Cost-Benefit Analysis of Establishing a Climate Smart Village in Southern Shan, Myanmar: The Case of Taungkhamauk Village, Nyaung Shwe Township Alessandro Manilay Phyu Sin Thant Chan Myae Wilson John Barbon Julian Gonsalves Correct citation Manilay A, Thant PS, Myae C, Barbon WJ, Gonsalves, J. 2022. Cost-Benefit Analysis of Establishing a Climate Smart Village in Southern Shan, Myanmar: The Case of Taungkhamauk Village, Nyaung Shwe Township. Wageningen, the Netherlands: CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS). About CCAFS The CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) is led by the International Center for Tropical Agriculture (CIAT), part of the Alliance of Biodiversity International and CIAT, and carried out with support from the CGIAR Trust Fund and through bilateral funding agreements. For more information, please visit https://ccafs.cgiar.org/donors. Contact us CCAFS Program Management Unit, Wageningen University & Research, Lumen building, Droevendaalsesteeg 3a, 6708 PB Wageningen, the Netherlands. Email: ccafs@cgiar.org Photos: International Institute of Rural Reconstruction Disclaimer: This report has not been peer reviewed. Any opinions stated herein are those of the author(s) and do not necessarily reflect the policies or opinions of CCAFS, donor agencies, or partners. All images remain the sole property of their source and may not be used for any purpose without written permission of the source. This Report is licensed under a Creative Commons Attribution – NonCommercial 4.0 International License. 2022 CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS). Abstract This study analyzed the financial sustainability of a Climate-Smart Village (CSV) established in Taungkhamauk, Nyaung Shwe Township, in the southern Shan State of Myanmar. The Climate-Smart Agriculture (CSA) options adopted by participating households and evaluated by this study included yield enhancement for upland rice and corn, planting fruit trees in farms and homesteads, and vegetable gardening as well as livestock and poultry raising in homesteads. The Cost and Return Analysis method was used in determining financial sustainability. Results showed that the majority of the households benefited from implementing the CSA options. Furthermore, the study also noted that the CSV promoted social values about economic empowerment, household food security, and gender inclusiveness. Upscaling of the CSV approach in other villages in the Shan State was recommended. i Keywords Climate smart agriculture, climate smart villages, cost-benefit analysis, agro-forestry systems ii About the authors Alessandro Manilay is a Technical Consultant/Economist for the Cost and Benefit Analysis (CBA) at the International Institute of Rural Reconstruction. Email: amanilay07@gmail.com. Phyu Sin Thant is the Country Researcher at the International Institute of Rural Reconstruction-Myanmar. Email: phyu.thant@iirr.org Chan Myae is a Project Coordinator at the International Institute of Rural Reconstruction-Myanmar. Email: chan.myae@iirr.org Wilson John Barbon is the Country Director for Myanmar at the International Institute of Rural Reconstruction. Email: wilsonjohn.barbon@iirr.org. Julian Gonsalves is the Senior Program Advisor for Asia at the International Institute of Rural Reconstruction. Email: juliangonsalves@yahoo.com. iii Table of Contents Abstract...........................................................................................................................................................................i Keywords.......................................................................................................................................................................ii About the Authors..................................................................................................................................................iii List of Tables................................................................................................................................................................v Introduction.................................................................................................................................................................2 Objectives of the Study.......................................................................................................................................3 Methodology..............................................................................................................................................................3 Mode and year of data collection.....................................................................................................3 Analysis of the CSA options..................................................................................................................3 Cost and Return Analysis...................................................................................................................3 Profitability Analysis..............................................................................................................................3 Analysis of the CSV approach.........................................................................................................3 Analysis of social benefits derived from the CSV project.................................................3 Economic empowerment.................................................................................................................3 Household food security.....................................................................................................................3 Inclusiveness and women.................................................................................................................3 Results and Discussion.......................................................................................................................................5 Description of Respondents.................................................................................................................5 Number of respondents.....................................................................................................................5 Number of family members per household.........................................................................5 Family members by age bracket.................................................................................................6 