CHAPTER 7 STORAGE LOSSES AMONG SMALLHOLDER FARMERS AND THE ECONOMIC
7.3 Results and discussion
7.3.1 Results of storage losses across storage structures
The grain weight loss in four storage technologies under natural infestation conditions showed differences between farmers‟ current technologies and hermetic technologies over a period of 10 months (Figure 7.1). Untreated polypropylene bags had the highest percentage grain weight loss (13.23%). Giga et al. (1991) also reported a maize grain weight loss of 13%
after eight months of storage in untreated maize in Zimbabwe. Figure 7.1 also shows that the rate of deterioration in grain weight changes over time and across the technologies. Grain weight loss accelerated after four months of storage in treated and untreated polypropylene bags while super grain bags and metal silo maintained a gradual increase. Losses to insects increase at later stages of the storage period and this explains the rapid increase in weight loss in the control storage technologies. Mutambuki and Ngatia (2010) reported similar results.
The low percentage weight loss results of hermetic technologies indicated their high level of effectiveness. Table 7.1 shows high statistically significant differences (p<0.05) in mean percentage weight loss across the technologies. Super grain bags storage technology recorded the least percentage mean weight loss among the four storage technologies, further revealing the effectiveness of the hermetic technologies compared to polypropylene bags. Section 7.3.2 presents the results of cost benefit analysis of the four storage technologies using on- station trials loss data.
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Figure 7.1: Monthly Cumulative Percentage Weight Loss of stored maize grain by storage structure in Zimbabwe
0 2 4 6 8 10 12 14
Aug Sept Oct Nov Dec Jan Feb Mar April May
% weight loss of grain
Polybag with insecticide Polybag without insecticide Superbag
Metal silo
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Table 7.1: Mean percentage weight loss of maize grain in four storage practices over ten months of storage
Storage Observations Weight Loss (%) Standard Deviation
Untreated Polypropylene bag 10 6.39a 4.96
Treated Polypropylene bag 10 5.12b 4.35
Super grain bag 10 1.30c 0.85
Metal silo 10 1.94d 1.13
*Means followed by the same letter in a column are not significantly different (p<0.05) 7.3.2 Net Present Value and Cost Benefit Analysis
The NPV and B-C ratios computations for storing a tonne of maize using different technologies are presented in Table 7.2.
Table 7.2: NPV and B-C ratio of hermetic technologies versus current farmer storage technologies over 15 seasons/years
Storage technology
Untreated bag Treated bag
NPV B/C ratio NPV B/C ratio
Metal silo $67.21 1.31 $70.26 1.38
Super grain bag $74.96 1.28 $106.76 1.50
Source: own study. Assumptions: Interest rate = 15%, years of storage = 15
Comparing the metal silo and super grain bag against farmer storage technologies, the NPVs of both hermetic technologies are positive ($67.21 and $74.96 versus untreated bag; $70.26 and $106.76 versus treated bag, respectively). Both technologies are financially viable at 15%
opportunity cost. Super grain bag gives the highest NPV (150% that of metal silo) when compared against farmers‟ storage technology of a treated bag. Likewise the B-C ratios of hermetic technologies were greater than that for farmers‟ storage technologies. The B-C ratio of super grain bag against treated bag was revealed to be greater than the B-C ratio of metal silo using the same control. Therefore, the super grain bag technology economically performs
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better than the metal silo. This can be explained by the fact that there are significantly higher costs associated with the purchase of the metal silos. Since the B-C ratios are greater than one and NPVs are positive, both hermetic storage technologies are economically viable.
Using the two financial performance indicators, overall, hermetic storage technologies are financially viable over farmers‟ storage technologies. The super grain bag technology recorded the highest NPVs. This result also shows that the super grain bag has the highest financial return. Regassa (2014) also found that super grain bags perform better than metal silos using the same parameters of NPV and B-C ratios. Other studies confirm that the use of metal silos and super grain bags is attractive to farmers (Kimenju and de Groote, 2010).
Whereas B/C ratios of metal silos in other studies were found to be greater than two (Kimenju and de Groote, 2010; SDC, 2011), in Zimbabwe lower B-C ratios of less than two were recorded due to higher cost of the galvanized metal sheet for metal silo fabrication which is imported.
7.3.3 Sensitivity analysis results
A Sensitivity analysis (Table 7.3) was carried out for three storage technologies; metal silo, super grain bag and actellic treated polypropylene bag.
Table 7.3: Sensitivity analysis: NPV estimates of hermetic technologies versus the treated bag NPV estimates 20 useful years of investment 10 useful years of investment
Metal silo $83.65 $30.97
Super bag $119.67 $30.84
Sensitivity Ratios
Metal silo 0.57 1.68
Super bag 0.36 2.13
Source: Own study. Assumptions: Interest rate = 15%, years of storage = 15, residual value of metal silo = $200
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Comparing hermetic technologies to actellic treated polypropylene bag is important because hermetic technologies eliminate insecticide use and insecticides are a huge expense being incurred by smallholder farmers, and their application and availability is a major challenge.
More so, the investment period of 15 years used for the CBA is a bit conservative since metal silos can have an expected life of 25 to 40 years with proper maintenance (Siebber, 1999;
Bern et al., 2013). Thus CBA is repeated using a higher investment period of 20 years. On the other hand, hermetic storage technologies are relatively new in the region and country, and smallholder farmers are not yet skilled in the use, handling and maintenance of the technologies. This may entail higher levels of storage losses in these technologies or even total collapse of the technologies‟ effectiveness against storage pests. Hermetic technologies work by totally eliminating exchange of gases into and outside the technologies and require no use of insecticides and fumigants. Poor use, handling and maintenance of the technologies can actually reverse the effectiveness of the technologies. Thus it is relevant that the sensitivity analysis captures this possible management issue that may arise among smallholder farmers and reduce the investment period from 15 years to 10 years. A new CBA was computed at 15% discount rate for only one parameter, the NPVs of both hermetic technologies against treated polypropylene bagging.
The financial profitability of investing in hermetic storage technologies at smallholder level remains unchanged after the sensitivity analyses. The NPV estimates were found to be positive for both hermetic storage technologies under the two sensitivity analysis scenarios.
This also shows that hermetic technologies have a clear economic advantage over farmers‟
current storage technologies, with the super grain bags performing better than metal silos.
The reduced investment period for the technologies caused a reduction in the NPV estimates of both technologies by more than half. Hermetic technologies are profitable in the long run.
High start-up costs of the technologies, particularly buying the metal silo, make it expensive to own the technology in the short run. The study also applied sensitivity ratio (SR), to measure elasticity or percentage change in NPV as a result of a 1% change in investment lifespan of the hermetic storage technologies versus the treated polypropylene bag. The SRs for both hermetic technologies were found to be greater than 1 under a 10 year‟s investment period. This means that hermetic technologies are highly responsive to a reduction in expected life. By increasing expected life of the technology to 20 years, the SRs were less than 1, showing that NPVs are inelastic to changes in the useful life of hermetic technologies, above a benchmark of 15 years. The conclusion from this analysis is that hermetic
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technologies require huge start-up capital hence a longer investment period is required to recoup the investment capital. The technologies are financially profitable in the long run.