• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Trends in wheat supply and...
 Economics of improved wheat production...
 Research and policy issues
 Conclusion
 Reference














Group Title: Working paper ; 80/2
Title: Accelerated wheat production in semi-arid developing regions
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Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00080086/00001
 Material Information
Title: Accelerated wheat production in semi-arid developing regions economic and policy issues : paper presented at the International Wheat Conference, Madrid, Spain, May, 1980
Series Title: Working paper
Physical Description: 36 p. : ill. ; 28 cm.
Language: English
Creator: Byerlee, Derek
Winkelmann, Donald
CIMMYT Economics Program
Publisher: International Maize and Wheat Improvement Center
Place of Publication: México D.F
Publication Date: 1980
 Subjects
Subject: Wheat -- Economic aspects -- Developing countries   ( lcsh )
Wheat -- Yields -- Statistics -- Developing countries   ( lcsh )
Arid regions agriculture -- Statistics   ( lcsh )
Genre: bibliography   ( marcgt )
statistics   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Includes bibliographical references.
Statement of Responsibility: by Derek Byerlee, Donald Winkelmann.
General Note: "Economics program"--Cover.
Funding: CIMMYT economics working paper ;
 Record Information
Bibliographic ID: UF00080086
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 31004698

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Title Page
    Trends in wheat supply and demand
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
    Economics of improved wheat production practices at the farm level
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
    Research and policy issues
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
    Conclusion
        Page 35
        Page 36
    Reference
        Page 37
        Page 38
        Page 39
Full Text





































CENTRO INTERNATIONAL DE MEJORAMIENTO DE MAIZ Y TRIGO
INTERNATIONAL MAIZE AND WHEAT IMPROVEMENT CENTER
Londres 40, Apdo. Postal 6-641, Mexico 6, D.F. M6xico


13q, -70a
,q, o


ECONOMICS [PHOGRAM

















ACCELERATED WHEAT PRODUCTION IN SEMI-ARID
DEVELOPING REGIONS: ECONOMIC AND POLICY ISSUES

by

Derek Byerlee*
Donald Winkelmann*


Working Paper 80/2


lq"


Paper Presented at the International Wheat
Conference, Madrid, Spain, May, 1980









SThe authors are respectively Economist and Director, Economics
Program, International Maize and Wheat Improvement Center
(CIMMYT), Mexico. Views expressed in this paper are not
necessarily those of CIMMYT.








INTERNATIONAL MAIZE AND WHEAT IMPROVEMENT CENTER
Londres 40, ler. Piso, M6xico 6, D.F. MEXICO








ACCELERATED WHEAT PRODUCTION IN SEMI-ARID DEVELOPING
REGIONS: ECONOMIC AND POLICY ISSUES


This paper focuses on wheat production in the semi-arid regions (SARs)
of selected developing countries. It is divided into three main parts. We
begin by providing a perspective on what has happened in wheat production in
the recent past, particularly in SARs and follow with evidence on projected
demand increases and the potential for increasing wheat production in these,
areas. The second section then analyses economic considerations affecting
farmers' choice among alternative technologies again with particular reference
to the SARs. We conclude by drawing some implications for agricultural research
policy.

TRENDS IN WHEAT SUPPLY AND DEMAND
Trends in World Wheat Production and Prices -- The growth in world wheat pro-
duction, yields, and international trade have exceeded world population growth
over the past two decades (see Table 1). Similar data for maize ard rice show
changes in yield lagging well behind wheat. For maize, area changes have per-
mitted production increases to keep pace with those of wheat. The price data
of Table 2 show that wheat's real price (its dollar price adjusted for changes
in the U.S. consumer price index) has declined since the first half of the
1960s.- Related to the more rapid production increases in wheat, the price
of rice relative to that of wheat has increased over the 1960s and 1970s.
Interestingly, even though maize and wheat production changes were virtually
identical over the period, the price of maize relative to that of wheat has
risen markedly, from .69 to .84 or by some 20 percent. This is primarily a
consequence of the large and growing demand for maize as an animal feed, as
a consequence of rapid increases in the consumption of livestock products
which have accompanied rising incomes in some countries.

For wheat, the inference from the price data is that production changes
have exceeded changes in demand emanating from population increases, from
income changes, and from changes in other prices. From the standpoint of the



- Even in the face of wheat price increases in 1980, real prices of wheat in
November, 1980 were below prices in the early 1960s.














TABE 1: MEASURES OF WORLD ARFA, YIFID AND PRODUCTION FCR WHEAT, MAIZE
i.ND RICE (1961-1978)


Ae/
1961-65 7'-78
(n. ha)

210.4 230.4

99.7 116.2

123.6 142.2


Yielda
1961-65 74-73
(t. ha)

1.2 1.7

2.2 2.9

2.0 2.5


a/
Producticr.-
1951-5S 74-78
(&. ten)

254.4 392.4

216.4 332.7

253.2 355.4


a!
Trad2-
1961-65 74-78
Cm ton)

54.0 70.5

20.4 57.8

7.3 9.2


Annual Rate C:.ange
(1961-l1273)
4r-ea Yield -cdd. Trade
(Percent/Year)

.7 2.7 3.4 2.3

1.2 2.1 3.4 e8.

1.1 1.5 2.6 1.8


/ Data for five year averages

SPaddy
Source: FA Production Yearbcokdls and FAO Trade Yearbooks fr m 1970 to 1978.














TABLE 2: SELECTED PRICES FOR WHEAT, MAIZE, AND RICE,/ 1961-1978.
($U.S. /t)


Current
.1961
-65

Wheat 70.2
(No. 2 IIU
Kansas City)
Maize (No.2 '19.0
Yellow Chi-
cago)
Rice (Thai 141.8
5% broken
*Bangkok)


Dollars
1974
-78

119.9


102.1



358.4


Constant!
1967 Dollars
1961 1974
-65 -78

76.0 68.2


62.7


Ratio of
Price of Maize
and Rice to
Wheat Price
1961 1974
-65 -78


57.3


154.4 215.1


2.03 3.15


Source: Various issues of USIA Feed Situation and W heat Situation

a/ fPices are five years averages ccritered on 1963 and 1976

b/ The U.S. CPT has bcln adjusted to reflect differences between calendar
and crop years for imize and for wheat.


Wheat

Maize

Rim










consumer, this reduction in real prices reflects well on the efforts of the
wheat industry.

Trends in Wheat Production for Selected Countries and Regions -- Table 3
presents wheat production statistics for those developing countries which
have more than 100,000 hectares planted to wheat. The data in Table 4,
taken from Table 3, group developing countries in terms of progress they
have made toward increasing yields. Countries with annual yield increases
from 1961-78 of over three percent represent 72 percent of the wheat area.
These include Bangladesh, China, India, Libya, Mexico, Pakistan, Tunisia,
and Turkey eight of the 26 developing countries analyzed. Several of
these countries, India, Pakistan, Bangladesh and Mexico, have a high pro-
portion of their area sown to High Yielding Varieties (HYVs). Area changes
were most notable in South Asia where yield changes were also large.

There is, however, some 28 percent of the reported area where yield
changes have not kept up with population increases. For the most part, this
area is in the traditional wheat belt, much of it semi-arid, stretching from
bMrocco to Afghanistan.

The data in Table 3 on imports are another manifestation of further
opportunity for progress. Twenty three of the 26 developing countries listed
were net importers over the period From 1974-78. For 22 of these countries,
net imports have increased from 1961-65. Indeed, for 15 of the 22 countries
with complete data even relative dependence on imports (imports as a percent
1/
of total consumption) has increased (see Table 5).- Only Turkey and, by 197S,
India, two of the largest producers among the 26 developing countries of
Table 3, have become self-sufficient, and have entered the list of developing
country exporters.

Classification into Wheat Production Regions -- Focusing more sharply on
production in the SARs of developing countries, attention is concentrated on
developing countries from Morocco to Bangladesh which are significant producers
of wheat. In the past, discussion of wheat production under various climatic



/Somne countries (Libya, Tunisia and Mexico) with yield increases above 3
percent per annum, have become more dependent on imports because of the
effect of both rising incomes and population growth on the demand for wheat.


















