COST BENEFIT ANALYSIS OF THE FEED THE
NATION
MAIZE CULTIVATION
PROGRAM IN HAITI
1
Program on Investment Appraisal and Risk Analysis (28th September –
9th October 2020)
Maize Cultivation Program
GROUP MEMBERS
Obed Apreku - Ministry of Finance
Abena Ofosua Dankwa - Min. of Special Dev’t Initiatives
Akpene Agbeko - Ministry of Food and Agriculture
Selorm Gbedemah – Min. of Aquaculture and Fisheries
Ama Aso Brentu - Ministry of Finance
Beatrice Owusuaa Kwarteng - Ash. Reg. Coordinating Council
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OUTLINE OF PRESENTATION
Introduction
Background of project
Project objectives,
Project Description
Project financing
Project cost
Project benefit
Project Analysis Module
Findings
Financial Analysis
Economic Appraisal
Stakeholder Analysis
Conclusions
Maize Cultivation Program and recommendations 3
INTRODUCTION
The government of Haiti contracted us to produce a feasibility report on the Cost – Benefit
Analysis of the Feed the Nation Maize Cultivation Program in Haiti.
Hence in conducting this Feasibility Study,
We collated Data with respect to the Project and conducted
Financial Analysis
Economic Analysis
Stakeholder Analysis
Sensitivity Analysis
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INTRODUCTION
BACKGROUND:
Agriculture in Haiti is characterized by subsistence farming carried out with unsophisticated
farm implements, and mainly rainfall dependent.
Agriculture is the mainstay of the Haitian economy. The sector employs approximately 66% of
the total labour force thus contributing between 20-25% to GDP.
In the past two decades, growth in agricultural production has stagnated, and food imports
have escalated.
In 2007, food imports accounted for approximately 23% of total imports and have increased
steadily over the years, hence widening the trade deficit.
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INTRODUCTION
PROBLEM STATEMENT:
Imported food constitutes about 50% of the country’s total food supply leaving it
vulnerable to fluctuations of world prices.
In addition, Haiti receives $20 million per year in food assistance from USAID
collaborations alone.
The major challenges to domestic food production include declining farm size, soil
erosion, low rate of commercial agricultural inputs application, poor agronomic practices,
limited access to credit, inadequate infrastructure, as well as climate change related
issues such as droughts and seasonal storms.
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INTRODUCTION
PROJECT OBJECTIVES:
The Government of Haiti (GoH) in collaboration with its development partners have designed an
agricultural program “Feed the Nation” (FtN). FtN program aims to achieve self-sufficiency in
maize production through the adoption of modern agronomic practices.
The GoH has identified 10,000 ha of land to pilot the program. The project will commence in
2016 and benefit approximately 1,650 farmers with an average land holding of 1.5 ha (total area
of 2,500 ha) in the first year. The project will expand to the area of 10,000 ha by 2019.
The average ongoing yield of maize in Haiti is 1.1MT/ha (including losses). The prevailing
average post-harvest loss is about 9% of the yield harvested.
The adoption of the recommended interventions is expected to increase the average yield per
hectare to 4 MT. Also, the use of hermetic bags is expected to reduce the post-harvest losses of
maize from 9% to 5%.
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INTRODUCTION
PROJECT EXPECTATIONS :
The GoH aims to gradually move from subsistence agriculture to commercially oriented agricultural
sector. To achieve this objective, the effort is made to “consolidate land” and form cooperative of
farmers.
With the project, farmers have access to high quality, high yielding maize seeds, adequate
fertilizers, and equipment necessary for commercial maize production.
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INTRODUCTION
PROJECT FINANCING:
The FtN program cost is financed by the GoH with the support of its development partners World
Bank, Inter-America Development Bank, Caribbean Development Bank, USAID and IFAD.
The three main components of the project include:
Infrastructure development cost for irrigation facilities;
Capacity building of farmers;
Rural financing through support of MFIs.
Project investment is expected to last for a period of 4 years. It will commence in 2016 and end in
2019. The total investment cost will be disbursed in equal proportions of USD$10million per year
over the investment period.
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INTRODUCTION
PROJECT BENEFITS:
The benefits of the project include:
Increased quality and quantity of maize production
increased annual income to farmers
Improved farmer agronomic practices.
Reduction in maize importation
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ANALYSIS MODULE
To assess the Financial and Economic Project Viability:
As an Analyst, our task is to comment on the financial implications of the proposed project
on the project beneficiaries.
Therefore we assessed the financial impact of adopting the improved agronomic practices
recommended by the government of Haiti on Farmers.
The Financial Implications are presented as follows
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FINANCIAL APPRAISAL
The financial appraisal of the project addresses the following:
The extent of reduction in importation of maize;
The net wealth generated to the farmers as a result of the project;
The improvement or otherwise in the farmers’ annual income;
The overall financial feasibility of the project
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FINANCIAL ANALYSIS
Actual Annual Maize Production
The extent to which the project is expected to reduce import of maize is the increase in annual
production of maize. At year 2027, the incremental production was at 55,980 MT.
