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This study examines the impact of R&D projects on horticulture in the Philippines, focusing on the contribution of fruits and vegetables subsector to agricultural development. It analyzes budgetary trends, investment drivers, and global research intensity ratios. The economic surplus approach is utilized to assess the research impact, with measures like NPV, BCR, and IRR. Preliminary results highlight modest k-shift levels needed for research investment justification. The study emphasizes the potential benefits of research for society via farm-level productivity enhancement.
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ASSESSMENT OF PROSPECTIVE IMPACT OF FRUITS AND VEGETABLES RESEARCH AT THE INDUSTRY LEVEL IN THE PHILIPPINES: THE CASE OF THE ACIAR – PCAARRD HORTICULTURE PROJECT Dr. RoehlanoM. Briones and Ivory Myka R. Galang Philippine Institute for Development Studies
Outline • Objectives • Research and Development (R&D) • Assessment method • Results of the assessment • Analysis of the results
Objectives • Analyze the contribution of the fruits and vegetables subsector in agricultural development. • Evaluate the potential impact of R&D on selected horticulture crops. • Draw implications for investment allocation and institutional framework for the agricultural R&D system.
Research and Development • Budgetary allocation trend • Table 1. By Major Final Output (OPIF; World Bank ; in P millions)
Research and Development • Budgetary allocation trend • Table 2. Breakdown of MFO 1 (OPIF; World Bank; in P millions)
Research and Development • Investment in agricultural R&D • one of the major drivers of agricultural productivity. • Most of the agricultural research and development efforts (funding) come from the government agencies. • Agricultural research as a public good • Stakeholders (workers and farmers) are poor
Research and Development • General trends • Table 3. Global public agricultural research-intensity ratios, 1981-2000
Research and development • Public-sector agri research intensity ratio, 2002 • PHILIPPINES: 0.46 % • Higher than Vietnam [0.17 %], Indonesia [0.22 %], Laos [24%] • Lower than Malaysia [1.92 %] • Higher than the overall average for Asia (2000) : 0.41 % • Lower than the average for developing countries (2000) : 0.53 %
Research and Development Source: David (1998)
Assessment Method • Economic Surplus Approach • Change in economic surplus arises from farm productivity improvement due to innovation (k-shift), which propagates by a diffusion process • Together with research cost, permits calculation of measures of project worth • Net present value (NPV) • Benefit-cost ratio (BCR) • Internal rate of return (IRR)
Assessment method • K-shift NPV, BCR, & IRR • Unable to get good estimates of k-shift Reverse • NPV, BCR, and IRR threshold k-shift • minimum value to justify the amount invested in the research • NPV=0, BCR=1, IRR= discount rate A model named ‘welfare impact simulator for evaluating research’orWISER has been developed to automatically calculate the prospective impact of a new technology generated from fruit and vegetable R&D.
Philippines Horticulture Program • Fruits • C1: Analysis of Papaya supply chain constraints • C2: Durian/Jackfruit Phytophthora Integrated Management • C3: Papaya Integrated Crop Management • C4: Improved and Sustainable Mango Value Chain • Vegetables • C1: Integrated soil and crop nutrient management • C2: Development of a cost-effective protected cropping system • C3: Management of bacterial wilt and other wilting diseases in Solanaceous crops • C4: Analysis of selected vegetable value chains • Fruits and vegetables • C5: Economic impacts of new technologies and policy constraints • Research cost: financing by the Australian Centre for International Agricultural Research (ACIAR) and in-kind contribution by the Philippines.
Assessment method Assumptions to calibrate the diffusion process: • High adoption scenario • admax (maximum adoption): 20 % • adop20 (adoption after 20 years) : 15 % • Low adoption scenario • admax : 5 % • adop20 : 4 %
Assessment method • Table 4. Research cost (over 4 years)
Preliminary results • Table 5. Threshold k-shift estimates in percent NPV=0; BCR=1 (Evenson, 2003)
Analysis of the Results • Modest levels of k-shift are needed to justify research investment • It is expected that the actual k-shifts of the research project would be higher than the k-shift estimates in this study. • The computed k-shifts can help the research stakeholders to potential benefit of research to society via farm-level productivity improvement