.TABLE 3: SELECTED WHATT STATISTICS FOR DEVELOPING COUNTRIES WITH OVER 100,000 HA WHEAT
1961-78


A R E Aa
1961-65 1974-78
(1000's ha)


North Africa
Algeria
Libya
Morocco
Tunisia

Other Africa
Egypt
Ethiopia
Kenya
Sudan

Middle East
Afghanistan
Iran
Iraq
Israel
Jordan
Syria
Turkey

South Asia
Bangladesh
India

Nepal
Pakistan

Latin Arerica
Mexico
Argentina
Brazil
Chile
Peru
Uruguay

China

Selected Other
U.S.S.R.
Major Export-
ersb/


4700
1971
149
1578
1002

1615
557
928
103
27

16773
2321
3580
1210
58
249
1396
7959

18555
60
13402
109
4984

7889
802
4916
812
753
153
453

25195


5259
2125
211
1843
1080

1579
568
636
114
261

20270
2345
5585
1288
106
146
1580
9220

26466
152
19834
324
6156

9856
783
4914
3021
633
131
374

30601


66622 61234

41568 50020


Y I EL Dr-
1961-65 1974-78
(t/ha)

.66 .73
.64 .60
.25 .39
S.85 .95
.49 .72

1.41 1.86
2.62 3.35
.71 .89
1.18 1.49
1.31 1.13

.95 1.30
.95 1.20
.80 .99
.70 .79
1.54 2.11
.72 .66
.78 .99
1.08 1.64

.84 1.36
.61 1.38
.84 1.36

1.24 1.12
,83 1.35

1.46 1.48
2.09 3.59
1.53 1.58
.71 .83
1.44 1.55
.98 .89
1.03 .97

.88 1.35


.96 1.50

.1.66 2.06


Net Imports- Annual Rate of Chanfe (1961-78)
1961-65 1974-78 Area Yield Production L-Dcrts
(1000's t) (Percent)


950 3876 .9 .8
339 1747 .5 -.5
137 490 2.7 3.5
322 1257 1.2 .9
152 382 .6 3.0

1872 4180 -.2 2.2
1747 3893 .2 1.9
22 77 -2.9 1.8
2 45 .8 1.8
105 165 19.1 -1.1

1244 2758 1.5 2.4
46 20 0.1 1.8
193 1230 3.5 1.7
156 709 .1 .9
257 440 4.7 2.5
113 216 -4.0 -.7
73 355 1.0 1.9
552 -212 1.1 3.3

5774 6197 2.8 3.8
na. 1419 7.4 6.5
4501 3540 3.1 3.8

0 41 8.7 -.8
1273 1197 1.6 3,8

-239 2116 1.7 .1
-265 382 -.2 4.2
-3227 -2908 0 .2
2152 2981 10.6 1.2
190 922 -1.3 .6
406 766 -1.2 -.7
-25 -27 -1.5 -.5

4477 5695 1.5 3.3


10 3489 -.6 3.5

-39465 -59237 1.4 1.7


11.4

13.4
10.3
11.0
7.3

6.4
6.4
10.1
d/
3.5

6.3
-6.2
15.3
12.4
4.2
5.1
d/
d/

.5
na.
-1.8

d/

ra.
d/
d/
-.sse,
2.5
12.9
5.0

1.9
1.9


3.2


a/Data are for five year averages for 1961-65 and 1974-78

/Includes Australia, Canada, France, U.S.A.

C-cwth rate is for exports

dOrCth rate not calculated because of change from importer to exporter or vice-versa

na. not available

Source: FAO Production Yeartook and FAO Tmdo Yeart'ooks from 1970-78








TABLE 4: AREA 3N VI 'AT FOR
OF CVHNGE IN


Annual Yield Clhngscs
(1961-78)


r'VINIDPING COUI iTK II' GROUIC) D BY IA~TS
YIILD O\VR Fi1 1iERIOD 1961-1978.


Number of
Countries
in groupp


Over 3 percent 8
2- 3 percent 1
1-2 percent 7
Under 1 percent 10

Total Selected Countries 26


Source: Calculated frcm Table 3.


Area, 1978

(m. .ha)


68.0
1
13.8
12.1

94.1


Percent of
Total Area


72


15
13

100


a 1Developing countries with over 100,000 ha of wheat, including China.








TABLE 5: IMPORTS OF WHEAT AS A PROPORTION OF DISAPPEARANCE (PRODUCTION
PLUS IMPORTS) FOR SELECTED COUNTRIES AND REGIONS, 1961-78a


Percent Imported
1961165 1974-78


North Africa
Algeria
Libya
Mbrocco
Tunisia
Other Africa
Egypt
Ethiopia
Kenya
Sudan
Middle East
Afghanistan
Iran
Iraq
Israel
Jordan
Syria
Turkey


Percent Imported
*1961-65 1974-78


South Asia
Bangladesh
India
Nepal
Pakistan
China
Latin Anerica
Mexico
Argentina
Brazil
Chile
Peru
Uruguay


- Five year averages, 1961-65 and 1974-78.

b/Self-sufficient or exporter
Source: Calculated from Table 3.












circumstances has been hampered by lack of data. For most countries, data
have not been available for agro-climatic regions but only for political
sub-divisions. In collaboration with national programs and others, CIMMYT
has assembled a first rough measure of wheat producing regions classified
on the basis of moisture conditions and type of wheat.

We asked national programs to identify major producing regions in
their country for spring bread, winter bread and durum wheats based on cha-
racteristics such as irrigation, drought stress, disease, maturity and cold
tolerance. From these data we have classified regions into three moisture
regimes irrigated, well-watered and semi-arid. In the irrigated areas,
we presume that moisture is generally not limiting yields although we
recognize that many irrigation systems deliver less than the required amount
of water because of changing water supply conditions. The well-watered area
generally receives a rainfall of at least 450-500 mm mostly during the growing
season in a Mediterranean or Continental climate.-/ The semi-arid category
is characterized by moisture stress at some stage during the crop season most
years and usually corresponds to wheat producing areas with less than 450 mm
of rainfall.

These three categories are rough delineations of moisture regimes.
A more precise classification would require more information on soil type,
evaporation rates, topography and fallow practices. Nonetheless we believe
they are a useful first approximation.

The countries considered include a substantial part of the semi-arid
production in developing countries. Table 6 and 7 show that irritated bread
wheats account for a little over 40 percent of the area and well over half the
production. Some 90 percent of this wheat is produced in South Asia -- Bngladesh,
India, Pakistan and Nepal. The next large group are spring bread wheats produced




- The definition again is subjective. For example most non-irrigated wheat
in Bangladesh is classified as well-watered although it is grown under
residual moisture with very little growing season rainfall.
2/
- Our data do not yet extend to Latin America and China and Mongolia where
there are substantial areas of semi-arid wheat production.










in semi-arid regions followed by semi-arid winter wheat and then by semi-arid
durum wheats. Yields in these semi-arid regions apparently range from 0.6 to 1.0
t/ha. It is probable however that these estimates overstate current yields and
we expect that continuing attempts to refine the country reports underlying/
Tables 6 and 7 will lead to yields of something like 0.5-0.6 t/ha in SARs.-

Unfortunately we do not yet have a measure of the rates of changes in
yields in these various producing regions. However we do know, that with the
exception of Turkey, most HYVs are sown on irrigated or well-watered areas. One
inference is that, for the most part, little change in yield has occurred in
SARs.

Trends in Demand for Wheat -- Wheat is the basic staple for the countries of
the Middle East and North Africa and a significant staple for much of South
Asia (see per capital consumption figures of Table 8). Consumption of wheat is
determined by three factors; change in population, change in incomes and
prices, and the propensity to increase wheat consumption as incomes increase
or prices are reduced. On the first of these, it is clear that over most of
the region wheat demand will expand by 2.5 percent per year or more due simply
to population changes. Moreover, consumer preferences for wheat are well
known. For most of the countries, changes in consumption relative to income
changes are high as shown by the income elasticities of demand in Table 9.
Moreover, many countries, especially the oil producing countries, have
experienced quite rapid rises in incomes.

