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Will PICS be Profitable?

Measuring Profitability of On-Farm Storage Pest Management in Developing Countries: The case of PICS and Maize in Africa Mike Jones Corinne Alexander Jess Lowenberg-Deboer April 2012. Will PICS be Profitable?. What are the returns to storage for PICS?

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Will PICS be Profitable?

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  1. Measuring Profitability of On-Farm Storage Pest Management in Developing Countries: The case of PICS and Maize in AfricaMike JonesCorinne AlexanderJess Lowenberg-DeboerApril 2012 Department of Agricultural Economics Purdue University

  2. Will PICS be Profitable? • What are the returns to storage for PICS? • What are the competing storage technologies? • Focus on marketing producers • Would need a different analysis for producers who store for food security Department of Agricultural Economics Purdue University

  3. Returns to Storage • Commodity price at harvest period (P0) • Quantity to store (Q0) • Length of storage period (t) • Price seasonality across the storage period (x) • Cost of storage technology (C) • Dry Weight Loss: quantity lost to insects (w) • Price discount for damaged grains (v) • Opportunity Cost of Capital (OCC) (rt) Department of Agricultural Economics Purdue University

  4. Economic Model • Return to storage (R) • R Department of Agricultural Economics Purdue University

  5. Economics Model Cont. • R • Financial rate of return to storage • Opportunity cost of capital adjusted for storage time • R>0: Storage profit greater than returns from other investments • R<0: Other investments more profitable Department of Agricultural Economics Purdue University

  6. Maize in Mal-awi Cowpeas in West Africa Profitable to Store Maize in W. Kenya Not Profitable to Store

  7. Department of Agricultural Economics Purdue University

  8. Average Return on Storage for Mbeya, Tanzania 2003/04 to 2007/08, selling eight months after harvest Department of Agricultural Economics Purdue University

  9. Department of Agricultural Economics Purdue University

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