Impact of cowpea breeding and storage research in Cameroon - IITA

Cowpea postharvest and socioeconomic studies
δ = proportional storage losses, 0 δ 1
η 1
= elasticity of demand period 1, η 1
< 0
η 2
= elasticity of demand period 2, η 2
< 0
ε = elasticity of supply, ε > 0
q 1
= proportion of total quantity consumed in period 1, q 1
, = 0
q 2
= proportion of total quantity consumer in period 2, q 2
, = 0
q s
= proportion of total quantity stored in period 1, qs = 0
α = storage loss reduction with innovation, α, = 0
Dias-Hermelo and Lowenberg-DeBoer call this (–∆E/EE’) the bias factor. The
importance of the weighted elasticity term (E) can be better understood by noting that
it is the denominator of the economic surplus estimation formula. The bias factor is
always non-negative and it is largest when first period elasticity of demand and supply
elasticity are small relative to the second period demand elasticity term. When supply
or first period demand is very elastic, the bias factor dwindles to insignificance. For
example, with the baseline parameters in Table 1, if the storage loss reduction almost
eliminates storage loss, the bias factor is 6% for a second period demand elasticity of
–0.8. If the consumption share of the second period is increased to 30% without changing
other parameters, the bias factor is 14% at the second period demand elasticity of
–0.8. Table 1 values indicate that the bias factor can be important for some plausible
parameter values.
Table 1. Values of the bias factor (–∆/EE’) for some representative values of other
parameters.
Storage loss reduction factor α
3.0 0.50 0.70 1.00
Baseline
η 2
–0.4 0.01 0.02 0.02 0.03
–0.8 0.02 0.03 0.04 0.06
–1.2 0.03 0.05 0.06 0.08
–1.6 0.04 0.06 0.08 0.10
Higher consumption share in second period 30%
η 2
–0.4 0.03 0.05 0.06 0.08
–0.8 0.06 0.09 0.12 0.14
–1.2 0.09 0.13 0.16 0.19
–1.6 0.12 0.17 0.20 0.24
Elastic first period demand η 1
= –10
η 2
–0.4 0.01 0.02 0.02 0.03
–0.8 0.02 0.03 0.05 0.06
–1.2 0.03 0.04 0.07 0.09
–1.6 0.04 0.07 0.09 0.12
*Given the baseline storage loss factor, φ = 2, α = 1 indicates zero storage loss.
**Baseline parameter values are: first period demand elasticity, η 1
= –0.4; consumption share
period one, q 1
= 0.60; storage share = 0.40; consumption share period two, q 2
= 0.20; price period
1, P 1
= 1; price period 2, P 2
= 4.8; discount rate r = 0.2; storage loss, δ = 0.5; discount factor, ρ = 1.2;
storage loss factor, φ = 2.
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