Recent changes in wheat consumption reflect these forces. Estimated
as the sum bf wheat production plus imports, wheat consumption over the
period 1961-78 has expanded by about 4 percent per annum in the Middle East
countries and 5 percent per annum in the North African countries excluding
Egypt. These consumption increases are largely being met from imports as
shown in Table 6. By 1978, the Middle East/North African group of countries
2/
(excluding Egypt and Turkey) imported eleven million tons of wheat.-


i/For some of the countries the area and average yield figures from Table 7
differ substantially from the FAO production figures presented in Table 3.
To some extent this may be due to the use of data from different years.
Nonetheless, national yield figures implied in Table 7 for India, Libya
Tunisia and Jordan seem unrealistically high. The data in Table 7 (and
also Table 3) should therefore be treated as approximations which we hope
to refine by further exchanges with the national programs.

2/Tils includes also minor wheat producers such as Saudi Arabia. Including
Egypt which produces all irrigated wheat, the region imported 16 million T-VSt,


















TABLE 6: SELECTED WHEAT STATISTICS BY CLASS OF WHEAT AND MOISTURE REGIMES FOR SELECTED DEVELOPING COUNTRIES


IRRIGATED
Spring Dread Duum
Country Area Yield Area Yield
(0loha) (t/ha) (00ha)C (t/ha)


"o-rocco 48
Lilya 15
Sudian 245
DL-yt 535
Jordan
Syria 130
Iraq 86
Iran 375
'Afhanistan 1125
Fakistan 4948
Ln/ia 14970
;ral 233
Eangladesh 61
Algeria
Ti-nisia
Ethiopia
Tknva
Turkey


Winter Bread
Area Yield
(100ha) (t/ha)


68 2.3


19 3.3


1170 1.9
125 1.7


Spring Bread
Area Yield
(1000ha) (t/ha)


ELL-WATERED '
Durum
Area Yield
(i000ha) (t7ha)


227 1.1 1143 .9
20 1.0 30 1.0


300
191
350
65
252
580
114
124
380
80
40
108
1372


18
116
150
10
10




670
586-
335

944c/


Winter Bread
Area Yield -
(00X)ha) (t/ha)


800 0.7
135 0.7








1491 1.9


S1MI-ARIDb/
Spring Bread Dunr Winter Bread
Area Yield Area --Yield Area Yield
(lOO1O) (t/ha)(100ha) (t/ha) (l000ha) (t/ha)


247




64
877
200
- 40
1417
3710


400
20
10

436


0.4 291 0.6


130
860
150
20
200

1400


3000 0.5
600 0.5


0.8 700 0.6
0.8 585 0.8
0.7 115 0.7

1.8 1291- 0.6 3488 1.5


a/Areas which are not irrigated and which do not normally experience
rainfall.


serious moisture stress and usually with at least 450-500 m annual


b/Areas reported as subject to frequent moisture stress and usually with less than 450 mn annual rainfall.

C/Both spring and winter durums are included
Source: CIMMT survey of national wheat programs. Statistics reported were generally for the period 1976-1978.

















Table 7: AREA AND YIELD OF .WEAT BY CLASS OF WHEAT AND MOISTURE REGIME


Moisture
Regime



Irrigated
Well-watered
Semi-arid
Total


AR


Spring D
Bread
(

22.8
4.3 4


7.5
34.6


10


.ur

m.1


EA
Ja)

;>a)


Winter
Bread


.2 1.3 24.3
.0 2.4 10.7
.9 7.1 20.4
.1 10.8 55.4


Source: Calculated from Table 6.


Spring
Bread


2.1
1.9
.9


YIELD
Durum Winter
Bread
(t/ha)

2.0 1.9
1.1 1.IL
.6 1.0


TABLE 8: PER CAPITAL WHEAT CONSUMPTION AND VARIABLES AFFECTING THE GRP~HI
CONSUMPTION FOR SELECTED COUNTRIES


Per Capita
Wheat Consumption-
(kg/perscn)
North Africa
Morocco 88
Algeria 88
Tunisia 125
Libya 84

Middle East
Afghanistan 115
Iran 104
Iraq 83
Jordan 120
Syria 125
Turkey 140

Other Producers
Argentina 96
India 29
Mexico 21
Pakistan 41
U.S.A. 53
U.S.S.R. 122

a/Estimated for 1975


Population Growtl
Rate, 1970-78
(t year)


SIncone/
Canita
($US, 1978)


670
1260
950
6910


240
2160
1860
1050
930
1200


1910
180
1290
230
9590
3700


Rate of Grov-h
of Per Capita Incames
1960-78
' (% year)


Inccm.
Elasticityb/
for Wheat -


2.6
1.4
2.7
2.8
2.1;
4.3


/The percentage change in wheat consumption per capital for a one percent change in per capital income.
Negative elasticities imply declining wheat consumption with increasing ir.ncoms.

Source: Population and r capital incomes from World Bank (1980): Income elasticities and per capital
consumption from FAO (1971)












The Potential for Yield Increases in SARs -- An immediate question concerns
the scope for increasing yields in SARs. One source of evidence is
from SARs of developed countries. Table 9 shows average yield trends over
recent years in South Australia, Nebraska and Central Oregon, all SARs but
all following a wheat fallow rotation. These data clearly show that yield
increases are feasible in SARs even on the basis of already relatively high
yields at the beginning of the period. In fact, the annual percent changes
reported for Nebraska compare well with those from India. While improved
varieties have played a role the dominant contributions have come from
improved husbandry, leading to better moisture conservation and the use of
fertilizers.

TABLE 9:. AVERAGE FARMERS' YIELDS AND YIELD INCREASES FOR SELECTED
SEMI-ARID REGIONS OF DEVELOPED COUNTRIES



South
Australia Nebraska Central Oregon
.Ct/ba) (t/ha) (t/ha)

1945-49 .83 1954-64 1.38 1964-66 2.03
1974-78 1.13 1966-76 2.01 1974-76 2.60

Annual Rate
Change (%) 1.0 3.2 2.5

Source: South Australia, Australian Statistical Yearbooks; Nebraska,
Barker, Gabler and Winkelmann (1978); Central Oregon, Oregon
State University (1979).




Another measure of yield potential is the difference between vields
researchers obtain in farmers' fields and those obtained by farmers.
Evidence on this difference for SARs is summarized in Table 10. Results
from experiments and demonstrations in farmers' fields regularly show a
potential to increase yields by 50 to 100 percent even in the driest areas.
As further evidence, a survey of national wheat programs for the Fifth
Regional Wheat kbrkshop in Algiers in 1979 estimated that wheat yields in
low rainfall areas were only 31 percent of potential yields.












TABLE 10. COMPARISON OF FARMERS' YIELDS WITH YIELDS OBTAINED FROM DIEONS-
TRATIONS AND EXPERIMENTS IN FARMERS' FIELDS IN SEMI-ARID REGIONS



Farmers' Yield Average Yield Obtained Percent In-
in Demonstrations/Ex- crease Over
periments in Farmers' Farmers'
Fields Yields

Syria Demonstrations with
Durum Wheat
a. 350 + mm rainfall 1.9 3.0 58
b. 250 350 mm rainfall 1.2 1.9 58

Jordain 500 Demonstrations
a. Amman Governorate
(350 mm rainfall) 1.2 2.0 67
b. Kerak Governorate
(270 rm) 0.9 1.5 67
c. Irbid Governorate
(250 rm) 0.8 1.3 63

Tunisia Durums
a. Inland Plateau -
Variety trials 0.9 2.7 300
.b. Inland Plateau -
Demonstrations 0.9 2.0 222


Sources: Syria Average results of 45 demonstrations reported in ICARDA (1978);
Jordan Average results of 500 demonstrations reported in Schmisseur
(1976); Tunisia.- Average results of unknown number of demonstrations
over 5 years obtained by personal communication with Country Wheat
Research Program.



In summary, then, the countries from Morocco to Bangladesh include
much of the wheat grown under semi-arid conditions in developing countries.
Some 20 million hectares of wheat are grown in the SARs of these countries,
over one-third of their total wheat area. Demand for wheat is strong and
growing as evidenced by increasing reliance on imports. While yield increases
have been attained, most of this was probably on irrigated and well-watered
lands. There is scope for increasing yields and production in SARs and
notable advantages from doing so. The remainder of this paper is focused
on some of the issues which will be confronted in pursuing those higher yields.










