Publications: ISAAA Briefs
No. 10 - 1999
Agricultural Economist, Center for Development Research (ZEF)
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List Abbreviations and Acronyms
Due to the dearth of sound information on the socio-economic repercussions of agricultural biotechnology in developing countries, the international debate about the topic is often emotional, and it is mostly split according to ideological beliefs. This study attempts to contribute to a rationalization of the discussion by providing some empirical evidence. The potential impact of tissue culture technology in Kenyan banana production is analyzed.
Unlike in large parts of Latin America and other export-oriented banana-growing regions of the world, in Kenya the crop is predominantly grown by peasant farmers for home consumption and for the national market. Apart from being the most popular eating fruit in the country, the banana cooking varieties also serve as an important staple food. The crop covers around 1.7 percent of Kenya’s total arable land. For the individual producer, banana is usually part of a diversified cropping pattern, including semi-subsistence commodities, domestic cash crops, as well as typical export commodities. Within these farming systems, banana is mostly seen as a security crop, which renders a continuous in-kind and in-cash income flow under very low input regimes. Consequently, in terms of input and factor allocation, banana production is a rather neglected enterprise. It is often managed by women.
To analyze distribution effects of the new technology, the growers are subdivided into three groups according to their banana acreage, i.e. small-, medium- and large-scale producers. Generally, the prevalence of smaller farms is higher in the western parts of Kenya, whereas large-scale farmers are mostly found in the Central and Eastern Provinces. The home-consumed proportion usually declines with the increasing size of the banana holding, and the input intensity of production rises. Likewise, the obtained yield levels are somewhat higher on the larger farms. Nonetheless, even the large-scale producers—with a mean banana area of about 5 acres (2 hectares)—are comparatively small in an international context, and their production systems are still rather traditional. The average banana yields in Kenya are meager. With 5.7 tons per acre (14 tons per hectare), they achieve less than one-third of the crop’s potential under the favorable conditions of the humid tropics. Apart from the low input levels, the oppressive infestation of banana with various pests and diseases is the main determinant for this yield gap. The economically most important banana pests in Kenya are weevils and nematodes.
Severe disease damage is primarily attributable to Panama disease and black sigatoka, both caused by fungi. All these pathogens are spread through infected banana suckers being used by farmers for plant propagation, due to the lack of clean planting material, and also because of the farmers’ limited knowledge. The resulting yield losses make banana a relatively expensive commodity for consumers, and reduce the cash earnings of producers as well as the potential of the crop to contribute to the food security of rural households.
To tackle this general problem, the Kenya Agricultural Research Institute (KARI) launched an international collaborative biotechnology project in 1996/97. The project is facilitated by the International Service for the Acquisition of Agri-biotech Applications (ISAAA) and is financially supported by the Rockefeller Foundation (RF) and the International Development Research Centre (IDRC). Through the use of tissue culture (TC) laboratory techniques, banana growers are supplied with pathogen-free planting material. Technical assistance for the implementation of the project is provided by the Institute for Tropical and Subtropical Crops (ITSC), a public research institute in South Africa, where the use of in vitro banana plantlets is already common practice. Since 1997, KARI has conducted on-station field trials with the TC material in different provinces of the country, and on-farm trials are also under way. Generally, farmers are quite interested in the innovation, and the first yield experiences are most promising. Besides further applied research (e.g. developing TC protocols for additional varieties) and technology demonstration, the main challenge in the future will be to expand the commercial production capacity for in vitro plantlets and to establish efficient biotechnology distribution channels. At this stage, no solid information is available about the long-term yield effects of TC technology under farmers’ conditions in Kenya. The impact assessment is, therefore, carried out within an ex ante analytical framework. It builds up on farm level data—as currently observed, i.e. without the widespread use of in vitro plants—and on banana experts’ projections and estimates about future developments. The potential effects of TC plants are analyzed for the three identified farm types. For this purpose, current enterprise budgets are compared to hypothetical ones, where technology application is assumed. The potential growth in average yields is substantial and, interestingly, it is highest for the small-scale producers. For the large farms, an average yield increase of 93 percent is anticipated, whereas it would be 150 percent for the smallholders. The medium-scale farmers would gain 132 percent.
