Weather Risks and Input Adoption
Maize makes up an important staple crop in much of Africa south of the Sahara, but maize production carries with it some inherent risks. One of the most significant risks faced by maize farmers is weather. Variable and heterogeneous weather conditions pose a challenge for Africa’s rain-fed crops like maize and have been identified as one explanation for the region’s low rates of fertilizer use and improved seed variety adoption, according to a new working paper released by IFPRI’s HarvestChoice program.
The paper’s authors argue that while farmers typically prefer to have higher average crop yields, they also tend to want to avoid really low yields or excessive yield variability. For example, most farmers will prefer to receive a certain yield of 5.0 ton/ha compared to a yield with an equal chance of being 6.75 ton/ha or 2.5 ton/ha. Thus, if the use of improved seed varieties or fertilizers in certain agro-ecological regions or under certain weather conditions does not guarantee higher yields, many farmers will choose to stick with traditional seeds and production methods. The high costs of fertilizers and improved seeds can compound this – more risk-averse farmers will choose to not spend precious resources on purchasing inputs that may or may not improve their yields.
The HarvestChoice paper uses simulated yield distributions and willingness-to-pay (WTP) bounds over a period of ten years to examine more closely how weather risk in Africa south of the Sahara can impact the yield benefits of nitrogen fertilizer and improved seed varieties for maize farmers throughout the region. The authors simulate yield distributions for traditional and improved seed varieties with and without the use of nitrogen fertilizer. These distributions are then used to create bounds on a farmer’s willingness to pay (in terms of maize yield) for fertilizer or improved seed varieties. The use of WTP bounds accounts for farmers’ different risk tolerances, thus taking into consideration the riskiness of maize production due to variable weather conditions and the fact that the inputs studied (fertilizer and improved seed varieties) may not be equally beneficial to every farm under every condition. Finally, a sensitivity analysis looks at how the WTP bounds change as the price of maize or the cost of nitrogen fertilizer changes.
The study examines 24.8 million hectares of cropland across Africa south of the Sahara and compares i) the estimated yield distribution for traditional maize varieties with and without nitrogen, ii) the improved and traditional varieties without nitrogen, and iii) the improved variety with and the traditional variety without nitrogen.
The paper first finds that initial adoption of nitrogen fertilizer combined with traditional seed varieties improves the yield distribution on only 32 percent of the studied hectares, although this number improves to 49 percent after 10 years of sustained nitrogen fertilizer use. This improvement in yields as a result of sustained fertilizer use is particularly evident in Angola, Congo, and Nigeria. However, the paper also finds that improvements in yields due to sustained fertilizer use are not uniformly positive; in fact, the percentage of cropland facing more risk increases from 2 to almost 5 percent as a result of 10 years of nitrogen fertilizer use. This result is most evident in Cameroon and eastern Tanzania. This finding highlights the fact that Africa south of the Sahara consists of heterogeneous farm and weather conditions, meaning that what is good for yields in one area may not be good for yields in other areas.
Second, the paper finds that the initial adoption of improved seed varieties without the use of nitrogen fertilizer provides larger yield improvements across a broader portion of the region, but these improvements diminish with sustained fertilizer use. This long-term decrease in improved yields is such that in some regions, farmers are better off abandoning improved seed varieties in favor of traditional seeds.
Third, the initial adoption of both improved seed varieties and nitrogen fertilizer results in large improvements in yield distribution across most of the region; in addition, these improvements tend to persist over the 10 year period.
Finally, the authors a sensitivity analysis to examine how changes in the world price of maize and the cost of nitrogen fertilizers impact improvements in yield distribution. They find that in areas where limited market access increases the cost of nitrogen fertilizer and decreases the price of maize, the benefits seen from the use of fertilizer and improved seed varieties are diminished or even completely lost.
Overall, the study concludes that while nitrogen fertilizer and improved seed varieties are not always advantageous for all farmers, due to variable weather conditions and risks and the high cost of these inputs, there are important synergies between nitrogen fertilizer and improved seed varieties. The benefits of nitrogen use tend to increase over time without improved seed varieties, while the benefits of improved seed varieties tend to decrease over time without nitrogen. However, combining the two inputs provides larger and more sustainable productivity benefits across broad swathes of Africa south of the Sahara. From a policy perspective, therefore, the authors argue that encouraging both nitrogen fertilizer use and improved seed variety adoption could be an important channel to promote productivity increases for maize farmers across most of the region.
By: Sara Gustafson, IFPRI