ECONOMICS OF IMPROVED jIHAT PRODUCTION PRACTICES AT Tn FARM I.JVI:L

Farmer IDcision Making in Semi-A/rid :nv-irnnments -- We now turn to ,:n eval.u,-
tion of wheat technologies at the farm level with emphasis on semi-arid areas.
This evaluation must take into account the factors that condition farmers'
decision-making. These factors are presented schematically in Figure 1.
The farmer is depicted as having an intimate knowledge of a given natural
and economic environment in which he allocates. his scarce resources of land,
labor and capital to meet certain goals.

Individual farmers may have quite specific goals but three goals
predominate among small farmers. First, there is now overwhelming evidence
that farmers seek to increase incomes. Experience from many countries has
shown that when farmers are presented with new technologies that offer
opportunities for significantly increased incomes within the resources
available to them, these technologies are widely adopted (Perrin and
Winkelmann, 1976). Second, farmers will modify their income-seeking ob-
jective to some extent, to avoid risks arising from weather or market un-
certainties which may incur undue hardship to the farm business or farm
family. In semi-arid areas the risks associated with variable rainfall are
likely to be especially important in conditioning the environment in which
farmers make decisions. For example, in the semi-arid areas of Eastern Orezon,
the coefficient of variation of annual wheat yields is 43 percent (Oregon
State University, 1979) compared to only 10 percent in the irrigated wheat
area of northwest Mexico (Barker, Gabler and Winkelmann (1980)).

Finally, small farmers, because of market risks and marketing costs,
usually produce their own basic food staples. To some extent, then, prefer-
ences for different grain types and suitability for home processing will
enter as a goal in small farmers' decision-making, particularly with respect
to varietal choice.

Wheat production in semi-arid areas cannot be analyzed in isolation
from other farm-enterprises. In particular, wheat in semi-arid areas is
usually produced as part of an integrated cereal-livestock system. Livestock
serve various functions such as provision of a ready source of cash and a
reduction of income variation in dry years. Especially important in evaluating
wheat technologies is the use of the fallow cycle and crop residues as sources
for livestock feed.













Figure 1 Various Circumstances Affecting Farmers' Choice of a Crop Technology

ECONOMIC CIRCUMSTANCES


INTERNAL
F:arii lrs' Goalis-
Inco:.'., food pc-'rcnccs.
risk
R'scource Coistr:*,nts-
Li.l.d, labor, ca;'it:&


VERNAL


SOverall Farming System

Cropping Pattern. Rotations, Food
Supply, Labor Hiring, etc.


NATURAL CIRCUMSTANCES

----Circumstances which are often major sources of uncertainty for decision-making.


Source: Byerlee, Collinson et al (1980)












The farmer will use improved production practices if; a) they fit the
particular natural and economic circumstances, b) adequate information is
available on the new practices, and c) the necessary inputs are available.
However, rarely will a farmer accept a "complete" package of practices at
one time, both because of the initial capital required and of the risk of
the unknown in using a completely new production system. Typically farmers
adopt new practices individually or in clusters (Mann, 1975) in a sequential
manner beginning with those practices which give highest return to scarce
resources when added to farmers' existing practices.

In semi-arid areas, moisture availability is usually the overwhelming
constraint. Following Bolton (1979), improved management practices in these
conditions may act a) to increase the amount of water stored in the soil and
reduce evaporation losses or b) to use stored water and growing season rain-
fall more efficiently. In the short run, it is the latter type of improvement
which offers the greatest potential. Moisture conservation dependent on
tillage technique usually requires additional power and appropriate implements
which may require a longer period for full adoption. Hence Bolton sees a
sequential adoption process as follows: a) chemical weed control, b) stand
establishment, c) fertilizer, d) improved varieties, and e) tillage and mois-
ture conservation. Here we present evidence on the economics at the farm
level on two of the priority factors chemical weed control and fertilizer
use and briefly discuss some constraints on tillage practices in semi-arid
environments.

Budgets for Evaluating the Impact of New Technologies on Farm Incomes -- Be-
fore considering the economics of improved inputs, we digress briefly to dis-
cuss some concepts important in constructing sound farm budgets for evaluating
the impact of improved practices on farm income. Although the evaluation of
a new technology in terms of its impact on farmers income is not conceptually
difficult, we have found that most studies substantially underestimate costs
and benefits.









The added costs of using a new input can be summarized as follows
(Perrin et al, 1976).

1. Purchase price of input
2. Cost of the transport of input to the farm
3. Cost of labor to apply the input
4. Cost of equipment to apply the input
5. Cost of operating capital spent on the input
6. Cost of harvesting, threshing and transporting extra yield
produced by the input.

Typically budgets on input use ignore many of these costs, some of which
are quite substantial. Transport costs for bulky inputs such as fertilizer typ-
ically add at least 10 percent to the cost of the input at the farm level. Small
farmers are usually constrained by capital scarcity and the cost of capital may be
quite high. To be attractive to capital-short small farmers we consider than an
input should return at least 50 percent annually on operating capital invested.
This rate of return is of course reflected in the informal capital market where
interest rates are often 50 to 100 percent or more. In the analysis below we
assume that a rate of return of 50 percent over the production cycle is necessary
to induce small farmers to rapidly adopt a new technique.-

Costs of harvesting, threshing and transporting of the extra yield are
usually ignored in budget calculations. Because these costs vary with the level
of yield, we prefer to calculate a field price of output which the market price
minus cost of harvesting, threshing and transportation. As a rule of thumb this
field price is about 20 percent less than the market price for output for hand
harvesting.-

In evaluating added benefits from using an input, two factors are usually
overlooked. First, caution must be used in applying yield increases obtained
in experiments, even experiments op farmers' fields, to farmers who operate
larger areas under different management conditions. Experiences suggest
that average farmers yields will only be 70-90 percent of experimental yields
for the same technology (Davidson (1962). Second, in countries of the
Middle East and North Africa, livestock is an important part of the farming



/-For an eight month production cycle (input purchase to grain sales) this is
equivalent to an annual interest charge of 75 percent.

2-Costs of machine harvesting usually do not vary greatly with yield.











system and wheat straw and (sometimes weeds) are often an important component
of total crop output.

Weed Control -- Losses due to weeds in wheat production in the Middle East/
North African region have been estimated at 20 percent (Basler, 1979). More-
over weed competition for moisture becomes critically important in semi-arid
areas. Improved weed control is one of the greatest potential sources of
improved water use efficiency and higher yields in these areas.

There is now ample evidence that use of herbicides to control broadleaf
weeds in wheat, particularly 2-4, D is economically attractive to small
farmers and is one of the first inputs widely adopted when made available to
them. The total cost of 2-4,D application including costs of capital ahd
equipment is usually equivalent to the value of 100 kg wheat as shown for
various situations in Table 11.- The budgets for Turkey and Tunisia have
been adjusted to include costs omitted in the originally sources. Also in
Tunisia, where herbicides are subsidized by 50 percent, the unsubsidized
price reflects the real national cost of herbicide use. Although farmers
applying herbicide for the first time may have to incur a substantial initial
cost for the sprayer, in many areas a rental market for hand sprayers exists
and/or herbicides is applied by contractors. In areas where weeds are ex-
tracted by hand and fed to animals, other costs (value of weeds fed to
animals) and benefits (saving of labor for hand weeding) of herbiqidq need
to be considered. Also, in other areas where wheat is a commercial crop, an
additional benefit of herbicide use is the reduction of price discounts due
to weed seed impurities.

Evidence from on-farm experiments shows that yield increases from
application of 2-4, D alone without any other changes in management are
usually much higher than 100 kg/ha. In Turkey results of 18 experiments in
the dry Anatolian Plateau showed average yield increases of 280 kg/ha which
even discounted by 20 percent to reflect farmers' yields would easily cover
the costs (Mann, 1975). In Tunisia, average returns on fields with average
weed populations were barely enough to cover subsidized costs (Ben Zaid, 1975)
but this may reflect the additional pre-sowing tillage of experimental plots



/ These budgets do not consider the value of additional straw produced which
will reduce costs further if the value of the extra straw exceeds the
forage value of the weeds killed.










