ACES studying motivations and incentives for reducing postharvest losses in Brazil
ACES faculty are investigating the perceptions of Brazilian farmers – both large and small holders – towards postharvest loss with the goal of helping the country maximize its agricultural production. Two separate studies showed that while large-scale farmers accept some postharvest losses to maximize overall production, smallholders may require revised incentives to further minimize their losses.
Both projects are funded by the ADM Institute for the Prevention of Postharvest Loss.
“Postharvest loss is broadly defined as grain lost from harvest up until grain is sold to commercial buyers,” explained Dr. Peter Goldsmith, associate professor in the Department of Agricultural and Consumer Economics. Specifically, he separates postharvest losses into three stages: 1) harvest (combine related losses); 2) short haul (during transport from field to storage or market); and 3) storage losses (that occur during storage, either on-farm or public storage).
As the world’s largest exporter of soybeans and home to the largest and fastest growing agricultural state in the world (Mato Grosso), Brazil is a critical component in feeding the world’s growing population. ACES faculty found it necessary to look at Brazil’s two types of farming operations, small and large scale, separately to see what policy changes, if any, they would recommend to minimize the country’s losses and/or maximize gains.
“The nature of postharvest loss is very different when comparing the small farmers in Paraná to the large commercial farmers in Mato Grosso, and the Brazilian government has separate policies and incentives for small and large scale agriculture,” explained Dr. Mary Arends-Kuenning, associate professor in the Department of Agricultural and Consumer Economics.
Large farmers accept some losses for greater good
“While we understand that policy’s goal is to reduce postharvest losses, we had not previously looked at the micro-economy of loss,” Goldsmith said.
He surveyed some of the world’s largest farmers in Mato Grosso, whose perceptions about postharvest losses were previously unknown, and learned these farmers perceive a certain level of postharvest loss as acceptable to increase their total production and profit.
“This study provides evidence that farmers are rational profit maximizers and trade some postharvest losses for grain production. In the case of double-crop systems in tropical regions where time and rain events are critical variables, managers accept a controllable loss. They perceive the economic benefits of double-cropping as compensation for the profit they lose from hastening, and therefore losing some of, their soybean harvest. Specifically, the results showed that farmers will accept soybean harvest losses of at least 6% and short-haul losses of at least 2% as an opportunity cost for not delaying the planting of a second crop, maize. In these cases, increasing their loss of soybeans postharvest does actually increase their total grain output per hectare,” Goldsmith said.
So what does this mean for policies directed at reducing postharvest losses for large scale farmers?
“Policymakers may want to focus on the public drivers of postharvest losses, such as infrastructure, including road construction and quality, and regulation, grain standards, and vehicle inspection,” Goldsmith said.
Goldsmith, Peter D.; Anamaria Guadencio Martins, and Altair Dias de Moura, “The economics of post-harvest loss: a case study of the new large soybean- maize producers in tropical Brazil” Food Security, 2015, Vol. 7. Number 4.
Smallholders need additional support
Smallholder farms in Brazil, which produce 41% of the country’s corn and 14% of the country’s soybeans, have great potential for progress and might be more inclined to mitigate postharvest losses.
In a recently-completed pilot study, Arends-Kuenning and her team examined smallholders’ perceptions of postharvest loss. Her study also assessed how government policies and incentives might impact these losses. She focused on the state of Paraná because it accounts for a significant share of Brazilian smallholder production.
“The Brazilian government has invested considerable resources in providing credit for smallholders to purchase new harvesting equipment and storage facilities. The state government extension agency has an annual competition to measure how much grain is left on the ground; the prizes include a TV and much fanfare is made of who wins,” said Arends-Kuenning.
Her pilot survey confirmed that smallholder farmers perceive postharvest loss as a significant problem and that their main losses are harvest and short haul related. “It’s usually related to improper maintenance of the combine and harvesting too quickly,” she said.
Arends-Kuenning said, “The government-sponsored competitions may have helped because the average losses of the competitors have gone down over time. The reports indicate that a significant numbers of farmers who enter the competition are below the maximum losses recommended by the Brazilian Agricultural Research Corporation (EMBRAPA). However, the incentives are still not working as they are intended overall. The Brazilian government has invested considerable resources into providing credit for smallholders to purchase new harvesting equipment and storage facilities, but the credit is not being used in a way that minimizes postharvest loss. For example, on-farm storage for animal feed remains primitive and results in loss from spoilage and rodents.”
Her upcoming project will quantify postharvest loss, determine its causes, and investigate the incentives that smallholders face to minimize postharvest loss. She will collect another round of data during the February 2016 harvest.
Measuring and documenting losses
Another ACES research team from the Department of Agricultural and Biological Engineering including Grace Danao, Richard Gates, and Marvin Paulsen, has previously collaborated with three universities in Brazil to measure and document postharvest losses of soybeans and corn. This study, also funded by the ADM Institute for the Prevention of Postharvest Loss, installed probes in trucks to monitor GPS coordinates, time, temperature, relative humidity, and carbon dioxide buildup in grain in trucks during transportation during harvest. Read more here: http://abe.illinois.edu/News/BrazilResearch2014.
The team published a report concluding that by operating a combine carefully and making proper adjustments to the combine, an operator can save about 2 bags per hectacre of soybeans which translates to an operator hourly value of $238-$277 in U.S. dollars.
Paulsen, M.R. et al. (2014) Measurement of combine losses for corn and soybean in Brazil. Applied Engineering in Agriculture, 30 (6): 841-855.