Return Possibilities for PICS Bags vs. Alternative Storage Technologies By: Jess Lowenberg-DeBoer and Michael Jones
Questions to be answered: Why think about storing maize in PICS bags? What are the issues when considering use of PICS bags for crops other than cowpea? Can it be profitable to store maize in PICS bags?
Why maize in PICS bags? Scale of Potential Impact Maize a staple food for about 50% of Sub-Saharan Africans IITA (2010) In Ghana, 20% of small producer households (1 million) dependent on maize for primary income WABS Consulting Ltd. (2008) Maize Production (millions of tons) 60 50 40 30 20 10 0 Maize Production in Sub-Saharan Africa 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Sub-Saharan Africa Source: FAOSTAT West And Central Africa
Why maize in PICS bags? Common storage problems in maize: Insect infestations: Weevils (Sitophilus spp.) Typical losses- 5-10% or more (dry weight) Large Grain Borer (Prostephanus truncatus) Typical losses- 10-20% or more (dry weight) Molds, Mildews, Fungi Cause discoloration, loss of value Aflatoxins much more dangerous Spread aided by insect infestations
Why maize in PICS bags? Lack of storage technology for small-scale farmers Metal drums only feasible for larger-scale storage Small bins expensive and pooling grain in larger bins problematic due to lack of trust among villagers Small holders constrained to traditional cribs, platforms, and storage in rooms Source: Hodges (2001)
Why maize in PICS bags? Lack of appropriate storage technology for small producers Use of registered, effective pesticides may be constrained by cost Health issues arising with misapplication of registered products and use of toxic substances Traditional botanical alternatives may be problematic Some unsustainably harvested Show mixed effectiveness in scientific studies Pest Control in East Ghanaian Villages Source: Hodges (2001)
Hermetic storage for maize in PICS bags Proven high effectiveness of hermetic maize storage in drums, yet cost and volume are constraints Hodges (2001), Quezada et. al (2006) New issues for storage in PICS bags Changing insect species Continued spread of P. Truncatus Moisture, mold, mildew and fungi Economics- maize often lower value than cowpea
Example: Maize in Ghana Key assumptions: Prices represented by northern market of Tamale Sufficient price fluctuations found from January to June WFP records cite five year average disparity of ~0.10 cedi/kg
Example: Maize in Ghana Key assumptions (cont.): Transformation of maize dry weight loss to percentage of grain damaged remains consistent Price discounts for grain damage in normal lean season still valid from 1993 data* Discounts cited by focus groups of Ghanaian merchants *Source: Compton et. al (1998)
Sell Maize at Harvest Storage of Maize with Traditional Crib Method Acetellic No Insecticide Super (EC*) Storage of Maize with Hermetic PICS Bags Selling period: January June June Revenue Sample Harvest (kg) 100 100 100 100 100 100 Dry Weight Storage Loss (DWL) (%) 1-20% 15% 10% 4% 0.6% *Emulsified Concentrate 1: Sources for DWL possibilities since arrival of Larger Grain Borer: Hodges (2001), Compton and Sherrington (1999)
Sell Maize at Harvest Storage of Maize with Traditional Crib Method Acetellic No Insecticide Super (EC) Storage of Maize with Hermetic PICS Bags Selling period: January June June Revenue Sample Harvest (kg) 100 100 100 100 100 100 Dry Weight Storage Loss (DWL) (%) - 20% 15% 10% 4% 0.6% Maize Marketed (kg) 100 80 85 90 96 99.4
Estimating Percentages of Damaged Grains from Dry Weight Loss Source: Figure 1; Holst, et. al (2000) Equation (5) for transformation (with conservative parameters for Regression I & II pooled): D = 100(-exp(-exp(-3.001+1.005ln(L)))+1)
Sell Maize at Harvest Storage of Maize with Traditional Crib Method Acetellic No Insecticide Super (EC) Storage of Maize with Hermetic PICS Bags Selling period: January June June Revenue Sample Harvest (kg) 100 100 100 100 100 100 Dry Weight Storage Loss (DWL) (%) - 20% 15% 10% 4% 0.6% Maize Marketed (kg) 100 80 85 90 96 99.4 Estimated % Kernels Damaged - 63.6% 53.1% 39.5% 18.2% 2.9%
Discount as a function of Grain Damage According to Compton et. al (1998), price discounts triggered after surpassing threshold of 5-6% damage Discount slopes range from 0.6 to 0.98, depending largely on seasons In June 1993 (lean season in a normal year ): %V = 101.5-0.88(%D) % Maize Value Retained Percent of Maize Value Retained 100 90 80 70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 70 80 90 100 % Grain Damaged Source: Compton et. al (1998)