TABLE 11: APPROXIMATE COST OF APPLICATION OF 2-4, D HERBICIDE TO SMALL
GRAINS IN.VARIOUS SEMI-ARID REGIONS.


WHEAT IN TUNISIA WHEAT IN BARLEY IN -MEXCO (HIGH
TURKEY PLATEU__
With 50% Without (ANATOLIAN Reoorrmended Farmers'
Subsidy Subsidv PLATEAU) Dosage Dosae


Dosage Cormercial Product 1.3 It/ha 1.3 It/ha 2.0 It/ha 2.0 It/ha 0.5 It/ha
Product Price/ D 0.7/it D 1.4/it TL 161/it P 120/1t P 120/it
Application Costb D 1.25/ha D 1.25/ha TL 40/ha P 130/ha P 130/ha
Cost Herb. + Application D 2.26/ha D 3.1/ha TL 162/ha P 370/ha P 190/ha
Cost with 50% Cost of Cap. D 3.3/ha D 4.6/ha TL 243/ha P 555/ha P 285/ha
Market Price Wheat/Barley D 0.62/kg D 0.62/kg TL 255/kg P 3.0/kg P 3.0/kg
Field Price Wheat/Barley D 0.05/kg D 0.05/kg TL 205/kg P 2.4/kg P 2.4/kg

Total Cost of 2-4 D in i
kg Grain 66 kg 92 kg 119 kg 230 kg 110 kg




aPrices in local currencies; Tunisian Dinar (D), Turkish Lire (TL), Mexico Peso (P)

- Calculated from the contract rate in Turkey; cost of hand sprayer plus labor for
Mexico. Method of Eoplication not stated for Tunisia.



Source: Tunisia Republic of Tunisia, (1975); Turkey Mann (1975); Mexico -
Byerlee, et al (.1980)












(Republic of Tunisia, 1972).- Also the economic risk of chemical weed control
of broadleaf weeds is minimal since yield. losses are relatively more important
in drier years and there may be little interactions of absolute yield losses
and moisture stress (Ben Zaid, 1975). In the dry Anatolian Plateau, use of
2-4, D weed control was unprofitable in only one of eighteen sites (Mann, 1975).

The rapid spread in recent years of herbicide use for broadleaf weed
control in semi-arid wheat producing areas in some countries is further proof
of the profitability of the practice. In Turkey, the percent of wheat area
treated apparently increased from 12 percent in 1975 (Mann, 1975) to 50 percent
in 1977/78 (Basler, 1979) in response to increased supplies of the input. In
the dry altiplano of Mexido, use of 2-4, D herbicide increased from 20 percent
to over 70 percent of barley farmers over a six year period as shown in the
adoption curve of Figure 2. Particularly important in this area of Mexico
was the ability of farmers to adopt herbicides independently of tractor
availability since most herbicides are applied by hand sprayers, even by
farmers with over 100 ha of barley. Herbicides are now applied by practically
all farmers in the area, many of whom have less than 10 hectares planted to
barley.

Herbicide control of grassy weeds is considerably more expensive. For
example, herbicides such as Suffix to control wild oats need to increase yields
by about 350-500 kg/ha to cover all costs.- Availability of these herbicides
at subsidized prices in Tunisia and Algeria requires yield increases of 250-350
kg/ha of wheat (Ben Zaid, 1975 and Nelson, 1980). In Algeria, the response
to Suffix application over 16 trials averaged 480 kg/ha (Nelson, 1979). In
Tunisia the yield response in average fields was 300 kg/ha but this increased
to 630 kg/ha in heavily infested fields and was even higher in years with wet
winters followed by a dry spring (Ben Zaid, 1976). In semi-arid areas, where
yield responses are likely to be lower, the cost and risk associated with use
of herbicides for grassy weeds will prevent rapid adoption in the near future.


- Since it is a common practice to perform extra tillage operations before
planting an on-farm experiment, experimental yield response to weed control
may actually be less than for farmers.

2/-7is discussion abstracts from the possibility of residual benefits from
weed control over time.























/
/
/
//
//
4~/


2-4 D Use

Fertilizer Use


dg ioo-
100-
< 90-
aC
o 80-
Ll
370-
7"

0
"--
I 50-
cr 40-

C_ 30-
Li
20-

S10-

a 199
LLJ
1 9<


YEAR FIRST USED PRACTICE


Figure 2.


Adoption for Various Barley Production Practices,
Central Plateau, Mexico.


Source: Unpublished Suryey Data.


66 68 70 72 74 76 78 80


- -


0 62
60 62 64


I


B


/ Grain Drill
esU


/.--*- Pl-:ll I 1^.^












However, with effective control of broadleaf weeds, grassy weeds will increase
in importance.

Fertilizer Use -- Nitrogen fertilizer use offers potential for increased
wheat yields in semi-arid areas. However, the profitability of nitrogen use
is strongly influenced by moisture supply and unlike 2-4, D herbicide use,
risk becomes a critical factor in farmers' decisions on fertilizer use.

First let us examine the profitability of nitrogen fertilizer use. As
with weed control many of the costs and benefits of fertilizer use are over-
looked in analyzing fertilizer experimental data. Typically the market price
of nitrogen fertilizer is divided by the market price of wheat to obtain the
number of kilograms of wheat needed to pay for one kilogram of nitrogen. This
is useful for international comparisons but substantially underestimates the
costs faced by farmers. Budgets for nitrogen use in Turkey and Mexico are
shown in Table 12 were straw yields are assumed to respond to nitrogen in
the same ratio as grain. These figures show that a yield response of 4 kg
and 5 kg of wheat in Turkey and Mexico respectively was necessary to pay the
cost of one kg of nitrogen, over double the crude nitrogen/wheat price ratios.

One of the most comprehensive studies of nitrogen response in semi-arid
wheat production was conducted by Russell (1967, 1968) in South Australia.
Experiments were sown in farmers' fields at 16 widely scattered locations
with average annual rainfall from 285 mn to 500 mm to give 52 site-season
combinations. Agroclimatically this region is representative of the
Mediterranean areas of North Africa and Middle East although the nitrogen
response is probably somewhat lower in South Australia because of the medi-
cago-ley fallow rotation system employed in wheat producing areas of South
Australia and because the studies were conducted before the introduction of
semi-dwarf wheat varieties. A nitrogen-moisture response function developed
by Byerlee and Anderson (1969) was used to construct Figure 3 which shows
the combinations of nitrogen-wheat price ratios and annual rainfall at which
it becomes profitable to use fertilizer.- The area identified by the dotted


- In constructing this figure we have taken into account that there is a
fixed cost of fertilizer application regardless of the level applied.
The fixed cost application is assumed to be 33 kg/ha of wheat roughly
the cost of hand broadcasting in Mexico or machine application in
Algeria.














TABLE 12. APPROXIMATE COSTS OF APPLYING NITROGEN FERTILIZER TO SMALL GRAINS
IN SI4I-ARID AREAS OF TURKEY AND MEXICO.


Product
Method of Application
Market Price of Producta
Cost of Transport
Field Price of Nitrogen (includes
transport)
Cost of Application-b/
Cost of Fertilizer + Application
Total Cost with 50 percent cost
of capital
Market Price of Wheat/Barley
Field Price of Wheat/Barley (20 percent
less for harvesting, threshing
transport)
Field Price of Straw
Field Price of Grain + Straw (Grain
Price + Twice Straw Price)
Crude Price Ratio (Market Price
N/Market Prige Wheat)
Actual Price Ratio (Total Cost N
Applied/Field Price Wheat + Straw)


WHEAT IN
TURKEY
(ANATOLIAN
PLATEAU)


Anmonium Nitrate (26%N)
Machine
TL 1.5/kg
n.a.


