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  • GRDC IMPACT ASSESSMENT REPORT SERIES

    An Economic Analysis of GRDC Investment in the National Chickpea Breeding Program

    DEC 12

  • GRDC Impact Assessment Report Series: Title: An Economic Analysis of GRDC Investment in the National Chickpea Breeding Program

    December 2012 GRDC Project Code: ATR00015

    This report was commissioned and published by the GRDC. Enquiries should be addressed to: Mr Vincent Fernandes Corporate Services Grains Research and Development Corporation PO Box 5367 KINGSTON ACT 2604 Phone: 02 6166 4500 Email: [email protected]

    Author: Peter Chudleigh Agtrans Research PO Box 385 TOOWONG QLD 4066 Phone: 07 3870 4047 Email: [email protected]

    ISBN No. 978-1-921779-47-3

    © 2012 Grains Research and Development Corporation. All rights reserved.

    Disclaimer Any recommendations, suggestions or opinions contained in this publication do not necessarily represent the policy or views of the Grains Research and Development Corporation. No person should act on the basis of the contents of this publication without first obtaining specific, independent professional advice. The Grains Research and Development Corporation will not be liable for any loss, damage, cost or expense incurred or arising by reason of any person using or relying on the information in this publication.

  • _________________________________________________________________ Agtrans Research Page 3

    Impact Assessment: An Economic Analysis of GRDC Investment in the National Chickpea Breeding Program

    Executive Summary .......................................................................................... 4 1. Introduction ................................................................................................. 6

    2. The Investment ............................................................................................ 9

    3. Description of the Projects ........................................................................... 11 4. Benefits..................................................................................................... 14

    5. Pathway to Adoption ................................................................................... 18

    6. Measurement of Benefits ............................................................................. 19 7. Confidence Rating ...................................................................................... 33 8. Conclusions and Lessons Learnt ................................................................... 34

    Acknowledgments .......................................................................................... 35

    References .................................................................................................... 35

  • _________________________________________________________________ Agtrans Research Page 4

    Executive Summary Chickpeas are grown as a winter crop in most Australian states with NSW and

    Queensland contributing the majority of production. Two types of chickpeas (desi and kabuli) are grown in Australia with the former contributing the majority of production. Most Australian production of chickpeas is exported with Pakistan,

    Bangladesh, and India receiving nearly 80% of all exported Australian chickpeas. While chickpeas are profitable to grow in their own right, they are favoured in

    rotations with cereals where they are grown as a break crop and can contribute nitrogen to the next cereal crop. An Australian highly coordinated chickpea breeding program commenced in 2005 but

    improvement via selection began in the 1970s. Further, NSW DPI and QLD DAFF had collaborated in breeding chickpeas since 1983. A number of improved varieties (e.g. Jimbour, Moti) had been released in the period before the current investment

    commenced. The current economic evaluation refers to two past and one current GRDC project

    investments in chickpea breeding. The principal outputs of these chickpea

    investments have been improved varieties. Important traits from these improved varieties have been disease and pest resistance and traits that influence yield. Improvements in these traits were delivered in the new varieties released between

    2005 and the current year of 2012. Higher yields and increased disease resistance

    can translate into higher profits from the chickpea crop, in turn potentially increasing the attractiveness of chickpeas in a cereal rotation and benefiting the next cereal

    crop.

    The investment in the three projects (DAN00065, DAN00094, and DAN00151) is

    expected to produce a number of benefits some of which have been valued in this analysis. The total investment of $43 million (present value terms) has been

    estimated to produce total gross benefits of $123 million (present value terms) providing a net present value of $80 million, a benefit-cost ratio of just under 3 to 1

    (over 30 years, using a 5% discount rate) and an internal rate of return of over 15%.

    A summary of the benefits from the current investment is shown in the following table.

    Levy Paying Industry Spillovers

    Other Industries Public Foreign Economic benefits

    Increased profitability of

    chickpeas via increased

    yields, reduced input costs of fungicides, and improved

    product quality

    Potential for increased area of chickpeas grown in

    cereal rotations with

    associated productivity and sustainability benefits

    Increased area of

    chickpeas grown on

    cropping farms leading to benefits

    to other crops in the rotation

    Nil Nil

  • _________________________________________________________________ Agtrans Research Page 5

    Levy Paying Industry Spillovers

    Other Industries Public Foreign Increase in capital value of

    chickpea germplasm in the program between 2005 and

    the end of the investment

    in 2016

    Environmental benefits

    Reduced use of chemicals

    (fungicides) in chickpea crops

    Nil Reduced use of

    chemicals (fungicides) in chickpea crops

    Nil

    Social benefits

    Improved farmer well being

    through reduced chemical use by farmers

    Nil Potentially reduced

    chemical export to waterways resulting in

    positive potential impact on regional well

    being

    Nil

  • _________________________________________________________________ Agtrans Research Page 6

    1. Introduction Chickpeas are an annual pulse crop. Two types of chickpea (desi and kabuli) are

    grown in Australia. Desi chickpeas produce small brown seeds that are used for split

    pea (dahl) or flour after the hulls are removed (DAFF QLD, 2012). Desi types constitute the majority of Australian production. The dominant desi chickpeas are

    grown mainly in the north east (northern NSW and Queensland), while the kabuli types are more common in the south east part of Australia (e.g. Victoria)

    Being a legume chickpeas are favoured in rotations with cereals where they can

    contribute nitrogen to the next cereal crop, as well as provide a disease break and

    help control weeds in a following cereal crop.

    Chickpeas are generally sown in winter and harvested in late spring or summer. NSW is the largest producing state with the northern part of the State being most

    favoured, with Queensland the next largest producing state. Chickpeas are also grown in Western Australia, South Australia, and Victoria.

    Kabuli chickpeas are creamy-white and much larger than desi chickpeas. They are sold whole, so seed size and appearance are critically important. Yields are generally

    lower and more variable than Desi varieties, though premiums for larger chickpeas can offset the yield disadvantage (DAFF QLD, 2012). Kabuli seed sizes of 7-8 mm

    can command price premiums of over $100 per tonne over desi types and sizes of

    greater than 8 mm considerably more. The majority of Australian produced chickpea are exported with Pakistan,

    Bangladesh, and India taking nearly 80% of all exported chickpeas in the year ended

    October 2011 (Pulse Australia, 2012a). Chickpeas are suitable for both ruminant and non-ruminant feeds but are not commonly used for these purposes due to the higher

    prices obtained from human consumption markets.

    Pulse Australia is a peak industry body that represents all sectors of the pulse industry in Australia, from growers and agronomists through to researchers,

    merchants, traders and exporters (Pulse Australia, 2012b). Areas, yields and total tonnages for Australian chickpeas since a serious commercial

    industry commenced are provided in Table 1. Yield per ha has been volatile over the

    29 year period and visually exhibits a static average around 1 tonne per ha (Figure 1). Area, yield per ha and annual production levels have fluctuated significantly due to factors such as disease, weeds, price volatility, drought, an