and Integrated Pest Management - part - usaid

ECONOMIC JIS'IFICATION OF PIIM173
Working on the basis of IPM implementation at a constant rate over ten
years, starting five years after the beginning of the project, these costs are set
against the total of all additional agricultural income derived from 1PM. The
sole investment criterion is then the question of how many farms would have to
adopt the IPM concept to ensure an acceptable internal rate of return (IRR), e.g.,
8%, on invested capital.
In order to achieve an IRR of 8% in real terms, the relevant technologies
would have to be adopted by 10,400 farms in the Philippines, 33,000 farms in
Thailand, 17,000 farms in Nicaragua and 20,000 farms in Cape Verde. Seen in
terms of the areas of land planted with the crops covered by tile projects, this
yields percentages of 0.3% for the Philippines, 2.1% for Thailand, 56% for
Nicaragua and 80% for Cape Verde (Table 5).
Besides these direct production-related effects, ii. is fairly safe to asume that
the other activities, such as promotion of quarantine (particularly in Cape Verde),
counterpart training, research work and the like, also yield positive effects in
economic and ecological terms.
Economic analyses of the individual projects were also carried out by experts
luring the planning phase (Philippines), and in conjunction with the interim
evaluation (Thailand, Nicaragua, Cape Verde), with the effects actually achieved
being included in the calculation. The internal rate of ieturn is 5% for Cape
Verde, 6.5% for Nicaragua, 16% for Thailand and 26% for the new project due to
start in the Philippines.
Although the lifferences in the basic data used in the analyses (prices,
project cycle) mean that the rates of return comparisons are limited, the figures
obtained are probably a realistic reflection of the situation.
CONCLUDING REMARKS
Projects designed to promote IPM permit public funds to be used in a
manner which ishighly rational from the economic viewpoint. The comparative
economic analysis for four projects promoting 1PM in Asia, Africa, and Latin
America reported in this paper certainly demonstrate this, even though the direct
effects of the projects analyzed are difficult to measure. It can also be shown that
IPM projects generally may be expected to give rise to follow-up costs of
reasonable magnitude and to raise the incomes of smallholders.
Table 5. Benchmark adoption of IPM technology for 8%IRR.a
Philippines Thailand Nicaragua Cape Verde
% area
Number of farms
0.3
10,400
2.1
33,000
56.0
17,000
80.0
20.000
"Philippines: maize, paddy, cotton; Thailand: paddy; Nicaragua: maize, cotton,
beans, soya; Cape Verde: maize, beans, pigeon peas, irrigated vegetables.