5.8/kg
200 per 50kgN
9.8/kgN


TL 14.7/kgN
TL 2.75/kg


2.2/kg
0.7/kg


3.6

2.1


BARLEY IN
MEXICO
(HIGH
PLATEAU)


Urea (46'N)
Broadcast
P 3.2/kg
.2/kg

P 7.4/kg
P 50 per 50kgN
P 8.4/kgN

P 12.6/kgN
P 3.0/kg


P 2.4/kg
P 0.1/kg


2.3

5.0


a/Expressed in local currencies Turkish Lire (TL), Mexican Peso (P)


- Machine contractor in Turkey and


in Mexico


Source: Turkey-































200


Breakeven line for
Profit Maximizing
Former

FFT+-++++++
. ++++++++ .~ Breakeven line
+++++ for Risk Averse
t++ Former
+~-___


300


I I I


500


400


600


Annual Rainfall (mm)

Figure 3a


Price of 1


300


wheat


kg wheat


400


500


600


Annual Rainfall (mm)

Figure 3b

Predicted Effect of Rainfall and Price of Nitrogen on Nitrogen Use in
South Australia. Figure 3a. The solid lines are breakeven lines for
profit-maxinizing and risk averse farmers. That is for combination:
of price of nitrogen and rainfall to the right of these lines farmore
would use nitrogen. The box shown by the dotted line sio:s rele'-.t
combinations of prices and rainfall for SAR's. Figure 3b. :c<.:- ':."
optimal level of N for varying rainfall for two prices of nitrogen.
Farmers need to apply about 20 kg of nitrogen to cover a fixed cost
of application of 33 kg wheat.


Figure 3.










line in Figure 3a represents the rainfall and nitrogen cost combinations
commonly found in semi-arid wheat areas. To the right of the solid lines
are combinations of rainfall and nitrogen prices at which it is profitable
to apply nitrogen. Significantly, at a low rainfall and with favorable
nitrogen prices, it is still profitable to apply nitrogen under favorable
nitrogen prices. With unfavorable nitrogen prices, rainfall must increase
to at least 430 mm before nitrogen application becomes profitable. These
figures then support the fact that farmers decisions on whether to use
nitrogen in semi-arid areas will be quite sensitive to the prevailing
wheat/nitrogen price ratios and to average annual rainfall.

However, the above analysis considers only profitability and ignores risk.
Most fertilizer studies show a strong positive interaction between rainfall and
nitrogen response. In the extensive South Australia studies presented above,
nitrogen response in dry years was negligible and in some years and sites with
a hot spring, grain yields were depressed by nitrogen application (Russell,
1968 ).

We predicted that farmers with average risk aversion would use about
25 percent less nitrogen than a profit maximizing farmer in lower rainfall
areas .- Moreover as shown in Figure 3a, the set of rainfall and nitrogen
wheat price ratios in which farmers would use nitrogen is reduced substan-
tially and risk averse farmers in the lowest rainfall areas would no longer
apply nitrogen fertilizer even at the more favorable prices for nitrogen.
Results from scattered fertilizer experiments elsewhere also indicate
the substantial risk in applying nitrogen to wheat. In the last ten years
of fertilizer experiments on dryland wheat in Jordan, reported in Duwayri
and Saket (1978), less than half of the experiments seem to show an economic
response to nitrogen. Data from areas of Tunisia with less than 500nn- annual
rainfall and with a total cost of one kg of nitrogen equivalent to 5 kg wheat
indicate on average an economic response to nitrogen upto 66 kg/ha. However,
in two out of the five years, represented in the data, farmers would be
better off by applying only 44 kg/ha of nitrogen. The possibility that

i-/bwever, straw yields were not adversely affected which lessens risk in
areas where straw has a high economic value as forage.

2/Risk aversion is often measured by farmers' willingness to trade-off expected
profits with a measure of risk,usually standard deviation of profits
(Anderson et al, 1977). We used a value of 0.5 which has been derived in
several studies in LDC's (e.g. Scandizzo and Dillon (1978)).










farmers would lose money from nitrogen application in dry years represents a
significant risk to farmers. We calculated from the South Australian data
that even at favorable nitrogen prices (1 kgN costing 2 kg wheat) farmers
would lose money one year in three from nitrogen use in the low rainfall
areas (less than 300 mm annual rainfall) but only one year in seven in the
higher rainfall areas (500 mm annual rainfall).-

Farmers, and especially smaller farmers, generally attempt to follow
management strategies.which reduce risks even if these strategies imply lower
expected profits. In this case, to some extent, farmers can avoid risks by
splitting nitrogen application with perhaps a moderate dose applied at planting
and a second application applied depending on stand establishment and available
soil moisture. Also phosphorous application is considerably less risky since
it may give a response even in dry years (Russell, 1968) and residual phospho-
rous can be carried over to the next season.

In summary, fertilizer use and particularly nitrogen use, given current
farmer prices for fertilizer seems to be profitable even in the lowest rain-
fall wheat areas although risk may be a severe deterrent to nitrogen use in
these areas. Moreover fertilizer can be broadcast by hand independently of
machine availability and is therefore particularly appropriate to small far-
mers. While fertilizer use has increased rapidly in some SARs (e.g. the
Anatolian Plateau of Turkey), average rates of use both nitrogen and phospho-
rous are usually below 10 kg nutrients per hectare in the countries of the
SARs (FAO, 1978).

Tillage Practices -- Tillage practices are important in moisture conservation,
weed control, and stand establishment. Extensive experimentation in the Ana-
tolian Plateau of Turkey has demonstrated a substantial yield advantage of over
500 kg/ha from early tillage followed by a clean fallow to conserve sumner
moisture. However, the use of weedy fallow for livestock and the high price
of forage resulted in only 27 percent of farmers adopting this practice in
1975/76 compared to 58 percent who were using herbicides (Mann, 1977). The
partial budget in Table 13 shows that when the forage value of weed and straw
is taken into account, the benefits of early tillage were negligible at that
time. However, after 1975 adoption of other elements of the technological



L/These risks are somewhat lower if only risks of losing cash costs of nitrogen
use are considered.



















TABLE 13. ADDED BENEFITS AND COSTS OF EARLY TILLAGE


IN TURKEY IN 1975-


Added Benefits


Added yield in experiments
Added yiield in farmers fields
(90% experimental yield)
Added straw yield (twice grain yield)
Market price of wheat
Field price of wheat (less 20 percent
for harvest costs)
Field price of straw
TOTAL ADDED BENEFITS


0.60 tons/ha
0.54 tons/ha

1.08 tons/ha
2.75/kg
2.20/kg


TL .90/kg
TL 2,160/ha


Added Costs


Weed Yield foregone (dry matter)
Price for weeds (approximate)
Foregone value of weeds
Extra cultivation to clean fallow


2.00tons/ha
TL 1.00/kg
TL 2,000/ha
TL 150/ha


TOTAL ADDED COSTS


TL 2,150/ha


a/Monetary units are Turkish Lire (TL)


Source: Mann (1980)












package and the use of bailersto conserve straw has apparently increased the
value of early tillage and led to widespread adoption of this practice.

A second difficulty with improved tillage operations in the short run
is the need for additional power to be available in a timely fashion. A
recent survey in the semi-arid barley area of Mexico's high plateau shows
substantial differences in tillage practices among owners and renters of
tractors. As shown in Table 14, tractor owners plough earlier, harrow more
frequently and plant earlier than tractor renters. To some extent the later
ploughing of tractor renters reflects the fact that many small farmers (who
are largely tractor renters) graze straw residues while large farmers bale
straw to sell. But even allowing for this difference, tractor renters have
difficulty obtaining tractor services in the short time when moisture is
suitable for either primary or secondary tillage; on average there was a
12-day lag from time services were requested until delivered. However,
there is evidence that with increasing numbers of tractors in the area (and
virtual disappearance of animal power) the timing and intensity of tillage
operations among tractor renters is improving.




TABLE 14. COMPARISON OF TILLAGE PRACTICES OF BtARLE PRODUCERS MI m RT'
TRACTORS ARD WHO OWN, TRACTORS DI TTH C-tIfRAL VALLEY, MEXCO.


Tractor Tractor
Renters Owners
Percent plough immediately after harvest 17 32
Percent plough on intermittent dry season
rainfall 49 57
Percent plough after beginning of rainy
season 34 11
Percent do zero or one pre-planting culti-
vation. 68 38
Percent do two or nore pre-planting culti-
vations. 32 62
Source: Byorlee et. al. (1980)









Farmers Adoption of Improved Production Packages -- We hypothesized at the
beginning of this section that farmers in SARs would generally follow an
adoption sequence initially emphasizing divisible inputs chemical weed
control followed by fertilizer use and variety accompanied by gradual
improvement of practices such as tillage methods which are dependent on
increased availability of power and machinery.

