Introduction Methodology Data Results Conclusions
Are farmers willing to pay for droughttolerant rice?
Evidence from Bihar, India
Patrick S. Ward
International Food Policy Research Institute
19 May 2014
Introduction Methodology Data Results Conclusions
Are farmers willing to pay for drought-tolerant rice?Evidence from Bihar, India
Aims and objectivesEstimate demand for drought-tolerant rice in Bihar usingwell-structured discrete choice experimentsGain a better understanding for the traits valued byfarmers in choosing rice seedsExplore variation in demand and the potential for marketsegmentation, subsidy targeting, etc.Analyze potential for private/public sector involvement inthe delivery of pro-poor technologies
Introduction Methodology Data Results Conclusions
Motivation
How do we combine efforts to incentivize private sectorinnovation with efforts to reach small-scale, resource-poorfarmers?
Humanitarian use exemptionsEx: Golden Rice for Vitamin A-deficient women andchildren
Technology subsidiesEx: Human and animal vaccines
Technology embodimentEx: open-pollinated varieties of Bt eggplant
Market segmentationEx: Microfinance services
Introduction Methodology Data Results Conclusions
Droughts and rice production in India
Droughts present a significant constraint to rice production(Pandey et al., 2007; Serraj et al., 2009)
India has 22.3 million ha of unfavorable areas:6.3 million ha. of upland rice16 million ha. of rainfed lowland rice
20% of India’s total land area is drought proneEvidence suggests that droughts have been occurring withgreater frequency in India since the beginning of the 20thcentury (World Bank, 2008)When droughts occur, rice production is significantlyaffected
Introduction Methodology Data Results Conclusions
Droughts and rice production in India
Introduction Methodology Data Results Conclusions
Droughts and area under rice production
Introduction Methodology Data Results Conclusions
Droughts and rice yields
Introduction Methodology Data Results Conclusions
Social consequences of droughts
Direct effects are often accompanied by secondary effects:Lower farm incomesHigher food prices for consumersIncreased indebtednessAsset depletionPoverty and malnutritionDrought risk reduces productivity even in favorable yearsbecause farmers avoid investing in inputs when they fearcrop loss (Pandey et al., 2007)
Introduction Methodology Data Results Conclusions
Drought-tolerant rice: Current developments andchallenges
DT rice may present a means of avoiding the increasingthreats of droughts
Productivity-enhancing (yield variability reducing) ratherthan purely productivity-increasing (yield increasing)
IRRI Sahbhagi dhan:Released in 2009 in Jharkhand and OdishaTolerant under drought stress
Yield advantage of 29% and 19% over check varieties inrainfed drought-affected conditionsMaintains yield advantage even under severe drought
No yield penalty under normal conditionsYield advantage of 23% and 31% over check varieties undernon-stressed conditions
Introduction Methodology Data Results Conclusions
Challenges to DT adoption
Benefits of DT may not be evident at all levels of stressUnder normal or irrigated conditions, DT may not performdifferently than non-DTAt severe stress levels, DT may be indistinguishable fromnon-DTModerate drought stress is best for learning about benefits
Complicates learning about DT
Introduction Methodology Data Results Conclusions
Methodology
Choice experiments are designed toAscertain how consumers evaluate purchasing optionsEvaluate demand for goods that consumers may not befamiliar with or for which markets do not existClosely simulate real-world purchasing decisions
Introduction Methodology Data Results Conclusions
Choice tasks
Introduction Methodology Data Results Conclusions
Sample Districts
Introduction Methodology Data Results Conclusions
Rainfall Deficiencies–2012 Kharif
Introduction Methodology Data Results Conclusions
Results: Willingness to pay for rice seed characteristics
Introduction Methodology Data Results Conclusions
Observations
Demand for DT hybrid far less sensitive to price thandemand for DT inbred
Small reduction in price for DT hybrid not likely to have alarge effect on DT hybrid demand
Significant differences in demand patterns for two seedsDemand for DT hybrid reveals much greater variationDemand for DT inbred does not vary a great deal
Potential market segmentationRoles for both public and private sector engagement indiscovery, development and delivery of DT seeds
Introduction Methodology Data Results Conclusions
Conclusions
Farmers are largely willing to pay a high premium forquality seeds.Farmers in our sample prefer reduction in yield variabilityoffered by DT seeds.They are also willing to pay more for seeds that offeredyield advantage even under normal conditions (no yieldpenalty).A significant segment of the market values the yields andlower seeding rates conferred by hybrid seeds, and themarket for inbreds and hybrids can coexist.Results imply a role for both private sector DT hybrids andlow-cost DT inbreds through public sector R& D.
