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Revista mexicana de ciencias agrícolas

versión impresa ISSN 2007-0934

Rev. Mex. Cienc. Agríc vol.7 no.7 Texcoco sep./nov. 2016

 

Articles

Economic and social contributions of INIFAP the development of Mexican agriculture

Adrián González-Estrada1  § 

1Campo Experimental Valle de México-INIFAP.


Abstract

Intensification and globalization of the agricultural and forestry sector of Mexico makes the generation of knowledge, technologies and innovative products in an essential and urgent for the sector's development needs. This coupled with budget shortages, requires the performance evaluation of the main Public Research Centre sector. The objective of this research was to comprehensively assess the results obtained in the first 30 studies of economic, social and environmental impacts of an equal number of technologies and products of the National Institute of Forestry, Agriculture and Livestock. The key components of the method followed are: 1) characterization of technological innovation; 2) quantification, time, and costs attributable to the incorporation of this technological achievement in the production process potential benefits; 3) quantifying the price effect of that product or innovation and its economic effect or aggregate potential; and 4) quantification of the time paths of adoption levels under uncertainty and risk. The results show that the INIFAP is a public research center more than justifies public resources exerted and is an essential tool for promoting growth and development of the Mexican countryside institution, agricultural policy has been allocating such meager resources to research it is not only incorrect and inefficient but also wasted significant opportunities for economic growth in Mexico and social improvement for Mexican countryside and cities.

Keywords: assessment of economic and social impacts; assessment of agricultural research

Resumen

La intensificación y globalización del sector agropecuario y forestal de México convierte a la generación de conocimientos, tecnologías y productos innovadores en una necesidad esencial y apremiante para el desarrollo del sector. Esto aunado a la escasez presupuestal, hace necesaria la evaluación del desempeño del principal Centro Público de Investigación del sector. El objetivo de esta investigación fue evaluar globalmente los resultados obtenidos en los primeros 30 estudios de los impactos económicos, sociales y ambientales de un número igual de tecnologías y productos del Instituto Nacional de Investigaciones Forestales, Agrícolas y Pecuarias. Los componentes fundamentales del método seguido son los siguientes: 1) caracterización de la innovación tecnológica; 2) cuantificación, en el tiempo, de los costos y los beneficios potenciales atribuibles a la incorporación de ese logro tecnológico en el proceso productivo; 3) cuantificación del efecto-precio de ese producto o innovación y de su efecto económico o agregado potencial; y 4) cuantificación de las trayectorias temporales de los niveles de adopción en condiciones de incertidumbre y riesgo. Los resultados obtenidos muestran que el INIFAP es un centro público de investigación que justifica sobradamente los recursos públicos que ejerce y que es una institución imprescindible para promover el crecimiento y desarrollo del campo mexicano, la política agrícola que ha estado asignando recursos tan exiguos a la investigación, no sólo es incorrecta e ineficiente sino que, además, desaprovecha importantes oportunidades de crecimiento económico para México y de mejoría social para los mexicanos del campo y de las ciudades.

Palabras clave: evaluación de impactos económicos y sociales; evaluación de la investigación agrícola

Introduction

Within Mexican agriculture they have been developing more freely than before forms and capitalist relations of production in all its productive activities to such an extent that according to Gonzalez-Estrada (2002), currently embarked on the beginning of the stage II of economic development, characterized by an increasingly intensive use of capital, knowledge and technology (González-Estrada, 2001). In addition, it is part of the process of globalization of the economy and financial capital.

The development of the productive forces and, consequently, production capacity, technical change and productivity in agriculture and producers industries of means of production and banks it supplies, is an essential and urgent need, the satisfaction requires the generation of innovations, knowledge, technologies and advanced products. In terms of importance, Parente and Prescott (2000) showed that increases in the rate of growth of total factor productivity plays a crucial role in the growth of the economies of the countries.

In this process of intensification and development of the Mexican countryside is crucial agricultural and forestry research, not only for the development of the sector, but also for the economy as a whole. In turn, the development of this activity requires, among other things, you are given for their performance and efficiency. It is important to quantify the efficiency of economic, social and environmental impacts has been showing agricultural and forestry research in Mexico, especially the National Institute of Forestry, Agriculture and Livestock (INIFAP). Mexico is a country, scarce fiscal resources allocated to research activities contrasts with a meager and insufficient economic growth and the existence of numerous economic problems, serious social deficits and a grinding poverty, the efficient management of public spending is an urgent requirement, which must meet all public institutions with a sense of efficiency and equity.