In fact evidence from semi-arid areas in which rapid technological
change has taken place support this type of adoption sequence. Table 15
.shows that for the Turkish Anatolian Plateau in 1975/76 the rates of
adoption were highest for seed treatment followed in descending order by
drilling and phosphorous use, herbicide application, spring nitrogen appli-
cation, early plowing and additional tillage. It is likely that the number
of herbicide users would have been higher had there not been a shortage of
herbicides. The cross-tabulation of.practices used shows where important
interactions occur. It is significant that nearly all farmers who used
nitrogen fertilizer also applied herbicide but only 20 percent of nitrogen
were growing high yielding varieties which were not widely available at the
time.


TABLE 15: ADOPTION OF SELECTED PRACTICES IN WHEAT
PRODUCTION IN ANKARA PROVINCE,TURKEY, 1975-76.
-- 7--


Practice
Treated Herbicide Drilling (and Plough Nitrogen High
Seed phosphorous early Yielding
use) Variety
(Percent farmers who use practices )
All farmers 92 58 70 27 43 12
Farmers applying nitrogen 97 84 71 37 100 20
Farmers ploughing early 100 65 93 100 60 24
Farmers using HYV 100 84 100 56 68 100


Source: Mann (1977)











Evidence from other SARs also shows that herbicide is likely to be
adopted before nitrogen fertilizer. In the semi-arid upper plateau of
Mexico the adoption of 2-4, D herbicide use, fertilizer (mostly nitrogen),
and planting with a grain drill are shown in Figure 2. Use of 2-4, D rose
very rapidly from 1968-1975 closely followed by nitrogen fertilizer use.
Adoption of grain drilling has been much more gradual and was only used by 40
percent of farmers in 1979.

Cases of non-adoption of practices are usually associated with un-
profitability, risk or lack of availability of relevant inputs. After an
extensive demonstration program over seven years in semi-arid wheat areas of
Jordan '(250-400 mm rainfall) adoption of the 'package' was low. The package
consisting of four operations for land preparation to provide clean fallow,
drilling, nitrogen and phosphorous application and 2-4, D use, raised yields
by an average of 650 kg/ha or 50-70 percent over farmers practices (Schmisseur,
1976). However, the yield increase required to cover cost is close to 700
kg/ha- and this was only achieved in 6 of 23 villages in five seasons in
which the demonstrations were made. However, in the somewhat better rainfall
areas, the use of 2-4, D combined with nitrogen and phosphorous application
2/
was profitable in almost all cases-/ (Gotsch, 1980). This experience shows
the need to disaggregate "technological packages" on the basis of on-farm
agronomic research prior to reaching the demonstration stage.

RESEARCH AND POLICY ISSUES

Increased wheat production in semi-arid areas will come about through
applied research to develop technologies appropriate to farmers in the area,
combined with availability of inputs and price incentives to implement these
technologies. In this section we offer some evidence and recommendations
for each component.





1/These results are somewhat more negative than found by Schmisseur (1976)
because we have used a higher cost of capital (25 percent) and included
harvesting costs (10 percent). The forage value of weedy fallow was not
considered by Schmisseur.
2/These demonstrations were conducted under improved land preparation so the
response to fertilizer use may be somewhat higher than farmers would obtain.











Agricultural Research -- We have already emphasized the importance of manage-
ment in increasing wheat yields in semi-arid regions. While we have made
some generalizations about the type of technologies and sequences of adoption
of technologies in semi-arid areas, we stress that much research is needed to
adapt these technologies to the specific climatic, soils and economic
circumstances found in each semi-arid areas.

Our review of agronomiic research in the SARs of the Middle-East and
'North Africa indicates that, with few exceptions such as Turkey, there has
been very little agronomic research and in particular agronomic research
aimed at representative farmers. Much of the agronomic research has been
conducted on experiment stations which usually do not represent conditions
in farmers' fields, and even where research has been conducted in farmers'
fields we have the impression that it has not been aimed at representative
farmers often the small resource-poor farmer. For example, in Algeria,
extensive fertilizer trails were conducted in farmers' fields in the early
1970s' In the dry upper plateaus of Algeria, the average yield in the check
plot without fertilizer over five years of trials was over 2 t/ha (FAO, 1976)
in a region where farmers average yields are 0.5 t/ha or less, indicating that
either nonrepresentative fields were used or that the underlying agronomic prac-
tices were very different to what farmers are likely to use in the immediate future.

In addition, there is also a shortage of farm-level economic studies
in the region to provide a knowledge and understanding of farmers' existing
system. As a result there is a serious lack of information on such questions
as constraints on improved tillage operations, operation of tractor hire
schemes, crop-livestock interactions, farmers' cach flows in relation to
needed inputs and farmers' perception of risk and the influence of risk on
their choice of management practices.

We believe an important means of increasing the relevance of research
to farmers is through programs of area-specific on-farm research. We have
elsewhere described procedures developed by CIMMYT for conducting such
research and only summarize its main elements here.- As shown in Figure 4,
on-farm research emphasizes the collaboration of agronomists and economists
to identify and understand the circumstances of farmers through fadn surveys



See Winkelmann and Moscardi (1979), Byerlee, Collinson et al (1980), arid
CIMMYT Wheat Training (1979).
























Figure 1. Overview of an Integrated Research Program


ON-FARM RESEARCH


Choice of Target Farmers
and Research Priorities







POLICY
CONTEXT-
National goals, input sup-
ply credit, markets, etc.









Identification
of Policy Issues


1. Plan
Obtain a knowledge and un-
derstanding of farmer cir-
cumstances and problems"
to plan experiments.

1
2. Experiment
Conduct experiments in
farmers' fields to formulate
improved technologies un- ,
der farmers' conditions. u
LU
3. Recommend u
Analyze experimental re-
suits in light of farmer cir-
cumstances to formulate
farmer recommendations.

1
4. Assess
Determine farmers' experi-
ence yith technologies.

I
5. Promote
Demonstrate improved
technologies to farmers.


New Components Incorpo-
rated into On-Farm Research






EXPERIMENT
STATION

new technological com-
ponents (e.g., varieties,
new herbicides, pesticides)


Identification of Problems
for Station Research











and/or informal interviews with farmers who are the target of the research.
This helps to rrore clearly focus experiments in fanners' fields by identifying
key constraints to increased production as well as those technologies for
overcoming these constraints which best fit farmers' goals and resources.
Although on-farm research usually has an immediate objective the formu-
lation of recommendations appropriate to farmers, we are increasingly finding
that the process of working in. farmers fields in communication with farmers
provides valuable guidance to experiment station research and to policy for-
mulation.

Implementation of effective on-farm research programs in the region
will require greater resources for agronomic research and involvement of
economists in the early stages of research design. This implies some
restructuring of agricultural research institutes, (many do not currently
employ economists), and appropriate incentives to ensure the implementation
of such farmer-oriented research.

It might be argued that payoffs to scarce research resources may be
higher if invested in higher rainfall areas than semi-arid areas. To some
extent this is true. Yields in the better rainfall coastal areas of Turkey
increased by 4-7 percent from 1961-76 compared to 2-3 percent in the semi-
arid central plateau. In Algeria the experimentation/farmer yield gap in
1979 in drier areas was a little over one ton/ha compared to a gap of over
2 tons/ha in higher rainfall areas. However the very size of the semi-arid
wheat area and the number of people dependent on wheat in these areas is
alone justification for research aimed at these areas. In many cases it may
also be possible to allocate research resources so that there are spinoffs
to semi-arid areas. For example, a research strategy focused on the inter-
mediate rainfall areas of North Africa may have high payoffs to those areas
as well as significant spinoffs for the semi-arid areas. On the other hand
research aimed at higher rainfall areas may have little relevance to the
semi-arid areas.

Finally, increased research efforts must be accompanied by expanded
demonstration and extension programs to make research results available to
fanners. This is .particularly the case for the introduction of chemical











inputs such as fertilizer and herbicides which require considerable knowledge
on type of product, dosage and method and time of application in relation to
climatic conditions.

