Certification and Agro‐Ecological Practice Use

Linkages and Investment Impact

Linda Kleemann02/08/2012

Overview of presentation

1. Motivation2. Literature Review3. Sector and Data4. Theory5. Empirical Strategy and Results6. Discussion and Policy Implications

Motivation

Relevance Environmental effects of agriculture Political will to increase adoption of sustainable

farming techniques Questionable sustainability of organic agriculture

in Africa?

Our contribution Link between certification and adoption of agro‐ecological practices …and between adoption and ROI (not yield)

Research Question(s)

Does organic certification increase agro‐ecologicalpractice use?

How does the intensity of agro‐ecological practice useinfluence the ROI?

Literature Review

Impact of certification on adoption “usual impression”: Organic farming in Africa means to stop using chemicals, 

but not to adopt alternative soil fertility management practices. Small‐scale farmers produce ”organically by default”.

Bolwig et al. (2009) and Blackman and Naranjo (2010): some adoption  Impact of organic certification on ROI

Modest positive effect on farmer welfare (poverty, hh income,…)

Possibly negative effect on yield  Impacts of agro‐ecological practice use

Yield increases? (1999; Pretty et al., 2006; Branca et al., 2011; Onduru et al., 2002)

Lower production costs? (Dasgupta et al., 2007) Revenues increases? (Bolwig et al., 2009) Environmental effects

Export Pineapple Production in Ghana

6

Actors in the Pineapple Sector

Smallholders

Large farms

Export companies

Local buyers

Development Agrencies, NGOs

MoFA

Processors

Data 

Household survey of 386 farmers January to March 2010 75 villages from 6 districts in Central, Eastern and

Greater Accra region 185 organic (from 9 farmer associations), 

201 conventional (from 14 farmer associations)

Stratified random sampling Districts with high production Percentage of certified groups in districts

Descriptive StatisticsDefinition Variable Organic

Farmers (N=185)

Convent. Farmers(N=201)

T‐Stat.

Gender of household head (0=female, 1=male) GENDER 0.891 0.982 3.51***

Age of HHH AGE 46.313 42.970 ‐2.82***

Household size (persons living in household) HHSIZE 5.230 5.917 2.35**

Maximal educational level in household EDUC 3.566 3.941 3.40***

Farm size (acre) FSIZE 10.35 18.720 5.02***

Pineapple land (acre) PINLAND 4.014 3.066 ‐2.07**

Share of land owned OWNLAND 0.549 0.204 ‐7.628***

Access to credit (0=no, 1=yes) CREDIT 0.317 0.232 ‐1.78*

Bank account with more than 200 GHS BANK 0.339 0.512 3.21***

Number of durable goods owned WEALTH 4.765 8.481 10.875***

Relation to the local government GOVERN 2.257 1.774  ‐4.27***

Self‐stated openness to innovation and risk RISK 0.152 ‐0.166 ‐3.01***

People that are met regularly MEET 1.175 1.196 0.45

Years of experience in pineapple farming EXPER 11.557 11.595 0.05

Distance to the closest local market (hours) DIST 0.698 0.804 1.59

Assistance or training for farming received  ASSIST 0.732 0.708 ‐0.5

Intensity of Agro‐ecological Practice Use

Theoretical Framework 

Basic utility maximization framework Choice of intensity to maximize the expected net utility

Utility function depends on net returns (Π) which are dependent on the level of

output Q, output prices Po, inputs I and their prices Ii, and farm and household

characteristics Z:

E Π E ,

Π =Π , , ,

with Ae = agro‐ecological intensity

Π =

and probability of adoption for each level:

Π 1 ∗ Π ∗ Π

Empirical Strategy

1) link between certification and adoption of agro‐ecologicalpracticesWhat is the impact of organic certification on the use of agro‐

ecological practices?

2) link between adoption of agro‐ecological practices and ROIWhat is the impact of the intensity of agro‐ecological practice use on 

the ROI?

1) Organic certification and adoption ofagro‐ecological practices

2) Impact of use of agro‐ecologicalpractices on ROI

Generalized propensity score matching (Hirano and Imbens, 2004)

We observe (exogenous controls), Ti (continous treatment variable)  and (outcome variable) associated with each treatment level.

We want to measure the average dose response function (DRF)  which relatesthe unbiased potential outcome to each treatment level  :

∀

Assumption: weak unconfoundedness:  ⎸ ∀

Generalized propensity score (GPS) :  ,

average dose response function (DRF): 

, ,

Where  , ,

;

2) Impact of use of agro‐ecologicalpractices on ROI (ctd.)

Our model:  GPS estimation using normal distribution of the logarithmic treatment

• Kolomogorov‐Smirnov test for normality for logarithm of the treatment variable (Hirano and Imbens, 2004) 

Common support condition: 278 farmers on support quadratic approximation for average potential outcome at each 

treatment level

Results GPSM

Robustness Checks GPSM: no weights

Different weighting schemeNo weights

Restricted to values < 13 Weeding excluded

Conclusion

Background:A common concern is that organic farmers in developing countries remain in an unsustainable low‐yielding state of ”organic‐by‐default” production Agriculture is responsible for environmental damage

Results:  Certification has a large 

influence Economic barriers to

intensification dependent on intensity

Why is the extent of adoption low? Availability of organic

material Transport costs

Potential SolutionUse certification or involved marketlinkages

Support by buyers required agro‐ecological

practices