The recent transformation of INIFAP in a Public Research Centre (CPI), made mandatory the presentation of evidence of significant economic and social impacts, which are consistent with the objectives which justify the new legal status of the institution. This requirement has been accentuated by the new system of management by results, which must adhere all parastatals.

The aim of this study was to comprehensively assess the results obtained in the first 30 studies of economic, social and environmental impacts of an equal number of technologies and products INIFAP, published in the series: studies assessing the economic impact of products INIFAP. The technologies evaluated here are not the only ones produced by INIFAP, nor the most important. Simply, those contributions that were available technical and economic information required for evaluation were considered.

Materials and methods

The method used for the quantification of economic, social and environmental impacts of the 30 technologies generated by INIFAP, is described in full in the book of González-Estrada and Stanley (2006). Its basic components are: 1) characterization of technological innovation; 2) translate the time paths of adoption levels under uncertainty and risk; 3) observe in time, costs and attributable to the incorporation of this technological achievement in the production process potential benefits; and 4) quantification of the price effect of this innovation and its potential economic effect or addition.

With the model described below, economic and social surplus generated by technological research INIFAP-oriented generation techniques more efficient production, in the context of a "small" open and distortions of economy quantified according to González-Estrada (2001) and Alston et al. (1995).

The annual surplus or profit induced by the introduction of a new technique to the production process is shown graphically as the area under the demand curve and between the two supply curves: the original and arising from technical change. Let k coefficient which measures the vertical displacement of the supply curve:

Parametric definition of annual profit induced research is built through the following two equations definition:

Where: k is the coefficient which measures the vertical displacement of the supply curve; p0 is the initial price; Q0 is the amount initially produced; represents the absolute value of the price elasticity of demand, and z symbolizes the price reduction due to displacement of the supply curve, and is defined as:

Where: > 0, represents the absolute value of the price elasticity of supply and p1 is the price after introducing technical change.

It is said that an economy is "small" if its participation in international trade is of such magnitude that it's economic and trade decisions do not affect the international price (Houck, 1992). According to González-Estrada (2001) and Alston et al. (1995), parametric definition of annual profits for producers induced research for small country hypothesis and trade liberalization, is:

Where: represents the tax rate.

According to Alston et al. (1995) to measure the displacement of the supply curve induced research, you can combine the maximum potential shift in supply, with the intertemporal sequence: , based both on the observed data adoption and the model most appropriate for dissemination to the problem under study (Wood and Baitx, 1999). The model used here is the logistic model or sigmoid. The fundamental assumption of the model is that the number of farmers adopting innovation, dA(t), the dt period is directly proportional to the number of farmers who previously adopted her, A(t) and inversely proportional to the number of those who remaining to adopt the new production technique: (N-A). According to González-Estrada (2015), the mathematical formulation schema change is represented by the differential equation:

The solution of this differential equation is, according to González-Estrada (2015):

Lekvall and Wahlbin (1993) indicate that the best parameterization of the previous logistic curve is:

Where: AMax, represents the maximum rate of adoption.

It would not be correct to assume with certainty adoption Rogers (1992); González-Estrada and Stanley (2006). That is why, in order to increase the likelihood of evaluation estimates, it was assumed that the probability of success of technologies is governed by a probability density function. In addition, the uncertainty inherent in estimating the benefits of research necessitates the inclusion in the analysis of stochastic simulations of evaluation indicators. According to Alston et al. (1995), such information is useful to indicate the degree of reliability that should be taken into account such estimates. Scobie and Jacobsen (1992), suggest a method for simulations of the benefits of research.

According to Alston et al. (1995), the model of the commodity market under study is:

The initial equilibrium price, which has not yet introduced the new production technique, and the equilibrium price with the new technology are, respectively:

The determination of the planning horizon, T, is variable and is determined case by case and thus can measure the present value of the timing of the economic benefits in present value of producers (VPS) consumer (VCS), government (VGS) and total, VTS generated in the region under study.

However, the 30 technologies evaluated here represent neutral technical changes, the distribution of its economic impact is uneven, because the distribution of the cultivated area and the capital is also uneven. For this reason, it is required to estimate a parameter of inequality shown by the Lorenz curves. Such parameter is the Gini coefficient, which according to González- Estrada (1990)), is defined as follows:

The Lorenz distributions obtained here are discrete, for which numerical methods for calculating the measure of inequality in the distribution of profits were used.

Results

Economic impacts of technologies INIFAP

The INIFAP and its predecessors, the National Institute for Agricultural Research (INIA) and the Agricultural Research Institute (IIA) have released more than 1 260 new improved varieties of plants between 1942 and 2003. As is obvious, it has not been possible to quantify the economic impacts of all the technological contributions of INIFAP. However, there are some important research that the net economic benefits induced by some of the varieties released by the institute are evaluated.

