1. Is Organic Farming Worth its Investment?The Adoption and
Impact of Certified Pineapple Farming in Ghana Linda Kleemann
12/07/2012
2. Overview of thesis Adoption and development impact of
sustainable agriculture on small-scale farmers livelihoods in rural
Ghana Overview: Sustainable Agriculture and Food Security from
Africas Perspective Value chain: Organic Farming in Ghana A Good
Choice for Smallholders? Price transmission: Knowing Where Organic
Markets Move Next - An Analysis of Developing Countries in the
Pineapple Market Certification: Is Organic Farming Worth its
Investment? The Adoption and Impact of Certified Pineapple Farming
in Ghana Certification and agro-ecological practice use:
Certification or Agro- Ecological Practice Use or Both? Linkages
and Investment Impact
3. Overview of this presentation1) Motivation2) Literature
Review3) The Pineapple Sector in Ghana4) Theory5) Data6) Empirical
Strategy7) Results8) Discussion
4. Motivation Globally: Changes in global food markets: new
requirements Environmental conscious consumers Locally (in Ghana):
Export-led agricultural development in Ghana Sustainable
intensification Our contribution: No mixing of contract farming,
export and certification impact Not project based Outcome variable
ROI (including certification cost, etc.) Results set in relation to
perceived motivations and outcomes
5. Research Question(s) What determines the choice between
organic and GlobalGAP certification? Is organic certification worth
ist investment?
6. Literature Review (1) Determinants of Adoption found in the
literature (examples): Education (+) Tenure security (+) Labor
availability (+) Wealth (+) Distance to a major city (-) Neighbours
(+/-) Perceptions (+/-)
7. Literature Review (2) Impacts Types: financial, economic,
(social), (environmental)Organic certification GlobalGAP
certification Modest positive effect on Positive income effects
farmer welfare (poverty, Access to export market hh income,)
Employment opportunities Possibly negative effect on yield Reduced
dependence on (expensive) inputs but increased dependence export
market Analytical methods? Counterfactual?
8. The Pineapple Sector in Ghana Non-traditional export crop
since the 1980ies Varieties: MD2 (new export), Smooth Cayenne (old
export), Sugar Loaf (local) and Queen Victoria (high value)
9. Export pineapple production area in Ghana 9
10. Actors in the Pineapple Sector SmallholdersLocal buyers
MoFA Development Agrencies, NGOs Export ProcessorscompaniesLarge
farms
11. Theoretical Framework Random utility framework Second stage
of a two-stage decision Binary choice to maximize underlying
utility function ; ( ) Difference between expected utilities:
unobserved utility, observed choice: with Z = observables and =
error term Probability of adoption ==
12. Data Household survey of 386 farmers January to March 2010
75 villages from 6 districts in Central, Eastern and Greater Accra
region 185 organic (from 9 farmer associations), 201 GlobalGAP
(from 14 farmer associations) Stratified random sampling Districts
with high production Percentage of certified groups in
districts
13. Descriptive Statistics
14. Descriptive Statistics (2)
15. Certification Costs
16. The Return on Investment (ROI) Relative profitability
measure relates profits to the investment base Descriptive
Statistics of ROI components
17. Empirical Strategy The setting: D and X have influence on Y
(i.e. ROI): The problem: = treatment effect: >> Is biased
>> Choice of data and regression method to minimize bias
Similar groups Information on discrimination by firms Endogeneous
switching regression (ESR) and propensity score matching (PSM)
18. Endogeneous Switching Regression Outcome equations for each
regime - probit for adoption model Expected values of truncated
error terms:
19. Endogeneous Switching Regression Second stage: FIML
estimation (Lokshin and Sajaia, 2004) Correlation coefficients:
When are significant > endogeneous switch same sign >
hierarchical sorting
20. Propensity Score Matching Propensity score (first step):
Matching Methods applied: Nearest-neighbor one-to-one
Nearest-neighbor one-to-many Kernel Radius ATT in comparison to
ESR:
21. Results of ESR
22. ATT with PSM and ESR
23. Robustness ChecksPSM Rosenbaum bounds based on kernel *=
1.25 Based on one nearest-neighbor: * = 1.3 Include higher ordered
variables Reduced equipment costESR OLS different exclusion
restrictions
24. Comparison with stated motivations Reasons for choosing
this certification Organic GGMarket demand 55% 51%Environmental
concerns 29% 38%Production 10% 10%Other reasons 5% 2%
25. Comparison with stated motivations Why did you decide to
get certified?30% Organic25% Conventional20%15%10%5%0%
26. Comparison with stated impacts How has your income from
pineapple How has the stability of your pineapple income changed
since receiving the certification? changed since receiving the
certification?70% 80% Organic Organic Conventional 70%60%
Conventional 60%50% 50%40% 40%30% 30%20% 20%10% 10%0% 0% no change
increased reduced no change more certain less certain
27. Conclusion & DiscussionPositive ROI Policy
RecommendationsOrganic higher ROI due to higher prices Organif
potential win-win Lower yields, higher Support is needed for
employment effects investment costOrganic more attractive forpoorer
HH Tailor information to achievable goals poverty and inequality
reduced Side effects of support and Increasing organic demand
information are importantPure certification effect Limitations
variables change in to be Risk, survival rates importance Panel
dataSelf-statements externalities, in p. Objective: classification
environmental effects subjective: sustainability and success
31. Organic and GLOBALGAP trade standards in EuropeOrganic:
certification requirement according to regulation (EC) 834/2007 and
(EC) 889/2008GLOBALGAP: Private standard founded in 1997 as
EurepGAP by European retailers Aim: establish one standard for Good
Agricultural Practices (GAP) 76 % of fresh fruit and vegetables on
European market GLOBALGAP certifiedBoth have certification options
for smallholder groups
32. ESR
33. ATT for different matching algorithms
34. ATT (reduced equipment cost)
35. Distribution of Propensity Scores
36. OLS Results
37. Demand versus supply driven choices Reason for cultivating
variety: GG OrganicBuyer demands 86.2% 70.4%Cost of production 4%
8.5%Availability of planting material 9.8% 17.6%Other reasons 0
3.5%
38. Production schedule of pineapples One cycle approx. 5 years
11 18 months from planting to harvest Plant population per acre 16
000 30 000land preparation forcing harvest fallow or rotation crops
planting inspection & sucker production degreening 10 month 4
month 1 week 6 month 1-2 years
39. Why do smallholders have a chance on the international
market? Risk reducing strategies by large plantations Restrictions
to land access Large plantations: diseconomies of scale due to the
high cost of labour supervision (Brockmeyer, 2008; Suzuki, 2008)
Constraints to export (TIPCEE, 2009): Consistent quality Key
certifications Exportable volumes