The quantity of maize is produced annually in the “without” and “with” case is presented
below
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ACTUAL MAIZE PRODUCTION
ACTUAL MAIZE PRODUCTION WITHOUT PROJECT
2027
2026
2025
2024
2023
Production Years
2022
2021
2020
2019
2018
2017
2016
0 5,000 10,000 15,000 20,000 25,000
Metric Tonnes
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ACTUAL MAIZE PRODUCTION
ACTUAL MAIZE PRODUCTION WITH THE PROJECT
80000
70000
60000
50000
Metric Tonnes
40000
30000
20000
10000
0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Production Year
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FINANCIAL NET PRESENT VALUE (FNPV) BEFORE AND AFTER FINANCING
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FINANCIAL ANALYSIS
INCREMENTAL INCOME FOR FARMERS
Incremental Farmers Actual Income
2000
1500
1000
Income
500
0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
-500
Production Year
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ECONOMIC ANALYSIS
Economic Net Present Value (ENPV) values illustrates the difference between the present
value of cash inflows and the present value of cash outflows over a period of time.
The Economic NPV values of the project is positive meaning the project is economically
benefitting the society as a whole. However the under the Stakeholders perspectives the
project ENPV has a negative value which signifies that all stakeholders apart from the farmers
are losing.
The USAID and Government are pumping funds to achieve the optimal efficiency in
increasing food production in Haiti.
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FINDINGS - ECONOMIC APPRAISAL
ECONOMIC ANALYSIS OUTPUTS
ECONOMY'S PERSPECTIVE
Economic Viability of Project
Economic NPV 40.01 Million HTG
Economic IRR 12% %
Economic MIRR 12% %
STAKEHOLDERS' PERSPECTIVE
Project NPV (3,514.01) Million HTG
USAID (374.35) Million HTG
Government (3,139.66) Million HTG
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FINDINGS - ECONOMIC
ANALYSIS
Factors Driving Difference between FNPV and ENPV
It is observed that the project is a social intervention meant to boost farmer’s productivity
hence the ENPV is positive but lower than the FNPV.
From the results we observe that government and USAID are losing. The Factors driving the
difference are
Budgetary Subsidies
Government Guarantees
Donor Support.
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STAKEHOLDER ANALYSIS
The Stakeholders identified are the
Farmers,
Government of Haiti; and
USAID.
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STAKEHOLDER ANALYSIS APPROACH
Financial NPV PV. Externality Economic NPV Fin. + Ext.
3,554.02 (3,514.01) 40.01 40.01
USAID (374.35) Mil ion HTG
Government (3,139.66) Mil ion HTG
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SENSITIVITY ANALYSIS
We decided to stress test these variables to ascertain how risky these are to the
project.
After the analysis we identified these variables as risky to the success of the project.
Farm-gate price of maize
Investment Cost Overrun
% Change in Post-harvest losses
Change in Price of Fertilizers.
Adoption rate of Interventions
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SENSITIVITY ANALYSIS
(Million HTG) Stakeholders
Farmers FNPV (After
Financial NPV Financing) Economic NPV GoH USAID
Farm-gate price of maize 3,442 3,665 40 (3,140) (374)
-30% 18 904 1,127 (1,822) (2,393) (374)
-20% 20 1,750 1,973 (1,201) (2,642) (374)
-10% 23 2,596 2,819 (581) (2,891) (374)
0% 25 3,442 3,665 40 (3,140) (374)
10% 28 4,288 4,511 661 (3,388) (374)
20% 30 5,134 5,357 1,281 (3,637) (374)
30% 33 5,980 6,203 1,902 (3,886) (374)
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(Million HTG) Stakeholders
Farmers FNPV (After
Financial NPV Financing) Economic NPV GoH USAID
Investment Cost
Over-run factor 3,442 3,665 40 (3,140) (374)
-20% 3,413 3,665 351 (2,798) (374)
-10% 3,428 3,665 196 (2,969) (374)
0% 3,442 3,665 40 (3,140) (374)
15% 3,464 3,665 (193) (3,396) (374)
30% 3,485 3,665 (426) (3,652) (374)
45% 3,507 3,665 (660) (3,907) (374)
60% 3,529 3,665 (893) (4,163) (374)
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CONCLUSIONS AND
RECOMMENDATIONS
Program Continuance and Improvement
We would advise the Government of Haiti (GoH) to proceed with the program, however based
on the analysis we have observed that other stakeholders apart from the farmers may be losing
immensely hence the GoH is recommended to introduce taxes or increase the price of the
maize product to increase revenue for all stakeholders.
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