Farm area and land ownership.....................................................................................................6 Crops planted and other sources of livelihood...................................................................6 Financial Analysis of the CSA Options Adopted by the Households........................7 Yield improvement for upland rice and corn.......................................................................7 Homestead vegetable gardening..............................................................................................10 Raising livestock and poultry at the homestead.............................................................11 Total Financial Benefits Generated by the Climate Smart Village by Implementing Climate Smart Agriculture Options................................................20 Social Benefits Established by the CSV Projects..................................................................21 Economic empowerment...............................................................................................................21 Household food security..................................................................................................................22 Inclusiveness and women..............................................................................................................22 Summary and Conclusions...........................................................................................................................24 References................................................................................................................................................................26 iv List of Tables Table 1. Number of households by types of implemented CSA options Taungkhamauk Village, Nyaung Shwe Township , Shan State, Myanmar 2021.............5 Table 2. Number of family members per household, 76 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021..............5 Table 3. Number of households showing family members by age bracket Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021..............6 Table 4. Farm size and land ownership, 76 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021..............6 Table 5. Primary sources of livelihood, 76 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021..............7 Table 6. Cost and return analysis of upland rice production using new methods to increase yield, 58 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021.........................................................................................................9 Table 7. Cost and return analysis of corn production using new varieties to increase yield, 41 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021.........................................................................................................9 Table 8. Number of households by type of cash crop planted in their homestead Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021............10 Table 9. Cost and return analysis of homestead vegetable gardening, 23 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021.................................................................................................................................10 Table 10. Cost and return analysis of cattle raising, 35 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021............13 Table 11. Cost and return analysis of native chicken, 23 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021............13 Table 12. Cost and return analysis of pig raising, 15 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021............14 Table 13. Number and type of fruit trees by year planted in homestead, 33 households, Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021.................................................................................................................................15 Table 14. Assumptions used in estimating the gross value of fruits Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021.............................................................................................................................................................15 Table 15. Cost benefit analysis of planting fruit trees in homesteads, Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021............17 Table 16. Number and type of fruit trees by year planted in farms, households, Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021............18 Table 17. Cost benefit analysis of planting fruit trees in farmlands, Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021............19 Table 18. Financial benefits gained by households from implementing CSA options Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021............21 Table 19. Village perception of household food security, 76 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021........;...22 Table 20. Village perception of gender inclusiveness in CSV activities, 20 households Taungkhamauk Village, Nyaung Shwe Township, Shan State, Myanmar 2021............23 v Acronyms CCAFS Climate Change, Agriculture and Food Security CDA Canada and the Community Development Association CSA Climate Smart Agriculture CSV Climate Smart Village IDRC International Development Research Centre IIRR International Institute for Rural Reconstruction 1 Introduction Taungkhamauk is an agricultural village within the Nyaung Shwe Township in the southern part of the Shan State of Myanmar. The people living in the village rely on farming and raising poultry and livestock as their main source of livelihood (Dayo, et al., 2021). They grow upland rice, corn, groundnut, sunflower, and safflower as cash crops and raise chickens, pigs, cows, and buffalo (Dayo, et al.). Due to climate change, the village experiences extreme climate variability, specifically irregular but intense rainfall and high ambient temperature. As a result, agricultural production has become highly vulnerable leading to “poor seed germination, lower crop yield, and even crop failure. (Barbon, et al., 2020) International development agencies and local research institutions have initiated cooperative efforts to help ameliorate the economic condition of rural households vulnerable to the impact of climate change. In Myanmar, the International Institute for Rural Reconstruction (IIRR) implemented the Climate Smart Villages (CSV) approach, wherein climate-smart agricultural options (CSA) are introduced