Price Discounts as a function of Dry Weight Loss (DWL) % Value Retained 100 90 80 70 60 50 40 30 20 10 0 Maize Value Retention with Varying DWL 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 Dry Weight loss (%) Source: Combination of formulas from Compton et. al (1998) and Holst (2000) DWL (%) Damaged Grains (%) Value Retention (%) 1.54 7.39 95 2.80 13.07 90 4.15 18.75 85 5.58 24.43 80 7.13 30.11 75 8.81 35.80 70 10.65 41.48 65
Sell Maize at Harvest Storage of Maize with Traditional Crib Method Acetellic No Insecticide Super (EC) Storage of Maize with Hermetic PICS Bags Selling period: January June June Revenue Sample Harvest (kg) 100 100 100 100 100 100 Dry Weight Storage Loss (DWL) (%) - 20% 15% 10% 4% 0.6% Maize Marketed (kg) 100 80 85 90 96 99.4 Estimated % Kernels Damaged - 63.6% 53.1% 39.5% 18.2% 2.9% Selling Price (cedi/kg) 0.27 0.17 0.20 0.25 0.32 0.37
Sell Maize at Harvest Storage of Maize with Traditional Crib Method Acetellic No Insecticide Super (EC) Storage of Maize with Hermetic PICS Bags Selling period: January June June Revenue Sample Harvest (kg) 100 100 100 100 100 100 Dry Weight Storage Loss (DWL) (%) - 20% 15% 10% 4% 0.6% Maize Marketed (kg) 100 80 85 90 96 99.4 Estimated % Kernels Damaged - 63.6% 53.1% 39.5% 18.2% 2.9% Selling Price (cedi/kg) 0.27 0.17 0.20 0.25 0.32 0.37 Total Revenue (cedi) 27.00 13.60 17.24 22.21 30.68 36.78
Sell Maize at Harvest Storage of Maize with Traditional Crib Method No Insecticide Acetellic Super Storage of Maize with Hermetic PICS Bags Total Revenue (cedi) 27.00 13.60 17.24 22.21 30.68 36.78 Storage Costs Insecticide Costs (cedi/100kg maize treated) - - - - 1.00 - Storage Bag Costs (cedi) 3 1.00 1.00 1.00 1.00 1.00 2.50 Number Needed 1 1 1 1 1 1 Total Storage Costs 1.00 1.00 1.00 1.00 2.00 2.50 3: Source of prices for woven and PICS bags from recent field experience in Ghana
Sell Maize at Harvest Storage of Maize with Traditional Crib Method No Insecticide Acetellic Super Storage of Maize with Hermetic PICS Bags Total Revenue (cedi) 27.00 13.60 17.24 22.21 30.68 36.78 Storage Costs Insecticide Costs (cedi/100kg maize treated) - - - - 1.00 - Storage Bag Costs (cedi) 3 1.00 1.00 1.00 1.00 1.00 2.50 Number Needed 1 1 1 1 1 1 Total Storage Costs 1.00 1.00 1.00 1.00 2.00 2.50 Nominal Crop Income 26.00 12.60 16.24 21.21 28.68 34.28
Sell Maize at Harvest Storage of Maize with Traditional Crib Method No Insecticide Acetellic Super Storage of Maize with Hermetic PICS Bags Nominal Crop Income 26.00 12.60 16.24 21.21 28.68 34.28 Opportunity Cost of Capital (assumed 25% annually) - 3.25 3.25 3.25 3.50 3.56 Gain from Storage - -16.65-13.01-8.04-0.69 4.72
Percent Return on Storage Investment 0.2 0.17 % Return 0-0.2-0.4-0.50-0.31-0.03-0.6-0.64-0.8 20% loss 15% loss 10% loss Acetellic Super PICS Bags
Sensitivity Analysis: Opportunity Costs at 15% annually 0.4 0.2 0.22 % Reutrn 0-0.2-0.26 0.01-0.4-0.6-0.59-0.45 20% Loss 15% Loss 10% Loss Acetellic Super PICS Bags
Sensitivity Analysis: Price Disparity of 0.05 cedi/kg (50% less) 0.4 0.2 % Return 0-0.2-0.4-0.42-0.19-0.01-0.6-0.71-0.59-0.8 20% Loss 15% Loss 10% Loss Acetellic Super PICS Bags
Sensitivity Analysis: Price Disparity of 0.15 cedi/kg (50% greater) 0.4 0.2 0.34-1E-15 % Return -0.2-0.19 0.13-0.4-0.6-0.57-0.41 20% Loss 15% Loss 10% Loss Acetellic Super PICS Bags
Conclusions Maize considered because of large opportunity for impact When considering hermetic storage for crops other than cowpea: Insect Species Humidity Profitability Maize storage can be profitable under reasonable assumptions in Ghana
References Compton et. al (1998). Involving grain traders in determining the effect of postharvest insect damage on the price of maize in African markets. Crop Protection 17:6 (483-489) Compton and Sherrington (1999). Rapid assessment methods for stored maize cobs: weight losses due to insect pests. J. of Stored Products Research. 35 (77-87) Hodges (2001). Post-harvest research: An overview of approaches to pest management in African grain stores that minimise the use of synthetic insecticides. Presentation to the Post-Harvest Conference, IITA, Benin. 11-14 December 2001 (abstract) Holst, et. al (2000). Grain Injury Models for P. Truncatus and S. Zeamais in Rural Maize Stores in West Africa. J. of Econ. Entomology. 93:4 (1338-1346) Quezada, et. al (2010). Hermetic storage system preventing the proliferation of Prostephanus truncatus Horn and storage fungi in maize with different moisture contents. Postharvest Biology and Technology. 39:3 (321-326) WABS Consulting Ltd. (2008). Draft report of Maize Value Chain Study in Ghana: Enhancing Efficiency and Competitiveness