Price Incentives for Wheat Production in Semi-Arid Areas -- From several
sources (including our own observations) we have assembled in Table 16 some
producer prices which seem to be consistent across various sources. Prices
of wheat are quite variable by country. Assuming that over the last five
years, it has cost from US $150-200/ton to land imDorted wheat in North
Africa/Middle East, domestic wheat prices are somewhat lower than world
prices in some countries such as Tunisia and much higher in others such as
Algeria.



TABLE 16: APPROXIMATE PRICES RECEIVED BY F. RCPRS FOR 1 1EAT
AND PAID BY FARMERS FOR NITRGEN FERTILIZER BY
COUNTrP



Country Year Price of Wheat Price of Nitroren Ratio Price
SUS/ton. $US/Ton N oiifr regen
Middle Fast/North Africa $US/ton. $US/Tn N

Algeria 1980 345 345 1.0
Tunisia 1977 135 350 2.6
Jordan 1979 330 465 1.4
Syria 1977 182 496 2.7
Turkey 1979 125 270 2.2
Afghanistan 1978 130 420 3.2
Iran 1978 200 300 1.5

Other Countries

India 1979 154 400 -2.6
Pakistan 1979 114 333 2.9
Australia 1980 159 632 4.0
U.S.A. 1980 154 406 2.6

Sources: Assembled from USDA (1979), FAO (1978) and our own personal
interview with flinners in various colu~tr-icj."










Relative prices are more useful than absolute prices in comparing
incentives for wheat production. On the one hand input-output price ratios
are indicative of incentives for more intensive management. In Table 16 we
show price ratios of nitrogen fertilizer to wheat. Significantly, for most
Middle East/North Africa countries, price incentives for nitrogen use are
quite strong relative to irrigated wheat areas such as India and Pakistan
and especially strong when compared to large wheat producers such as Australia
and the U.S.A.

The cost of nitrogen in terms of wheat is kept low by high support
prices for wheat (e.g. Algeria) and/or government subsidies on fertilizer
prices. Subsidies in 1976/77 for nitrogen fertilizers were 40-50 percent of
farm gate prices in Iran, Syria and Turkey in 1976 and 20 percent of farmgate
prices in Tunisia (FAO, 1978). Subsidies on fertilizer can be justified for
various reasons. Purely on an economic efficiency criterion, subsidies may
be used to induce farmers facing risks and capital scarcity to use fertilizer
at levels nearer to socially optimum levels than they could otherwise use.
For example, using the nitrogen response data of Figure 3, a subsidy of 50
percent would be needed to induce risk averse farmers to use fertilizer at
a socially optimum level that maximizes profits (regardless of risks) at a
social cost of capital of ?0 percent. Moreover, a subsidy program is usually
more efficient and easier to administer than a credit program to overcome
capital scarcity, or a crop insurance program to counter risks.

The second set of price relation keeps affecting wheat production is
.the relationship between the price of wheat and competing farm activities.
In the semi-arid areas, the main competing activity is livestock, especially
sheep. Evidence on meat/wheat price ratios is very scanty. Roughly we have
estimated that at the farm level one kg of live mutton is valued at about 55
kg of wheat in Tunisia, 45 kg of wheat in Algeria and about 15 kg of wheat in
South Australia. That is, in countries of the Middle East and North Africa
the price of mutton relative to wheat is three times as high as in Australia.

Partly because of oil and gas production, the North Africa/Middle East
area is on the whole, a region of rapidly rising per capital incomes. It is also











a region of high population growth rates relative to other regions at compa-
rable stages of development. Increasing incomes and population are likely to
increase the price of meat relative to wheat. A recent Oregon State Univer-
sity report estimates that the demand for meat in the North Africa/Middle East
is growing at 8 percent per annum because of a high propensity to increase
meat consumption with rising income. At the same time, meat production is
rising at only 3 percent per annum leading to upward pressure on meat prices.
Of course wheat demand is also outstripping supply, but as we have seen this
is being met by large increases in wheat imports. On the other hand, trans-
portation and handling costs for meat imports are much higher. Even so,
meat imports to North Africa and the Middle East have increased in recent
years, particularly from Australia and New Zealand. These crop-livestock
interactions add considerable complexity to policy decisions on increased
wheat production that demands a thorough analysis of alternative strategies
of domestic forage production, medic-ley farming and imports of feed grains
and meat to relieve pressure on meat prices.

Input Availability -- In addition to price incentives, reliable and accessible
product and input markets are needed to induce increased wheat production.
Our impression is that in the case of wheat, reliable product markets are
usually less of a problem than input distribution problems. This impression
is reinforced by contrasting the experience of Algeria with that of Tunisia.
Price policies apparently are more favorable to Algerian wheat, e.g. nitrogen
costs in Tunisia are roughly 2.5 kg wheat and 1.0 kg wheat in Algeria while
the cost of sheep, in ttrms of wheat, is lower in Algeria than in Tunisia.
Even so, the annual change in yield in Tunisia is notably larger than for
Algeria.

The problem with input distribution varies. Fertilizer often suffers
from a limited number of distribution points, particularly if distribution is
handled by the public sector. For the small farmer, the transport cost of
bringing the fertilizer to the farm may be a severe deterrent to fertilizer
use. Herbicide, on the other hand, is not a very bulky item. However,
sprayers -- either tractor or backpack -- as well as the herbicide must be
available for herbicide application.











SAvailability of machinery to small farmers usually depends on the establish-
ment of a rental market. In Turkey and the upper plateau of Mexico this has
largely been established by the private sector entrepreneurs specialized in
machinery rental or medium to larger farmers who rent machinery to small
farmers after completion of work on their own farms. In both cases the levels
of mechanization even on small farms has risen very rapidly. For example the
number of tractors in operation in Turkey more than doubled from 1968-1976.
Research too can help rationalize machinery import policy. For example, in
Algeria Nelson (1980) has shown that heavier combination drill-cultivators from
Australia give substantially superior results to those of conventional European
models.

CONCLUSIONS

From Morocco to Bangladesh, wheat production under semi-arid conditions
accounts for a significant proportion of the wheat sown. Average yields in
these areas are low. In most of the countries with large semi-arid areas
yield increases have generally lagged well behind population growth rates.
Moreover, with expanding population and income, the demand for wheat, the staple
for food cereal, is increasing at 4 to 5 percent per annum, a large part of
which is being met by imports. For the Middle East and North Africa (excluding
Turkey, and Egypt) wheat imports had risen to 11 million tons by 1978 or from
14 percent of total consumption in 1963 to 31 percent in 1978. However, experience
of yield increases in SARs of developed countries, and some SARs of developing
countries such as Turkey, and results from on-farm experiments and demonstrations
show the potential for increasing yields by 50 to 100 percent or more in most SARs.

There is ample evidence that farmers in SARs will rapidly adopt improved
technologies that fit their particular natural circumstances (soils and climate)
and economic circumstances (goals of increased income and risk aversion as well
as resource availability). There are relatively few farmer-level economic studies
on wheat technologies in SARs and most ignore important costs and benefits. Most
also ignore the crop-livestock interactions that influence farmers' decisions.
Nonetheless we have shown tha- some technologies such as broadleaf weed control
and fertilizer use are often appropriate to farmers particularly resource
poor farmers in SARs since they can be applied by hand methods independently











of tractor availability. Some inputs such as nitrogen, are somewhat more risky,
but even these inputs seem to be appropriate except perhaps in the lowest rainfall
areas. Improved land preparation and moisture conversation also show promise
of increased yields but improvement may be slower if increased power and machinery
is required or weedy fallow is highly valued for livestock feed.

Increased farm-level agronomic and economic research at the local level
is needed to establish improved practices appropriate to farmers in each SAR.
*This requires additional resources expenditures by national agricultural research
programs for on-farm research, early involvement of applied economists in this
research and appropriate incentives to orient research to farmers. Research also
needs to be supported by strong demonstration and extension programs.

At the policy level, it appears that incentives to use improved management
practices are usually provided at least in terms of input/output price ratios.
However, expanded wheat area or use of wheat production practices such as early
tillage which compete with livestock are constrained by policies which keep wheat
prices low relative to livestock. Obviously, price incentives for input use
have little effect unless inputs are made available to a wide number of distri-
bution points in a timely way. It is in the area of management of input acquisition
and distribution that policy can play the largest role in improving wheat production
in SARs in the near future.










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