in villages. Technologies and/or practices the villagers choose are implemented using donor funds. In the village of Taungkhamauk, the CSAs that were implemented were: 1.Yield enhancement for upland rice and corn, 2.Planting fruit trees on farms and homesteads, and 3.Vegetable gardening and livestock and poultry raising in homesteads. The projects started in 2018 and were completed in 2020. The CGIAR supported the project through CCAFS Southeast Asia and the International Development Research Centre (IDRC) Canada. Determining the financial benefits generated by the CSAs for the villagers is a component of the CSV project in Myanmar. This paper presents the Cost-Benefit Analysis of the CSV in the village of Taungkhamauk. The analysis attempts to ascertain whether the selected CSAs are financially advantageous to the households through quantitative data. 2 Objectives of the study The general objective of this study was to determine the financial and social benefits generated by the Climate Smart Agriculture (CSA) options adopted by the village of Taungkhamauk, Nyaung Shwe Township, Shan State, Myanmar. Specifically, the study was conducted to: 1.Estimate the net benefits accruing to the households from implemented CSA options; 2.Determine the combined financial benefits of the various CSA options; and 3.Determine social benefits generated by the CSV project. Methodology Mode and year of data collection Primary data for this study were generated through personal interviews of households in the village of Taungkhamauk using a structured questionnaire. Data gathering was done in 2021. Analysis of the CSA options Cost and Return Analysis The financial benefits accruing to the Taungkhamauk households that adopted the CSA options were measured using the Cost and Return Analysis. Estimates of the households’ Gross Value (GV) were compared with estimates of the Operating Costs incurred in employing the options. The GV represents the market value of agricultural produce (i.e., rice, corn, vegetables, livestock, poultry) that were sold or consumed at home, including the estimated market value of fruits that can be harvested from trees planted by the households, as well as values of unsold offspring of livestock which can be sold when the need arises. The Net Value (NV) was obtained by taking the difference between the GV and the corresponding operating costs. The NV is the “profit” earned by the households. Similar to the GV, the term Net Value, instead of Profit, was used in most of the Cost and Return Analyses in this study because noncash revenue such as produce consumed at home, unsold live assets, and projected fruit harvests was considered in determining household earnings. Profitability Analysis The Profitability Analysis is an essential component of the Cost and Return Analysis. After the Cost and Return Analysis has determined the profit (termed “Net Value” in this study), the former measures how “profitable” the Net Value is in relation to the GV. This study used the Operating Profit Margin Ratio (OPMR) to gauge the profitability of the CSA options. The OPMR reflects the percentage of Net Value (profit) the farmer retains out of the GV. A high percent value is preferred over a lower one. For instance, an OPMR of 70% means that a farmer keeps 70% of the GV as his profit while the remaining 30% pays for his operating/production expenses. 3 On the other hand, an OPMR of 10% means that the farmer only retains 10% of his GV as profit while 90% goes to expenses. A low OPMR of 10% indicates that the farmer is operating in a disadvantaged position and will continue to do so unless his operating costs are minimized. On the other hand, the farmer with a 70% OPMR is better off because he is getting more than half of the GV as earnings while only 30% goes to his expenses in the farm operation. Analysis of the CSV approach Climate-smart village (CSV) is an approach that was developed to mitigate the negative effect of climate change on agriculture and on people who depend on agriculture as a source of livelihood. It is based on adopting a portfolio of climate-smart agriculture options appropriate for the locality. Estimating the financial impact of the CSV approach was achieved by adding up the net financial gains of the households from all the CSA options they adopted. Economic empowerment Economic empowerment is defined as “enabling poor people to think beyond immediate daily survival and to exercise greater control over both their resources and life choices” (Combaz and McLoughlin, 2014). In the context of the CSV project, this social benefit may be represented by an improvement in household liquidity due to additional revenue generated from the CSV interventions. Household food security Household food security exists “when all the people living in the household have physical, social and economic access to sufficient, safe and nutritious food at all times that meet their dietary needs and food preferences for an active and healthy life” (FAO, 1996). A household becomes food insecure when it is “unable to acquire adequate food for one or more household members because the households had insufficient money and other resources for food” (Life Sciences Research Office, 1990; National Research Council, 2005). This was measured by asking the respondents whether their household experienced food insecurity during a given period and to what degree. Inclusiveness and women Social inclusion refers to the "removal of institutional barriers and the enhancement of incentives to increase the access of diverse individuals and groups to development opportunities" (FAO, 2016). Other literature refers to it as women's empowerment (Buvinic and Nichols, 2013). For this study, the indicator of inclusiveness was equal access to IIRR-organized meetings, which aims to increase technical knowledge in agriculture. 