallows, intercropping, relay cropping, agroforestry, fertilizers, soil amendments, foliar sprays, pest- and disease control, new varieties, etc.

Effect of improved technology on rainfed crop profitability $ per hectare per season

From: Dave Harris and Alastair Orr (2012). Is Rainfed Agriculture Really a Pathway from Poverty? Agricultural Systems (submitted).

-200

-100

0

100

200

300

400

500

600

700

800

USD

/ha/

seas

on

Improved Current

Median value for the ‘base’ case = $84 per hectare per season Median value for the ‘improved’ case = $268 per hectare per season (220 % increase) Median value for the B:C ratio of the improved technologies = 2.1 Upper limit around $700 per hectare per season?

80 % of farms in SSA are now below 2 ha (Nagayets, 2005).

0

5

10

15

20

25

30

35

40

0 100 200 300 400 500 600 700

Lan

d p

er

HH

(h

ect

are

s)

Net returns from crop production ($ per hectare per year)

HH=1

HH=4

HH=6

HH=15 Ethiopia (6-4 HH-1 )

2.4 ha

Land per HH required to give $ 1 per person per day for a given net return ($268 ha-1) from crop production, for various HH sizes and countries.

(Note: one season per year)

HH=2

HH=10

HH=20

Mali (20.3 HH-1) 13.3 ha

Nigeria (9.4 HH-1) 8.4 ha

Malawi (4.8 HH-1) 1.05 ha

There are not many rural households that

are entirely dependent on their own

agricultural production.

Land required to produce an individual income of $1 per day, as a function of net returns from

crop production, for two proportions of the contribution of crop production to total household

income. Values calculated using Equation 1 and assuming household size = 5.

“Eneless Beyadi appears through a forest of maize clutching an armful of

vegetables and flashing a broad smile. Beyadi cultivates about half a hectare of

plots in the village of Nankhunda, high on the Zomba plateau in southern

Malawi. She gets up at 4 a.m. every day to tend her gardens, as she lovingly

calls them, before heading off to teach at a school.”

‘ DIRT POOR: The key to tackling

hunger in Africa is enriching its soil.

The big debate is about how to do

it.’

29 MARCH 2012 | VOL 483 | NATURE | 525

Intensification?

Depends on where you are and who you

are (or what you have).

0

10

20

30

40

50

60

70

80

0 200 400 600 800

HH

s w

ith

$1

/pe

rso

n/d

ay (

%)

Net return ($/ha/season)

Response to increasing net returns - four contrasting sites

Limuru

Matopos

Makueni

Kaffrine

Site Makueni Limuru Matopos Kaffrine

HH size - mean 6.2 4.7 6.4 17.4

Farm size - mean 3.55 0.54 1.34 14.60

HHs with less than 2 ha (%) 39 99 81 0

Rainfall (mm/year) 611 854 567 593

No of seasons 2 2 1 1

0

10

20

30

40

50

60

70

80

0 100 200 300 400 500 600 700 800

HH

s w

ith

$1

/pe

rso

n/d

ay (

%)

Net return ($/ha/season)

Limuru

Matopos

Makueni

Kaffrine

sorghum/millet x = $176

maize x = $300

high value x = $520

Conclusions (1) With a range of technologies in a wide variety of crops and countries, agricultural research can substantially increase (by 220%) the net returns from rainfed crop production, from a median of $84 / ha / season to $268 / ha /season ( n = 69) There seems to be an upper limit of net returns from rainfed crop production of around $700 / ha / season. Returns near this limit are rare. Given the limited range of profitability of rainfed cropping enterprises and the small farm sizes that are characteristic of resource-poor farm households, absolute values of income will remain small for the majority of smallholders even if there is widespread adoption of improved technologies. For any given level of return, farmers in areas where there are two- or three seasons per year can potentially gain more benefit from crop production than those in single-season areas. Irrigation can facilitate additional cropping seasons.

Conclusions (2) Adaptation requires adoption. We must not continue to assume that our target HHs are full-time farmers. The available additional returns to investment in crop production are small, and their decisions may be influenced by other, non-farm, opportunities (trade-offs). The potential for impact from agricultural intensification depends on HH characteristics as well as agro-ecological potential. Some communities in high potential areas will never be able to benefit directly from agricultural intensification. This should be taken into account when targeting interventions.

Variable Non-participant

farmers

Participant

farmers

Difference

(Participants-

Non)

Household size 7 8 1

Annual farm income ($/HH)ƚ 131 150 19

Annual off-farm income ($/HH)ƚ 47 119 71

Total HH income ($/HH)ƚ 178 269 90

Total land per HH (ha) 1.21 1.78 0.57

Land area planted to sorghum (ha/HH) 0.36 0.45 0.08

Sorghum output (kg/HH) 164 351 187 (114%)

Sorghum yield (kg/ha) 504 739 235 (47%)

Total value ($/ha) 40.31 55.31 15.00 (37%)

Production costs ($/ha)§ 36.39 45.65 9.26 (25%)

Gross margin ($/ha) 3.92 9.66 5.74 (146%)

Gross margin ($/HH) 1.43 4.30 2.87 (200%)

Per capita income from sorghum ($/day) 0.0006 0.0015 0.0009 (150%)

Effect of a technology package on productivity and gross margins of sorghum in Uganda (Tororo, Pallisa, and Soroti Districts). Data from Sorghum Production Technology Transfer Project in Eastern and Northern Uganda: A

Baseline Survey. Final Report, May 2011, by Gabriel Elepu, J. Mark Erbaugh and Donald W. Larson.