Policies to favour crop intensification and farm income under climatic risk in West Africa

Study area

Data collection Policy scenarios

Sudano-Sahelian region: high inter-annual variability of climate

Extensive cultivation practices low but stable income; intensive cultivation practices higher income in average but lower in case of drought (e.g. fertilizers, maize)

Farmers must ensure basic food needs even in case of drought they choose extensive options

Insurances based on weather indices aim to hedge farmers against droughts may foster intensive practices

Research questions:

• What are the impacts of climate variability on farmers' incomes, behaviours and practices ?

• Are index-based insurances the best tool for farmers?

Method: Coupling a crop model (CELSIUS) with a farm economic model (ANDERS)

Context and research questions

Main references

Affholder, F., C. Poeydebat et al., 2013. The yield gap of major food crops in family agriculture in the tropics. Field Crops Research 143(1): 106-118

Leblois, A., Quirion, P., 2013. Agricultural insurances based on meteorological indices: realizations, methods and research agenda, Meteorological Applications 20(1): 1-9

Leblois, A., P. Quirion, B. Sultan, 2014. Price vs. weather shock hedging for cash crops: ex ante evaluation for cotton producers in Cameroon, Ecological Economics 101:67–80

Muller, B., M. Sall et al., 2013. L’Assurance agricole indicielle en Afrique de L’Ouest : principes, premières réalisations et perspectives. Agronomie Africaine Num. spé. 6: 95 – 111

Research program ANR ESCAPE website: http://www.locean-ipsl.upmc.fr/~ESCAPE/ Corresponding author: Philippe Quirion, quirion@centre-cired.fr

Surveys (180 households) detailed data on crops

and farming systems to build a farm typology

Previous studies and literature allow to get soils and

crops data for modelling

Meteorological data came from CERAAS

The ANDERS-CELSIUS model

Socio-economic context

• Output and input prices

• Production costs

• On-farm and off-farm wages

• Interest rate (credit)

Objective function

• Maximize farmer’s expected utility with risk aversion

Subject to farm household constraints distributed over

the agricultural cycle

• Agronomic constraints (land, crop rotation)

• Labour constraints

• Financial constraints

• Household food need constraints

The animal farming system

• Animal type

• Animal feeding

• Livestock management

The weather index-based insurance scheme

• Index definition

• Insurance policy design (indemnity schedule)

Farm structure

• Cultivated area by land type

• Labour force

• Household members

• Farm equipment

Input:

Climate

Soil

Crop rotation

Cultivation practices

Model output:

Simulated crop

yields

Model outputs:

• Household income

• Crop mix and technical choices

• Adoption or not of the insurance tool

• Borrowing

• Salaried employees & off-farm work

• Food purchase/sale

A. RICOME1, F. AFFHOLDER2, F. GERARD2, B. MULLER2,4, Ch.POEYDEBAT2, P. QUIRION1, M. SALL3

1 Centre International de Recherche sur l'Environnement et le Développement, 94736 Nogent-sur-Marne

2 Centre International de Recherche Agronomique pour le Développement, 34398 Montpellier 3 Institut Sénégalais de Recherche Agricole, Dakar, Senegal

4 Centre d’étude régional pour l’amélioration de l’adaptation à la sécheresse (de l’ISRA), Thiès, Senegal

Two

contrasted

areas:

Sine:

~550 mm/yr.

Saloum:

~800 mm/yr.

The bio-economical farm

model ANDERS

The crop model CELSIUS

Results

Without subsidies ("Insu" policy scenario)

• Insurance not interesting for farmers in Saloum:

• Drought risk too low

• Weather indices are imperfect predictors of a bad harvest

• Insurers make a profit: w/o intensification, expected income drops

• In Sine, insurance useful:

• Reduce income variation, while roughly neutral on average income

• Part of groundnut replaced by millet

• Cow fattening develops

• More chemical fertilizers

Baseline Insu PremiumSub CreditSub CreditSub-I FertSub FertSub-I CashTrsf CashTrsf-I

Insurance

available?

No Yes Yes No Yes No Yes No Yes

Subsidy

program

No No Insurance

subsidy Reduced interest rate +

enhanced credit access

Fertilizer subsidy program

(reduced fertilizer price)

Cash transfer program

Policy scenarios with subsidies

• We compare the scenarios for the same public spending

• We rank them in term of expected farmers' utility

• Subsidising insurance is never the best choice; even the worst choice in

Saloum and for the less poor farmers in Sine

• The best scenarios are CreditSub-I or CashTrsf-I: credit subsidy or

unconditional cash transfer, combined with (unsubsidized) insurance

availability

• Insurance suffer from the "basis risk"

• All subsidies foster intensification (inorganic + organic fertilization + cow

fattening)

• Highest intensification level: "CreditSub-I" scenario (credit subsidy +

unsubsidised insurance)

Perspectives: use the model to • Assess the value of seasonal climate forecasts

• Quantify the impact of climate change