4 Results and Discussion Description of Respondents Number of respondents Eighty households were interviewed for this case study. After finishing the interviews, this number was eventually reduced to 76 by excluding respondents with incomplete responses. Fifty-eight (76%) of the 76 respondents implemented the technology to improve the yield of upland rice, while 41 (54%) applied the process to increase the yield of corn (Table 1). Vegetable gardening and raising livestock in homesteads were adopted by 30% to 46% of the households. Thirty-three (43%) and 18 (24%) planted fruit trees on their homesteads and farms, respectively. Number of family members per household More than half (57%) of the households are composed of four to five family members (Table 2). Fourteen percent have more than five members in a household, while 30% have less than three family members. The number of family members in a household ranged from one to nine. The World Bank stated that "poor households have almost two times more children than non- poor households, resulting in a higher child dependency ratio" (World Bank, 2017). Based on the family member distribution, fewer (14%) households have a considerable responsibility to provide food and other basic needs for the family, while the majority (57%) are only moderately burdened with family support. The respondents' demographic profile indicated that most households could not be classified as extremely poor. 5 Family members by age bracket The majority of the 76 households in Taungkhamauk have family members that are young adults (17 to 30 years old, 64%) and who are in their middle ages (31 to 50 years old, 66%) (Table 3). The persons under these age brackets represent the economically productive members of the households. In addition, a smaller number of households (26%) have older family members (51 to 65 years old) who can still earn a living. On the other side of the scale are family members aged 0 to 16 years old. They depend on the older productive family members for their basic needs. Farm area and land ownership The majority (74%) of the respondents till land that spans from less than 0.5 to 1.5 hectares (Table 4). Of these households, 26% work on less than 0.5 hectares, 22% on 0.5 to 1.0 hectares, and 26% on 1.01 to 1.5 hectares. Twenty percent produce crops on land with an area greater than 1.5 hectares. The majority (92%) of these households own the land that they farm. Crops planted and other sources of livelihood Households planted eleven different types of crops on their farms in 2020. These included rice, corn, groundnuts, sesame, tomato, sunflower, beans, pigeon peas, and chili. The households differed in the choice of the types of crops that they planted, but the more common crops grown were rice, corn, and groundnuts. In addition, some households raised cattle which they mainly sold to be used as draft animals. Table 5 presents the various crops and cattle grown by the households. It also shows that, aside from farming, a few households earned a living by working off-farm as laborers, selling food/farm produce in the public market, or collecting and selling firewood. On the other hand, a few households (8%) also reported that they did not draw income from farming or off-farm sources. 6 Financial Analysis of the CSA Options Adopted by the Households Yield improvement for upland rice and corn Attaining the goal of increasing the yield of upland rice and corn in the village of Taungkhamauk was put into motion through the CSV project on Participatory Varietal Selection (PVS) of high-yielding field crop varieties. Farmers participating in the project chose Yn-3230, Yanlu-31, and Tarpagu, as well as AB-DMT (sweet corn) as the varieties of upland rice and corn, respectively, for the field trials to determine the ones that are most suitable for their environment. The varieties were produced by Myanmar’s department of agricultural research. 7 This study performed a Cost and Return Analysis based on the field trials conducted in 2019 and 2020. Gross Revenue and Production Cost values were averages of the two-year data. In the case of upland rice, 58 households participated in the field trials. Forty-six (46) of these households could profit from selling the yield produced by the tested rice varieties. The combined Gross Revenue earned by the 46 households was estimated to be MMK 9,977,050.00 (USD 6,028.00), while the total production cost was MMK 3,845,461.00 (USD 2,324.00) (Table 6). The resulting Net Income was MMK 6,131,589.00 (USD 3,705.00). Production costs included the cost of seeds, fertilizer, and pest control materials, farm machinery rental, hired labor for land preparation, planting, maintenance, harvesting, shelling, and drying, and marketing services (transport and handling). Family labor was excluded as a direct cost with the assumption that this is not a cash cost and there is no opportunity cost for family labor. Net Income, on the other hand, was considered as the returns to family labor and management. On a per household basis, the Net Income earned by each household was estimated to be MMK 216,892.00 (USD 131.00). This represents the amount the household received as remuneration for family labor and management that they inputted in the rice production process. Computing for the Operating Profit Margin Ratio (OPMR), the Net Income generated by the households was estimated to be 61% of the Gross Revenue. In contrast, the portion of the Gross Revenue used to pay for the Production Cost amounted to 39%. The households could keep a larger part of the Gross Income as profit instead of being absorbed as cost, indicating that the field trials using the selected varieties were profitable. The remaining 12 households earned an average Gross Revenue of MMK 124,125.00 (USD 75.00). However, their average Production Cost (MMK 203,029.00 or USD 123.00) exceeded their Gross Revenue resulting in a negative profit. On the other hand, it is worth mentioning that most of the households in Taungkhamauk Village interviewed for this study admitted that they were concerned about food security for the family in 2020. This was the height of the COVID-19 pandemic. It is reasonable to assume that, for this reason, farmers decided to keep a large part of their rice harvest for home consumption instead of disposing everything in the market. Thus, the revenue from the quantity of rice these farmers sold was inadequate to cover the cost incurred in producing their rice crop. In addition to acceptable financial performance, the field trial also showed that the majority (79%) of the 58 households successfully produced the quantity of yield required to generate a profit. This result suggests that the selected varieties of rice have the potential to be adopted as seed stocks for rice production by the village. 