Becerra-Márquez and González-Estrada (1990) showed that the net economic benefits generated by genetic improvement of wheat in Mexico conducted by INIA-INIFAP in collaboration with CIMMYT, between 1961 and 1987, are so substantial that represent 1.55 times the gross domestic product, GDP, the primary sector of 1986 and 14.3% of total GDP of Mexico; these net benefits represent several times the total expenditure amount disbursed by INIFAP, and three institutes that made it during the period 1961-1987.

Those net benefits represent several times the total expenditure amount disbursed by INIFAP, and three institutes that formed it, during the period 1961-1987. Finally, Ardito Barletta-(1971) evaluated the research aimed at genetic improvement of maize and sorghum in Mexico during the period 1941 to 1963, and earned rates of return of 26% for the improvement of maize and 59% for the improvement of sorghum. More recently, Fernandez and Shumway (1997) estimated an average rate of return of agricultural research in Mexico of 64% over the period 1940-1990.

Recent economic impacts of 30 technologies generated by INIFAP

Then the net economic impacts of only thirty of recent technologies generated by INIFAP are presented:

In the Table 1 shows that the weighted average interest rate cost (B/C) is equal to 56.6, which means that for every peso invested in the INIFAP, only 30 of its technologies have produced a net benefit to the country and adopters farmers for 56.6 pesos. Moreover, the internal rate of return of INIFAP spending is 53.9%, considerably higher than the average profitability of private investment and much higher than the rate of risk-free return of financial investments, 15.6%.

Table 1 Economic Impact of 30 technologies of INIFAP. 

González- Estrada et al. (1990 a 2015).

National importance of the economic impacts of the 30 technologies of INIFAP

In relation to the interpretation of net present value, in Table 1 also it shows that the net economic impact of only 30 INIFAP technologies-a small fraction of the total contributions of the institute in recent years, has been so large that equals:

A 141 times the fiscal budget exercised by the INIFAP in 2014 according to the report of the Director General (2015); INIFAP fiscal budget that year was 1 275.7 million); and 2 times the federal budget SAGARPA in 2015 (the general expenditure budget of the institution for 2015 is 92 141 million (SAGARPA, 2014). It was estimated equivalent to 8.4 times the total annual expenditure of PROCAMPO (today promotion program agriculture) for 2015. The budget allocated to this program in 2015 is 21 500.2 million (CEFP, 2015). The 63.8% of the estimated gross domestic product of agriculture in 2015, that for this year is estimated at 282 052 million of pesos. The 42% ofthe gross domestic product of agricultural, forestry and fisheries in 2015, estimated at 428 000 million of pesos.

In order to better appreciate these economic impacts of INIFAP, consider that from 1982 to 2015, the fiscal budget allocated to INIFAP has been reduced considerably in real terms.

The economic impacts of 30 technologies of INIFAP in the international context

As shown in Table 1, the evaluation results presented here are more conservative than the estimates reported in previous works. The internal rate of return, TIR, average weighted net present value (VAN) of the here evaluated technological achievements is 53.9%, considerably lower than the world average TIR, 81.3%, calculated based on 1 886 studies evaluating research agriculture for different countries (Alston et al, 2000).According to these authors, 21% of evaluations reported a TIR in the range 40% -60%. Ardito Barletta-(1971) obtained rates of return of 26% for the improvement of maize and 59% for sorghum improvement in Mexico, between 1941-1963. Research Fernández and Shumway (1997) estimated an average rate of return on agricultural research in Mexico of 64% for the period 1940-1990.

Impacts on social welfare

According to the above, the average net impacts on the welfare of farmers adopting any of the 30 technologies of INIFAP here assessed amount to 179 878.9 million of pesos at prices of 2015. Since technologies here evaluated are neutral, farmers will benefit them directly to the surface on which the applied rate. In order to study the social impacts of the 30 technologies evaluated here, they will be studied: Annual harvested area and net profits, benefiting farmers and the distribution of social benefits (Table 2).

Table 2 Annual area harvested and net profit of 30 technologies INIFAP (annual average 2000-2010). 

González-Estrada et al. (1990-2015).

A) Area harvested and annual net profit

In order to eliminate the annual fluctuations in harvested area, were calculated the average annual harvested area and the corresponding net profit during the period 2000-2010. The results are the following:

During the period 2000-2010, the 30 technologies evaluated here were planted in 1.8 million hectares per year on average, of which 1 014 524 were sown under rainfed and irrigated 766 002.

