CHAPTER 7. ENHANCING FORAGE SEED PRODUCTION IN SMALLHOLDER
7.3 Economic analysis
After identifying the business models and factors that enhance competitiveness of forage seed production, the study also explored the Gross margins of various crops including forages. Results in Table 7.1 indicated that total benefits were highest on cowpea followed by mucuna and maize had the least. Benefits included income generated from sale of produce plus nitrogen fixation by the legumes.
Table 7.1: Comparison of Gross Margins for various crops including forages grown in Goromonzi and Murewa districts
Maize Groundnuts Cowpeas Lablab Mucuna
BENEFITS
Average Grain yield (kg/ha) 266.67 216.67 1,421.67 88.84 752.67 Price grain ($/kg) 0.30 0.70 0.60 3.00 1.00
Gross income 80.00 151.67 853.00 266.51 752.67
Other benefits (N2 fixation) 40.00 36.58 82.70 101.94 125.38
Total Benefits 120.00 188.25 935.70 368.45 878.05
COSTS
Crop management (planting, weeding, spraying)
40.00 40.00 40.00 40.00 40.00
Packaging and transport 3.20 2.60 17.06 1.07 9.03
Labour costs 120.00 80.00 60.00 60.00 60.00
Other Inputs costs
Seed costs 70.00 80.00 40.00 69.00 32.00
Fertilizer costs 252.00 84.00 112.00 112.00 112.00
Herbicide costs 17.50 15.50 22.50 15.50 13.40
Total costs ($) 502.70 302.10 291.56 297.57 266.43 Gross margin (Gross benefits-Total
costs)
(382.70) (113.85) 644.14 70.89 611.61
Return to TVC (0.76) (0.38) 2.21 0.24 2.30
Source: Developed by researcher
Gross margins were positive for cowpea, mucuna and lablab, whilst maize and groundnuts had negative gross margins. The low gross margin for maize is attributed to costs of fertilisers and labour costs, which contribute 74.0 % of the total variable costs.
From the results, it shows that the average seed yields are low compared to the national averages of 2,000 kg ha-1 (maize), 1,500 kg ha-1 (cowpeas) and 2,000 kg ha-1 (groundnuts). Farmers in the study
sites indicated that whenever they cannot access seed of improved field crop varieties (maize, groundnuts and cowpeas), they resort to farm saved seed which they would have selected from the previous crop and perceived as good seed. This was also echoed by Hamukwala et al., (2015) and Mwendia, Notenbaert and Paul, (2016) who said that farmers use farm saved seed. In this way they are assured of access to seed of crops they desire, irrespective of seed quality.
The unit (kg) price of seed is highest for lablab (US$3.00), compared to that of mucuna (US$1.00), groundnuts (US$0.70), cowpea (US$0.60) and maize (US$0.30). This is beside the fact that lablab is considered a garden crop and is low valued among other legumes crops especially when used as a food crop (Heuzé, Tran, Sauvant, Renaudeau, Bastianelli, and Lebas, 2016).
Since this is farm saved seed, the price for maize, groundnut and cowpea is equivalent to that of grain. Farmers use farm saved seed as a result of unavailability of seed of improved varieties at affordable prices. In Malawi, Siambi, Okori, Sichali, Madzonga and Audi (2015), seed producer companies failed to take up seed multiplication and the marketing of groundnut varieties, citing seed is uneconomic. This also is the case with forage seed of mucuna and lablab which are scarce.
The initial forage seed of mucuna and lablab used in the project were imported at a cost of US$8.00 and US$11.00 respectively. In the country there is no forage seed source and where it used to be produced, in national research stations, resources are limited to produce large quantities of seed for sale to farmers.
There are other benefits derived from forage production that is; from nitrogen fixation. The best value was calculated using the estimated amount of nitrogen fixed and related to nitrogen fixation benefit. Maize has no nitrogen fixation benefit as it is not a leguminous crop. Mucuna has the greatest nitrogen fixation benefit and this goes along with Waddington, (2003). The benefit that farmers will derive is through the reduced amount of nitrogen fertiliser that they will use in the field.
Costs are highest in the maize crop as a result of labour and fertilisers. Results indicate that for the maize crop, farmers use about 120 kg each for basal and top dressing fertilisers per season over 0.56 ha. This agrees with standard recommendations of 250-300 kg ha-1 for the area. Mucuna has the lowest variable cost (US$266.00) and this may be explained by the fact that the crop has low seed and fertilizer costs, although packaging costs are high (US$9.00) compared to the other crops.
The Gross Margin analysis indicates that mucuna has the highest return per dollar. This is in agreement with result trends for mucuna obtained by Waddington, (2003) using the Net Present Value (NPV) approach to analysis. This implies that forage seeds are a better business venture for smallholder farmers. Lablab is also an option for seed production. Legumes have been found to be
a better option for inclusion in cropping systems. However, adoption of forage legume seed is limited by the market structure, which is exacerbated by lack of knowledge on the forage seed. Results in Chapter 4 indicate that there is no reliable market for the forage legumes, a notion supported by Alemu, (2015) and Welu, (2015) who found similar results. It has been also put forward by Boelt et al., (2015) that there is lack of information on legumes in an understandable way for the farmers to encourage adoption. Most information is technical publications in peer reviewed journals and there is rarely information on forage seed available in general local language for the smallholder farmers.
This could be the reason for the low adoption. Most agro dealers questioned did not know of lablab nor mucuna. However, results from the study show that legumes present viable opportunities in smallholder farming systems (Zulu, 2011).