8 For corn, 41 households conducted field trials in 2019 and 2020 to test the performance of the selected varieties. Similar to the Cost and Return Analysis for upland rice, the data used for corn were averages of the Gross Revenue and Production Cost of the two abovementioned years. Thirty of the 41 households could earn a profit using the new corn varieties. The combined Net Income of these households amounted to MMK 9,150,376.00 (USD 5,529.00), while per household Net Income was MMK 305,012.00 (USD 184.00) (Table 7). The Operating Profit Margin (OPMR) for these gainers was computed to be 70%, indicating that each household retained 70% of their Gross Revenue as profit. This amount represents payment for family labor and management, while the remaining 30% is paid for the farmer’s operating cost. With a high OPMR, corn production using the selected varieties can be considered profitable. Similar to the results of the field trials for upland rice, the majority (73%) of the farmers that tested the new corn varieties earned a profit given the yield generated from the trials. The large number of households that succeeded in generating good financial results suggest that the selected varieties could improve corn production and income of the households in Taungkamauk. 9 Homestead vegetable gardening Twenty-three households converted available space in their homesteads to be a productive resource by planting cash crops. Table 8 presents the type(s) of crops grown by the households. Almost three-fourths (74%) of the households preferred planting tomatoes or beans. The rest of the households grew corn (13%) or a combination of beans and corn (13%). Twenty-one (91%) of the households could make a profit out of the harvests from the crops they planted. The Gross Revenue generated by these households per production season ranged from MMK 4,000.00 (USD 2.40) to MMK 5,250,000.00 (USD 3,172.00), or an average of MMK 678,198.00 (USD 410.00) per household (Table 8). They spent an average of MMK 80,579.00 (USD 49.00) for production expenses, including fertilizers, pesticides, and hired labor for weeding, cultivation, fertilizer application, and harvesting. The resulting Net Income ranged from MMK 4,000.00 (USD 0.30) to MMK 5,097,000.00 (USD 226.60) or an average of MMK 597,619.00 (USD 361.00). The Net Income represents 88% of Gross Revenue retained as profit by the households. Two households were not successful in generating a profit from home vegetable gardening. Their Gross Revenue averaged MMK 9,100.00 (USD 5.00) per production season, while the average Production Cost amounted to MMK 45,500.00 (USD 27.00), leading to a negative Net Income. 10 Raising livestock and poultry at the homestead Small-scale livestock and poultry production at the homestead is a common practice among rural households in Myanmar, significantly contributing to family income and nutrition. The animals commonly raised are cattle, buffalo, pigs, and chicken (Barbon, et al., 2017). Cattle and buffalo are commonly raised to be used as draft animals for “land cultivation, transportation, and producing manure for compost.” Farmers rarely keep cattle and buffalo to be sold for meat. They are fed mainly with a mixture of broken rice, rice straw, and salt ( Theingi Myint et al., 2018). Backyard producers of chicken use native breeds under a low-input, free-range type of feeding (Henning and Pym, 2019). In a few cases, producers provide supplementary feeds such as broken rice, food scraps, corn, or sorghum (Win, 2012). The producers rarely provide housing, vaccination, and disease treatment (Henning, et al., 2009). At night, the birds are kept under their homes, “inside the cowshed, in trees, natural sheds and bird shelters (made of bamboo and palm leaves), all of which are provided with nests for laying and brooding” (Burgos et al., 2009). Female chickens lay 12 eggs per clutch while producing three clutches per year (Henning and Pym). The average hatchability of the eggs is 75 to 85%, and hatched chicks have a survival rate of 40 to 66% (Burgos et al.). The birds are raised mostly for “income generation by selling them live, followed by home consumption and cockfighting” (Win et al., 2019). Backyard producers sell directly to consumers, village traders/assemblers, or the local market. Local consumers prefer native chicken meat and eggs over products from imported breeds. Raising pigs in homesteads is another source of food and supplementary income for the household. Native breeds are preferred over hybrids because of their low feeding and medication costs (Chan Myae, 2018). Gilts (female pigs) reach their reproductive stage within five to six months and give birth to an average of 12 piglets in one farrowing. The piglets reach their marketable weight about six months after farrowing (National Pork Board, 2016). A Cost and Return Analysis was performed to determine whether households in Taunkhamauk Village benefit financially by raising livestock and poultry in their homesteads. The data for the analysis were gathered from households that participated in IIRR’s CSA project on homestead livestock and poultry raising. 11 Cattle Production Thirty-five of the 80 households were On the other hand, five households interviewed regarding the results of were not successful in earning a profit rearing cattle as a CSA option. These from selling their livestock. The households opted to market their combined cost of cattle and cattle instead of keeping them as draft production cost exceeded their Gross animals. Households did this to raise Sales. The estimated loss per cash to pay off loans in acquiring some household was MMK 85,200.00 (USD of the cattle. Results of the financial 51.00). analysis showed that 29 of these households could profit from selling Native Chicken Production their livestock by generating an average Gross Revenue of MMK 1.55 Twenty-three households served as Million (USD 935.00) (Table 10). After respondents for the financial subtracting the purchase cost of cattle analysis of raising native chicken as a and the production cost, the Net CSA option. Sixteen households sold Income per household was computed 123 birds for 2020, including seven to be MMK 463,831.00 (USD 280.00). birds consumed at home. The Note that the cost of cattle was remaining seven households did not deducted from the Gross Revenue report any number of birds sold or instead of the depreciation cost of the consumed by the family. cattle because they were not kept as It is worth noting that most an asset but sold within a short period. households did not spend on Expenses for commercial feeds were commercial feeds or veterinary minimal since the households utilized medicines to raise chickens. The few