The average benefit/cost (B/C) ratio of seed multiplication was estimated, in 2003, at 2 (i.e. a 100% profit). It is likely that this figure did not take into account the direct and indirect subsidies which were delivered at the time to seed producers. Indeed, a year later, Broers[26] estimated at 1.2 (20% profit) the average annual B/C for a seed multiplication parcel of 1 ha (1.4 manzanas) operated over a five year period.
As shown in Tables 2 and 3, 2004 ex-post performance figures for four maize and bean land plots are in general lower than Broers’ estimate[27]. Regarding maize, only one out of four producers achieved the estimated average B/C ratio of 1.2. The other three ranged from 0.8 to 0.6 (that is, they ended up without any profit or with significant losses). As far as beans are concerned, the producer who had the best performance with maize obtained a "peak" B/C ratio of 1.7, while the others ranged from 0.7 to 0.2 (i.e. suffered major losses).
Table 2 - Cost/benefit analysis of maize seed multiplication by four ASEJO members in 2004.
|
ASEJO member |
Belisario |
Claudio |
Neftali |
Esvin |
|
Land used for seed multiplication |
0.5 |
1.9 |
0.5 |
0.9 |
|
Yield |
10.2 |
35.15 |
21 |
23.1 |
|
Total production cost |
2,764 |
11,870 |
3,459 |
6,009 |
|
Total benefit |
2,040 |
7,030 |
4,200 |
4,620 |
|
Benefit/cost ratio |
0.7 |
0.6 |
1.2 |
0.8 |
Table 3 - Cost/benefit analysis of bean seed multiplication by four ASEJO members in 2004.
|
ASEJO member |
Isabel |
Claudio |
Neftali |
Esvin |
|
Land used for seed multiplication |
0.94 |
2.25 |
1 |
0.25 |
|
Yields |
14.2 |
15.6 |
31 |
1.8 |
|
Total production cost |
5,855 |
10,849 |
5,515 |
3,340 |
|
Total benefit |
4,260 |
4,668 |
9,300 |
540 |
|
Benefit/cost ratio |
0.7 |
0.4 |
1.7 |
0.2 |
* 1 manzana =0.7 ha
** 1 American quintal = 0.46 metric quintal
*** 100 Quetzales = 12 US$
These B/C figures should be interpreted in the light of the major shocks that affected seed multiplication during 2004, and are not representative of the average economic performance of this activity[28]. However, as poor germination, pests and frost are likely to occur again in the future, these findings illustrate how risky this business can be and how "rational"[29] it is for a campesino family to keep it as a low profile activity, integrated into a diversified household livelihood strategy.
An additional advantage of keeping seed production at a low scale is covering a significant part of labor requirements by means of (unpaid) household and extended family labor. Indeed, when the opportunity costs of household labor and land rent are discounted, 2004 seed multiplication B/C ratios significantly increase: average maize B/C increases from 0.8 to 1.1 and average bean B/C increases from 0.7 to 0.9. It must be stressed that these discounted estimates are closer to ASEJO members’ perception of gains and losses in seed multiplication, than those including opportunity costs. This is because they can’t see why one should consider as a cost the work done for free by a son or a brother, and believe that there is no other use for family’s land than cultivating it.
|
[26] Broers, R. (2004)
"Estudio de coste/ beneficio de buenas prácticas y proyectos de PESA
Guatemala". [27] As none of the five ASEJO members kept written records, data on which this B/C analysis is based are exposed to a strong recall bias. However several checks for consistency and accuracy were carried out, with positive results. In particular cost findings are consistent with Broers estimates and were validated by the consensus of the SPFS staff and ASEJO members. Notwithstanding, the author believes that, in a couple of cases, bean seed yield and benefit figures do not capture fully the sales made by the producers in the aldea. [28] In 2004 maize and bean yields have been respectively 10 and 50% less than expected. [29] Popkin, S. (1979) "The Rational Peasant. The Political Economy of Rural Society in Vietnam" |
