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Returns to Wheat Breeding Research in Bangladesh

Joseph G. Nagy
Dr. Joseph G. Nagy is an international consultant in agricultural and applied economics,Saskatoon, Canada.

Md. Ferdous Alam
Professor
Professor, Department of Agricultural Finance,Bangladesh Agricultural University, Mymensingh

Abstract/ Executive Summary:

An ex post rate of return analysis was conducted to estimate the internal rate of return (IRR) to Bangladesh developed and released high yielding wheat varieties that have replaced the previously introduced wheat varieties. Since the inception of the CIMMYT assisted Bangladesh wheat research program in the 1970's and the release of the first Bangladesh variety in 1979, the IRR to the total investment in both wheat research and extension was calculated at 32%. The increase in production due to the higher yielding varieties also generated foreign exchange savings of Tk. 7.9 Billion because of the need to import less wheat. Under various assumptions about the magnitude of the benefits and the research and extension expenditures, the IRR ranged between 27% and 41% and the foreign exchange savings ranged between Tk. 5.9 Billion and Tk. 9.8 Billion. The rate of return is comparable to returns to wheat research and other agricultural research and extension investments in most developing countries. This indicates that Bangladesh and donor agency funding of wheat research and extension is a good investment.

Keywords: Returns, Wheat, Investment

Location:

Start Date:

End Date:

Program Area: Socio-economic and Policy

Commodity: Wheat

Objectives:

To estimates the foreign exchange savings from decreased wheat imports due to increased wheat yields and production through the Bangladesh/CIMMYT research and extension programs.

Methodology:

There are two distinct parts to obtaining the rate of return to research and extension expenditures. The first is estimating the yearly stream of benefits in monetary terms that flow from an adopted intervention such as modern varieties. This is done by using the economic surplus methodology. Once the yearly benefits have been calculated, they are then related to the yearly costs of research and extension by calculating a benefit-cost ratio or internal rate of return (IRR). Overview of The Economic Surplus Method. The concept of economic surplus has been used to measure economic welfare and the changes in economic welfare from policy and other interventions. (see Alston et al., 1995 and Currie, Murphy, and Schmitz, 1971). The economic surplus concept has been adapted to estimating the benefits from the adoption of improved varieties. The closed-economy model is first introduced. A closed-economy commodity market is defined as a commodity totally produced and consumed domestically and not imported nor exported.

Source of Information: Bangladesh J. Agric. Econs. XXIII, 1 & 2(2000) 1-17

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

Under various assumptions about the magnitude of the benefits and the research and extension expenditures, the IRR ranged between 27% and 41% and the foreign exchange savings ranged between Tk. 5.9 Billion and Tk. 9.8 Billion. The rate of return is comparable to returns to wheat research and other agricultural research and extension investments in most developing countries. This indicates that Bangladesh and donor agency funding of wheat research and extension is a good investment.

Knowledge Management: Journal