However, the use of the technology also entails a considerable increase in the cost of production. The in vitro material is quite delicate, especially in the first months after field transplantation, and it demands good growing conditions to produce satisfactory yields. This implies that the prevailing banana cultivation practices would need to be intensified to some extent, and it emphasizes that it is absolutely essential to combine technology dissemination with relevant extension services. Another major additional cost component for farmers is the TC planting material itself. To date, the price of a plantlet produced in a commercially run laboratory is around 100 Kenyan Shillings (KSh), which is about seven times the average cost that growers incur for the acquisition of conventional suckers. It is expected that—due to growing experience and/or competition—the laboratory cost of producing TC plantlets will be reduced significantly in the medium-run. Nevertheless, it will remain higher than the current cost for suckers. In the calculations, a TC price of 75 KSh is assumed. Considering the whole plantation cycle, which on average is 14 years in Kenya, the total cost increase through using the technology for the small-, medium- and large-scale farmers would be 130, 118 and 92 percent, respectively. Although income projections reveal that this is more than offset by the expected gains in banana revenues, the high cost outlays indicate additional risk, especially in the given situation of severe imperfections in rural markets for credit and information. Thus, it is reckoned that particularly the small and resource-poor producers, for whom the relative cost increase is most pronounced, will be hesitant to take up the innovation at commercial prices.
The expected aggregate welfare effects of the biotechnological progress are analyzed by means of an economic surplus model, which builds on the results from the farm-level analysis. The model is run until the year 2020. Projected average annual benefits from TC bananas are 94 million KSh and, juxtaposing the benefits to the total project investments, an internal rate of return (IRR) of 42 percent is produced. It is worth noting that banana consumers would capture more than 40 percent of the overall gains because of technology-induced price decreases. Distribution effects across the three identified farm types are also analyzed. Main beneficiaries would be the medium- and large-scale farmers. Owing to the predicted restrained adoption of the innovation by the smallholders, their benefit portion would be only marginal, with a concomitant rise in income concentration among banana producers.
As mentioned, the cost of the in vitro material itself plays an important role. Although TC technology cannot be reproduced by farmers themselves, it is likely that there will be some carry-over effect of yield advantages from the in vitro mother plant to subsequent sucker generations. The implications of such a "technology self-propagation" option are investigated by lowering the assumed price of TC material from 75 KSh to 35 KSh per plantlet in the model calculations. Corresponding to the lower cash outlay, technology adoption is presumed to be much faster. Strikingly, the aggregate welfare gains under these assumptions reach a level which is more than eight times (764 million KSh per year) the benefits in the initial higher price scenario, and the IRR would rise to 91 percent. Moreover, the equity effects are improved remarkably, because the TC price reduction would have the biggest relative impact on small-scale farmers. Other instruments to speed up technology adoption of small producers should particularly focus toward removing factor market imperfections. This should involve, inter alia, improving the flow of information and establishing suitable micro-credit schemes.
In summarizing, TC technology is likely to bring about considerable aggregate welfare growth in the Kenyan banana sector. Potential yield and income gains for the poorest farmers are even higher than those for the relatively richer and larger farms. Yet, due to the high additional cost outlays associated with the technology, the small farms particularly are facing the most severe adoption constraints. Providing this group with appropriate access to the technology will require a major institutional effort. It must not be forgotten, though, that in addition to the direct TC impacts—for which quantifying was tried—the establishment of viable biotechnology distribution channels within the project will also facilitate future innovation developments. For instance, the international availability of transgenic banana varieties with resistance to major biotic stress factors is expected in the next 10 years. The project opens up avenues for the quick introduction of such biotechnologies that are most promising, especially for resource-poor producers.
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