Julianne Quinn is a PhD student in Cornell’s School of Civil & Environmental Engineering.
Far too often, agricultural interventions are evaluated solely on their yield impacts. It makes sense; everyone wants higher yields, right? In reality, however, yield-improving interventions are not always economically profitable. Farmers are unlikely to adopt an intervention if the economic returns don’t outweigh the costs. For this reason, agricultural interventions should be targeted where they are most likely to succeed which, in many cases, is where they are most likely to be profitable.
Unfortunately, assessing a technology’s profitability is not as straightforward as it may seem. Take fertilizer, for example. The profitability of applying fertilizer depends not only on the yield returns to that application, but also on the price of the fertilizer and the price of the resulting crop. Yield returns can be very different under diverse soil and climate conditions. Prices of the fertilizer and the crop also vary from place to place and over time due to variability in local markets and infrastructure. Assessing profitability is further complicated by uncertainty in weather and output prices. Farmers must choose whether to purchase and apply fertilizer before they know how much rain will fall and what price they will receive for their harvest.
These concerns led me, along with fellow Cornell PhD students Ellen McCullough, Andrew Simons, David Flannelly, and Holly Buck, to propose the development of a geographically-specific fertilizer profitability assessment tool to help the Government of Ethiopia better tailor their fertilizer promotion efforts. In the summer of 2013, the five of us spent several weeks developing this idea with the Ethiopian Agricultural Transformation Agency (ATA) using funding from the National Science Foundation (NSF) as part of Cornell’s IGERT on Food Systems and Poverty Reduction.
Under its soil health program, the ATA is working to identify and help farmers access improved fertilizer products, such as locally-customized fertilizer blends designed to compensate for known soil nutrient deficiencies. Our group saw an opportunity to support this effort by helping decision makers within Ethiopia understand how the profitability of these fertilizer products might vary across different settings. We recommended the creation of a geographic tool that would use numerous existing datasets (on soil quality, distance to markets, rainfall, temperature, agricultural yields, input prices, and output prices) to forecast the profitability of fertilizer use in a given location, with specific consideration of both spatial heterogeneity and uncertainty in the factors of production.
With funding from the International Food Policy Research Institute (IFPRI) and under the direction of Professor Josh Woodard, we’ve begun to develop this tool. In doing so, we are estimating a distribution of profitability measures (value cost ratios, or VCRs) for fertilizer use at the woreda (district) level across Ethiopia.
For a set of fertilizer adoption scenarios, we plan to simulate plausible combinations of seasonal climate conditions and input and output prices in order to generate a distribution of possible profitability outcomes. We will then create a map-based tool that Ethiopian decision makers can use to see where fertilizer use is expected to be “robustly profitable,” meaning comfortably profitable in most years.
Government decision makers can use this tool to prioritize specific geographies for scaling up soil health interventions. The tool can also be used to evaluate how other interventions, such as road improvement or liming of acidic soils, might shift the probability distribution of fertilizer profitability. We are thrilled to partner with the soil health program of the Ethiopian ATA to create an innovative decision support tool that leverages existing Ethiopian datasets.