rice straw, forages, and homegrown households that reported expenses corn (if available) as feed materials. The for feeds estimated significantly 29 households sold a total of 46 heads minimal amounts. Family labor, of cattle. The total Net Income being a non-cash cost, was also not generated was MMK 13.45 Million (USD considered an operating cost, an 8,128.00). Converting the Net Income assumption that was applied in all into a per head basis, the households the analyses in this study. earned MMK 308,890.00 (USD 187.00) from selling one head of cattle. Hence, the production cost for raising chicken in this study was The Net Income corresponds to 30% of considered zero. However, the the Gross Sales indicating that the depreciation of the start-up households retained 30% of their gross (breeder) chicken (i.e., the female sales as compensation for their labor and/or male chicken that were and management in rearing the cattle. initially bought to start the coop) A larger percentage of the Gross Sales was considered a fixed cost and was was used to recover the purchase cost deducted from the Gross Value. of the cattle as well as the expenses for Depreciation cost for one year was the commercial feeds. estimated based on the reported purchase cost and the three-year economic life of the breeders. 12 The households that marketed and consumed their home-raised chicken generated a combined Gross Value of MMK 670,500.00 (USD 405.00) or an average of MMK 41,906.00 (USD 25.00) (Table 11). After deducting the depreciation cost, the total Net Value amounted to MMK 577,167.00 (USD 349.00). This is equivalent to a per household earning of MMK 36,073.00 (USD 22.00). Based on 132 heads of chicken that were sold and consumed at home, the resulting Net Value per bird amounted to MMK 4,372.00 (USD 2.64). The total Net Value represents 86% of the total Gross Value. In other words, the households that sold and/or consumed chicken could keep 86% of the gross returns they generated. This amount, which is greater than half of the Gross Value, serves as the remuneration for the labor and management performed by the family members in raising the native chicken. 13 Native Pig Raising Thirty-four (34) households were interviewed to generate data for the financial analysis of raising native pigs in their homesteads. Fifteen of these households reported selling a number of their livestock in 2020. Home consumption was not recorded. On the other hand, 19 did not report any market transaction or slaughtering livestock for home consumption. The latter were families that started raising pigs under the IIRR CSV project in 2020 and, therefore, did not have marketable litters to sell when the study was conducted. The Cost and Return Analysis for the households that generated revenue from selling their livestock revealed that all were able to earn a profit from their transactions. The 15 households made a combined Gross Revenue of MMK 5.87 Million (USD 3,547.00) or an average of MMK 391,333.00 (USD 236.00) gross earnings for every household. A total Production Cost amounting to MMK 713,008.00 (USD 431.00) or an average of MMK 47,534.00 (USD 208.00) was deducted from the Gross Revenue to determine the households’ Net Income. The analysis showed that the households generated a combined Net Income of MMK 5.16 Million (USD 3,116.00) or an average of MMK 343,799.00 (USD 208.00). The Net Income is equivalent to 88% of the Gross Revenue the households retained as their profit (OPMR). It refers to the amount of revenue they received as payment for the time and labor the family spent rearing their livestock. This ratio is relatively high in contrast to an OPMR that is way below 50%. The Production Cost included the cost of commercial feeds, the depreciation cost of housing and/or enclosures, and the depreciation of the start-up animals. Housing and enclosures were depreciated based on an assumed lifespan of three years. On the other hand, the female and male breeders were depreciated based on a reproductive life of five years. 14 Agroforestry in homesteads: Fruit trees Planting fruit trees was one of the Climate Smart Agriculture (CSA) options identified by the International Institute for Rural Reconstruction (IIRR) for the southern Shan State uplands (Barbon, et al., 2017). Fruit trees are a source of supplemental income and food for households. They also mitigate the harsh effects of climate change in the uplands, such as soil degradation due to soil erosion and flooding of lower areas due to water run-off. Thirty-three households participated in planting fruit trees in their homesteads. The households selected eight varieties of fruit trees, with avocado, lime, and orange emerging as most preferred (Table 13). Planting started from 2018 to 2020, with a total of 1,020 surviving trees recorded by the study in 2021. The table also implies that several households planted a combination of fruit trees in their homesteads. Value estimation of fruits to be harvested Table 14 presents the assumptions used in estimating the Gross Value of fruits expected to be harvested by the households from their homesteads. Included in the assumptions were the number of years it would take for the trees to bear fruits, yield per tree, and farmgate prices. 15 Financial benefit of growing fruit trees in homesteads Evaluating the financial benefit of growing fruit trees differed from the process done on the other CSA options discussed earlier because the Gross Values of most of the fruit trees were based on projected data instead of past data. Most of the fruit trees bear fruit on or after the third year after planting, as Table 14 indicated. Thus, minimal information on the harvest volume from these perennials was available when the study was conducted in 2021, thereby compelling the need to project values. The Gross Values were obtained from the years where the maximum quantities of harvest were projected during the growing and mature stages of the trees (Table 15). The total projected Gross Value from the 1,020 fruit trees planted amounted to MMK 18.95 Million (USD 11,454.00) at the growing stage and MMK 52.08 Million (USD 31,471.00) at the mature stage. Deducting the cost of production[1], the resulting Net Value (“profit”) earned by all households was estimated to be MMK 18.9 Million (USD 11,421.00) per year during the growing stage and MMK 52.03 Million (USD 31,438.00) per year at the mature stage. Based on value per tree, households with an avocado