B) Farmers benefit

Since the average acreage per farm is 3.32 ha (ASERCA, 2013) and considering that the 3 0 technologies here evaluated were planted on average over an area of 1 780 526 ha per year, it is estimated that the number of farmers benefited was annually 536 369, during the period 2000-2010.

C) Distribution of social benefits

In order to measure the unequal distribution between the adopter farmers, economic surplus induced by the 30 technologies here evaluated, information about 11 524 612 hectares reported by Support and Services for Agricultural Marketing (ASERCA) was used in relation to the beneficiaries of Rural Support Program (PROCAMPO).

The distribution curves (Figure 1 and 2) for technologies Lorenz planted under irrigated conditions and time are:

Figure 1 Distribution of Lorenz of economic surpluses of 30 technologies of INIFAP (irrigation).  

Figure 2 Distribution of Lorenz of economic surpluses of 30 technologies of INIFAP (temporary). 

The Gini coefficients calculated by numerical integration are 28.9%, 21.4% and 25.6% for irrigation, temporary and total, respectively, indicating that the distribution of surplus is more unequal among farmers who produce under irrigation. In order to correctly interpret how unequal are those distributions of impact, be summoned to Stiglitz (2012), who in his book: the price of inequality, says that countries with income inequality "reasonably good" as Germany Sweden and Norway, have a Gini coefficient of 30% and those with a "high" inequality have a ratio exceeding 50%: Mexico, Latin America and South Africa, among others. The USA have a coefficient of 47%.

Insufficient financial support to agricultural and forestry research in Mexico

According to Table 1, the internal rate of return (TIR) weighted average (40.8) of the corresponding indicators of the evaluations reported here, although conservative, is so high that far exceeds the average rate of return at the macroeconomic level, 15.7% (González-Estrada, 2002). This confirms, without a doubt, that both public and private investment in agricultural and forestry research in Mexico are extremely profitable; however, the growing shortage of resources and support to the scientific and technical activity. It also confirms the hypothesis of underinvestment. That is, the level of public and private investment in agriculture, livestock and forestry research in Mexico is far below the optimal level from an economically and socially. In addition, it is also confirmed that the INIFAP justified to spare, exercised public resources and is an essential tool for promoting growth and development of the Mexican countryside institution.

It is estimated that the total expenditure on agricultural and forestry research in Mexico, which is the sum of the INIFAP budget and other institutions doing similar research, represents barely 0.38% of all government transfers (González-Estrada and Sánchez-Ramos, 2008). According to the executive summary of the external evaluation of INIFAP conducted by the American Institute of Agricultural Sciences (IICA-GEE, 2003), the Government of Mexico should allocate 1% of agricultural GDP to finance agricultural and forestry research.

The agricultural subsidies not only distort economic processes, but they perpetuate backwardness and inefficiency. In addition, they detract valuable resources and other support services to other areas of highly profitable public investment. González- Estrada (2002) presents convincing results that such policies are wrong and concludes that: in terms of social welfare, economic benefits and promoting efficiency, is socially superior and economically, increase investments in generation and promotion of technical change and productivity, the policy of increasing levels of subsidies and protection of agriculture.

Should they increase support to the field? Yes, definitely. But they should be assigned in an efficient, rational and progressive, economically, socially and historically speaking manner. The solution is not to increase subsidies and protection levels to the field, but in a more determined promotion of technical change and total factor productivity, through such diverse instruments as the development of infrastructure of all kinds, greater support for innovation and adoption of new production techniques, development of basic services to field production, etc.

Mexico is wasting important opportunities for growth and development for the field (González-Estrada and Stanley Wood, 2006).

Conclusions

The economic and social impacts of the 30 technologies evaluated here show that INIFAP is a public research center more than justifies public resources and exercise is a must to promote growth and development of the Mexican countryside institution. Investments in research conducted are highly profitable, both private perspective and the economy as a whole, which means that public and private funds allocated to agricultural and forestry research in Mexico are well below the amount optimal, why, they are missing important opportunities for economic growth and social improvement Mexico for Mexican countryside and cities as well. It conclude that current agricultural policy is inefficient, because it spends much on subsidies and little in promoting the development of productive forces and productivity. Spends more on maintaining the status quo, which in the development of production and productivity to overcome it.

The results of this research confirm that it is more convenient and socially promote economic growth of agriculture by promoting technical change and productivity, that subsidy policies field; also confirm that the policy of promoting technical change and productivity, mainly through research, is considerably less expensive than the subsidy policy, less distortive in economic and political terms and more progressive, historically speaking.

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Received: February 2016; Accepted: April 2016

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