Proceedings of the Fifth Asian Regional Maize Workshop - Search ...

case in which the hybrid replaces an improved OPV. Note that the maize price used in this
analysis is the "field price," which has been adjusted for harvesting, shelling, bagging,
and post-harvest transportation costs. Use of the field price is important in order to
take into account the additional costs of harvesting higher-yielding hybrid maize. In this
example, switching to hybrid maize would be particularly profitable for farmers who are
currently growing the unimproved local variety, as the MAR exceeds 475%. Switching to
hybrid maize would be somewhat less profitable for farmers who are already growing the
improved OPV, in which case the MAR equals 2~. However, even the latter MAR is likely to
be considered attractive by most farmers.
3.5. Break-even yield gain curves for hybrid adoption
Putting together all of these variables -- seed price, seed rate, yield gains, cost
of capital and risk -- we can derive break-even yield gain curves to show the likely
profitability of adopting hybrid maize. Break-even yield gain curves depict the set of
minimum percentage yield increases (computed across a range of yield levels) which a
hybrid must generate in order to compensate the farmer for the higher seed cost and
increased risk. Figure 8 shows break-even yield gain curves for three alternative
seed-to-grain price ratios. At a high seed-to-grain price ratio of 20:1, the yield
increase generated by the hybrid must be very large in order for adoption to be attractive,
especially if current yields are low. At a low seed-to-grain price ratio of 5:1, the
yield increase generated by the hybrid can be much smaller, especially if current yields
are relatively high.
Table 10.
Partial budget analysis for the use of improved maize seed.
Local
variety
Improved
OPV
Double-cross
hybrid
Yield (kg/ha)
Adjusted yield (minus 10%)
Field price of maize grain (US$/kg)
Gross revenues (US$/ha)
Price of seed (US$/kg)
1,500
1,350
0.12
162
0.15
2,000
1,800
0.12
216
0.30
2,500
2,250
0.12
270
0.90
Total costs that vary (US$/ha)*
Net revenue (US$/ha)
3.75
158
7.50
208
22.50
247
Additional costs (US$/ha):
Change from local variety to hybrid
Change from improved OPV to hybrid
18.75
15.00
Additional net benefits (US$/ha):
Change from local variety to hybrid
Change from improved OPV to hybrid
89.25
39.00
Marginal Rate of Return (%)**
Change from local variety to hybrid
Change from improved OPV to hybrid
476
260
* Based on a seed rate of 25 kg/ha for all types of seed.
** The marginal rate of return (MAR) is calculated by dividing the additional net
benefits by the additional costs, and expressing the result in percentage terms.
216