tree could earn a Net Value of MMK 3,535.00 (USD 2.14) per year during the growth stage and MMK 7,109.00 (USD 4.30) during the mature stage. Households with a lime tree would earn a Net Value of MMK 32,223.00 (USD 19.47) and MMK 64,495.00 (USD 38.97) at the growth and mature stages, respectively. An orange tree would generate a Net Value of MMK 9,880.00 (USD 5.97) at the growth stage and MMK 148,900.00 (USD 89.97) when the tree reaches its mature fruiting age. For mango, households would earn MMK 8,391.00 (USD 5.07) per tree in one year during the growth stage. This amount would increase to MMK 16,831.00 (USD 10.17) upon reaching the mature stage. Households that planted longan could generate a profit of MMK 6,140.00 (USD 3.71) per tree during its growth stage and increase to MMK 47,449.00 (USD 28.67) during the mature stage. The potential annual income from a Sunkist Orange tree could amount to MMK 9,434.00 (USD 5.80) during its growth stage. This would significantly increase to MMK 221,274.00 (USD 133.20) when the tree reaches its mature fruiting age. Households could earn the largest income from a jackfruit tree due to the weight of its fruits. At the growth stage, the average earning per tree was estimated to be MMK 446,574.00 (USD 269.83) per year. Income would increase to MMK 535,944.00 (USD 323.83) upon reaching its mature fruiting age. Lastly, a lychee tree would enable a household to receive MMK 49,678.00 (USD 30.02) and MMK 119,767.00 (USD 72.37) during the growth and mature stages of fruit-bearing. 16 17 Agroforestry in farmlands: Fruit trees In addition to planting fruit trees at homesteads, the IIRR CSV project also initiated growing fruit trees on the farms of the village residents. Eighteen (18) households planted 649 trees from 2018 to 2020. The trees planted are similar to the ones raised in the homesteads, with the addition of custard apples (Table 16). The majority (57%) of the selected trees were avocadoes. This was followed by lime (21%) and orange (15%) trees. Fewer mango, longan, jackfruit, custard apple, and lychee trees were planted. Most of the fruit trees (410 out of 640 surviving perennials) were planted in 2019. Value estimation of fruits to be harvested In estimating the value of fruits produced on the farms, the same assumptions used for similar trees planted in homesteads were used with the addition of assumptions for custard apples (see Table 16). The latter would bear fruits within three years after planting and is expected to produce 10kg of fruits per year throughout its economic life. The farmgate price for a kilogram of custard apple is MMK 955.00 (USD 0.58). The results of the Cost and Return Analysis showed that the total projected Gross Value from the 649 fruit trees planted on the farms amounted to MMK 7.97 Million (USD 4,818.00) per year at the growing stage and MMK 27.32 Million (USD 16,506.00) at the mature stage (Table 17). Deducting the cost of production, the resulting Net Value generated by the 18 households was estimated to be MMK 7.96 Million (USD 4,810.00) per year during the growing stage and MMK 27.30 Million (USD 16,497.00) per year at the mature stage. Measuring the net returns per tree, households with an avocado tree could earn a Net Value of MMK 3,557.00 (USD 2.15) per year during the growth stage and MMK 7,100.00 (USD 4.29) during the mature stage. Households with a lime tree would earn a Net Value of MMK 32,248.00 (USD 19.49) and MMK 64,520.00 (USD 38.99) at the growth and mature stages, respectively. An orange tree would generate a Net Value of MMK 9,913.00 (USD 5.99) at the growth stage and MMK 148,933.00 (USD 89.99) when it reaches its mature fruiting age. For mango, households would earn MMK 8,421.00 (USD 5.09) per tree in one year during the growth stage. 18 An orange tree would generate a Net Value of MMK 9,913.00 (USD 5.99) at the growth stage and MMK 148,933.00 (USD 89.99) when it reaches its mature fruiting age. For mango, households would earn MMK 8,421.00 (USD 5.09) per tree in one year during the growth stage. This amount would increase to MMK 16,861.00 (USD 10.19) upon reaching the mature stage. Households that planted longan could generate a profit of MMK 6,252.00 (USD 3.78) per tree during its growth stage and increase to MMK 47,561.00 (USD 28.74) during the mature stage. Households could earn MMK 446,543.00 (USD 269.80) per year from a jackfruit tree at the growth stage. Income would increase to MMK 535,913.00 (USD 323.83) upon reaching its mature fruiting age. The potential annual income from a custard apple tree could amount to MMK 9,318.00 (USD 5.40) throughout its productive life. Lastly, a lychee tree would enable a household to receive MMK 49,683.00 (USD 29.95) and MMK 119,772.00 (USD 72.30) during fruit-bearing growth and mature stages. 19 Total Financial Benefits Generated by the Climate Smart Village by Implementing Climate Smart Agriculture Options Taungkhamauk, which was selected to be a Climate Smart Village (CSV), adopted a portfolio of Climate Smart Agriculture (CSA) options. These options included yield improvement for upland rice and corn through the selection of genetically improved varieties, planting fruit trees on farms and homesteads, and vegetable gardening and cattle, pig, and poultry raising in homesteads. The adoption of these options generated financial benefits for the village households. The combined financial gain of Taungkhamauk as a CSV was estimated and summarized in Table 18. Two sets (Total A and Total B) of the estimated Net Value per year (if the produce was either sold and/or consumed at home) or Net Revenue per year (if the produce was totally sold) that was earned by the village from the CSA options are shown in the table. Total A, which amounts to MMK 73.88 Million (USD 44,640.00), is the combined Net Value/Revenue if income from fruit trees is measured during the growth stage of fruit-bearing. Total B, which has a value of MMK 126.35 Million (USD 76,344.00), is the combined financial gain if the Net Value from fruits is considered when the trees have reached the mature age where fruit bearing is at maximum. Note that the estimated financial gains have benefited most households interviewed for each CSA option. For instance, the benefits from the project on yield improvement for upland rice were earned by 46 households (79%) out of the 58 households that were interviewed for this study. The remaining households did not report a monetary gain from the project. These