A simple methodology for measuring profitability of on-farm storage pest management in developing countries

Jones, Michael; Alexander, Corinne; Lowenberg-DeBoer, J.

A simple methodology for measuring profitability of on-farm storage pest management in developing countries

2014

Jones, Michael | Alexander, Corinne | Lowenberg-DeBoer, J.

We present a simple financial model for storage researchers to measure the profitability of storage protection for marketing producers in developing countries. We examine the relationship between the value of a stored commodity and required price seasonality for profitable storage under a range of possible fixed costs of storage and opportunity costs of capital. The cost of storage protection has a larger effect on storage profitability with low value commodities such as maize, while the opportunity cost of capital has a larger effect on storage profitability of high value commodities such as cowpeas and common beans. An example is drawn with maize in Malawi, contrasting the profitability of storage protection with hermetic Purdue Improved Crop Storage (PICS) bags versus government-subsidized chemical protectants. Results from this example show that while PICS bags financially outperform chemical protectants, profitability varies greatly both by year and region of the country. We additionally include a Microsoft Excel template and interactive website link along with an explanation of the financial model to facilitate incorporation of economics in storage research on insect losses and technology adoption.

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