Cost-benefit analysis of prioritized climate-smart agricultural practices and innovations among smallholder farmers; a case of selected value-chains in Sub-Saharan Africa

Abstract

Current climate shocks are already affecting agricultural productivity, especially in the Least Developed Countries reducing the resilience of most vulnerable populations to deal with the negative effects. Smallholder farmers who depend on rain-fed agriculture are the most affected owing to the uncertainty of climate projections and limited capacity to adopt economically viable climate adaptation strategies. More so, they are constrained in both land and financial resources for the implementation of these agricultural innovations. Using a sample of 306 respondents, the Climate-Smart Agriculture-Prioritization Framework was used to assess the prioritized innovations for selected agricultural value chains in seven countries within the sub-Saharan Africa region; Kenya, Ethiopia, Zambia, Malawi, Togo, Nigeria, and Ivory Coast. Also, the study makes an economic case for investing in the prioritized innovations through a Cost-Benefit Analysis with a sample of 153 representative farmers. Four economic indicators comprising the Net Present Value, Internal Rate of Return, Benefit-Cost ratio, and payback period were computed. Data were collected via online interviews with the representative farmers by use of digitized questionnaires. The data was analyzed using the Cost-Benefit Analysis tool and the STATA software. The results indicated that most smallholder farmers in SSA prioritized the use of improved seed varieties, conservation agriculture, and good agricultural practices due to their ability to increase productivity and improve their resilience to climate change. The Net Present Value and the Internal Rate of Return for all the practices indicated the profitability of all the practices. In the sweet potato value chain in Kenya, good agricultural practices were viable with an NPV of US$ 28,044, an IRR of 328%, and a one-year payback period. This is in comparison to the improved seed varieties (US$ 8,738, 111%, and two years payback period) respectively. In Nigeria, the most viable option was the improved seed in the potato value chain and good agricultural practices in the rice value chain. In Malawi, Ethiopia, and Zambia, the most viable practices were improved seed, and conservation agriculture in the soybean, faba beans, and peanut value chains respectively. The NPV was highly sensitive to changes in the discount rate, moderately to price, yield, and practice lifecycle, and least to changes in annual labour costs. Policies should, therefore, be geared toward the development of low-cost strategies. These strategies should also present the ability to reduce the potential trade-offs and synergies as well as be in line with the objectives of increasing productivity, resilience, mitigation, and sustainability.