households decided to keep a large portion of their rice harvest at home for food security instead of selling them in the market. Similarly, only 70% and 44% of the households that raised chickens and pigs, respectively, generated profits from selling their produce. The rest of the households interviewed withheld selling their livestock and poultry for specific reasons such as ensuring household food security or keeping the animals as assets that can be easily liquidated in the future when the need arises. The financial benefits that the CSV Project generated become significant when perceived in the context of welfare improvement. The national poverty line of Myanmar as of 2017 was MMK 1,590.00 per person per day (World Bank, 2017) or MMK 580,350.00/person/year (USD 351.00/person/year). The average family size of households in the village of Taungkhamauk is five persons/household. Translating the poverty line into a value equivalent to a household with five family members, the poverty threshold per year per household becomes MMK 2.90 Million (USD 1,753.00). Households that are dependent on agriculture for their source of livelihood are highly vulnerable to shocks brought about by climate change. This vulnerability can affect their income and push their economic condition below the poverty line. The Net Value/Revenue from any CSA options functions as additional income or a “safety net” for each household, so they do not fall below the threshold. 20 Social Benefits Established by the CSV Project In addition to evaluating the financial performance of the CSV project, this study determined the social benefits arising from its implementation. The social benefits examined were: economic empowerment, household food security, and gender inclusiveness. Economic empowerment Economic empowerment was defined earlier as the “enabling [of] poor people to think beyond immediate daily survival and to exercise control over resources and life choices” (Combaz and McLoughlin, 2014). The CSV Project achieved this task by introducing climate-smart agriculture interventions that enable households to increase their income if they choose to market their produce and provide additional food sources for family members. The results of the financial analyses of the CSA options adopted by the village proved that these are economic activities that are effective in attaining economic empowerment. The household beneficiaries can become self-reliant, resilient, and empowered with increased income. Aside from cash income, the study also revealed that households that raise livestock and poultry obtain satisfaction from the knowledge that they have “live” assets in their backyards that they could liquidate when needed. This pervading perception could be considered as part of the economic empowerment benefit that was generated by the CSV project. 21 Household food security Household food security is achieved when households have “physical, social and economic access to sufficient, safe and nutritious food at all times that meet their dietary needs and food preferences for an active and healthy life” (FAO, 1996). In the village of Taungkhamauk, all CSA options adopted under the CSV Project foster food production to improve household food availability. The study noted that during the period between 2020 to 2021, 89% of the 76 respondents reported that they did not worry that their household would not have enough food (Table 19). Furthermore, 88% stated that their household did not experience eating fewer meals within the day because there was not enough food for everyone. However, no correlation was statistically established between households’ perception of food security and adoption of CSA options. The questionnaire used by the study was not designed to draw data for a Correlation Analysis. On the other hand, eight households (11%) admitted that they did worry about not having enough food supply for the family and nine (12%) reported that their household was not able to have a complete number of meals for the day. It is also worth noting that five of the eight households concerned about not having enough food for the family were also included among the households that reported missing meals for the day. Inclusiveness and women Social inclusion was defined in this study as the “removal of institutional barriers and the enhancement of incentive to increase access of individuals and groups to development opportunities” (FAO, 2016). Attendance in meetings initiated by the CSV project as well as membership in village organizations were used as indicators of gender inclusiveness. Participation in these activities was found to be gender neutral based on the perception of 26 interviewees (Table 20). Either the husband, the wife or both were allowed to attend these activities. 22 23 Summary and Conclusion Yield enhancement for upland rice and corn, planting fruit trees in farms and homesteads, and vegetable gardening, as well as livestock and poultry raising in homesteads, were the Climate-Smart Agriculture (CSA) options adopted by households in Taungkhamauk Village, Nyaung Shwe Township, Shan State. This report presents the study's results conducted in 2021 to determine the financial and social benefits generated by the CSAs for the households that participated in the CSV project. A cost-benefit analysis using the Cost and Return Analysis method was applied to evaluate each CSA option. The results showed that a large majority of the households benefited financially from adopting the interventions. Collectively, the total net benefit generated by the CSV project ranged from MMK 73.88 Million (USD 44,640.00) to MMK 126.35 Million (USD 76,344.00) per year. Thus, the CSV project can be considered financially sustainable. The study also determined that the CSV project propagated social benefits for the villagers. The additional cash and non-cash income derived from the CSA options provided increased household liquidity, resulting in economic empowerment. In addition, access to food (household food security) was achieved since all of the adopted CSA options were aimed at food production. Lastly, the CSV project promoted gender inclusiveness by ensuring that all project-related activities are open to both male and female household members. The positive results of the study further show that the CSV approach can be recommended for upscaling in other villages of the Shan State. 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