Impact assessment of the in-store dryer for grains in the Philippines

Between 1983 and 1997, ACIAR and its partners including BPRE invested A$4.1M or Php 159 M in research, extension and capacity building addressing the problems of drying grains such as rice, maize and peanuts after harvest in hot humid climates and particularly during the wet season. The concept of two-stage grain drying technology was developed based on the use of a flash dryer or, from later projects, a fluidized bed dryer, in the first stage for grain with high moisture content (18%) followed by the use of an in-store dryer. This study focused on the use of the technology in the rice industry. From a technical viewpoint the program of R and D seems to have been successful with its development of a technology that is close to being competitive on a cost basis especially during the wet season but delivers a marked improvement in the proportion of rice meeting Grade 1 standards. This technology is reported to be widely adopted in Thailand with growing interest in Vietnam and china (Pearce and Davis 2008) yet there has been no adoption in the Philippines of the two-stage process as a whole or even of its components singly. Hence from this suite of projects funded by ACIAR, there are no positive changes in economic welfare in the Philippines that can be reported here. In an earlier assessment McLeod et al. (1999) reported positive benefits which largely arose from efficiency gains in Australia and further gains in Thailand where the fluidized bed layer was widely adopted. There have likely been important gains in capacity in Australian and Philippine agencies conducting research into grain handling and this capacity has enabled the results of the research to be extended and adopted in other countries such as Thailand, China and Vietnam where there is some evidence of adoption. Perhaps the benefits of this technology, which requires a significant change to the way small grain trading firms operate, are not well known. Certainty there has been criticism of the government programs to subsidize the introduction of the technology which mainly focus on an apparent lack of understanding of the two-stage nature of the technology, the poor selection of firms to receive assistance, and the lack of training and ongoing support and maintenance for a technology that requires significant management skills. We are not aware of government policy that directly impinges on the adoption of two-stage drying technology, apart from past attempts to subsidize adoption. However we have not attempted to assess the implications for adoption of more efficient grain drying processes of more general government policy related to land reform and food security for example which may influence the rate of adjustment in the farm and processing sectors of the rice industry. It is more likely that the economic incentives to adopt the technology are not strong even though simplistic budgeting studies suggest that two-stage technology (and recirculating technology), while more costly, has a positive impact on profit, largely from quality improvement. The Philippine rice trading sector is still characterized by many small traders handling small volumes of rice with turnover of a few days. The two-stage technology requires significant investment in drying facilities (often including shed space) with a consequence that a larger throughout of rice is required to achieve per unit drying costs similar to traditional sun drying. The adoption of two-stage drying technology (and recirculating technology) in a significant scale may require considerable structural adjustment within the Philippine rice industry and likely needs to be aligned with other developments such as greater bulk handling of rice. We have not been able to assess the significance of these scale and adjustment issues to the adoption of the technology. The technology would also be more attractive from an economic point of view if the premium for Grade 1 rice was larger. Rice is a staple, consuming a large share of family income in many Philippine households. Perhaps as households become wealthier through economic development in the Philippines generally, a stronger premium for quality will emerge. These projects are likely to have delivered significant gains in capacity in the partner research organizations and in grain processing firms who are engaged in the research process in some manner. Several research staff in the Philippines undertook post graduate training in association with these projects. The staff of the cooperatives (technical and managerial) collaborating in the research received training on grain drying by the NAPHIRE scientists and other extension activities were undertaken reaching out to grain processors in the Philippine including the Postharvest Newsletter that was disseminated throughout the Philippines. We have not attempted to quantify the benefits flowing from these capacity building activities.