December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 1 Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya Agroecology Initiative Technical Report December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 2 Contents List of Tables ................................................................................... 3 Acronyms and abbreviations ........................................................ 5 1. Introduction ............................................................................ 7 1.1. The mango value chain in Kenya...................................... 8 2. Methodology ........................................................................ 11 2.1. Study area .......................................................................... 11 2.2. Sampling and data ........................................................... 12 2.3. Mango business models ................................................. 13 2.4. Analytical approach ......................................................... 15 2.4.1. Net Present Value (NPV) .............................................. 15 2.4.2. Internal rate of Return (IRR) ......................................... 16 2.4.3. Cost-Benefit Ratio (CBR) .............................................. 16 2.4.4. Payback period ............................................................. 17 2.4.5. Content analysis ............................................................ 17 2.5. Variables used in the model ........................................... 17 3. Results and discussion ......................................................... 19 3.1. Private processor business model ................................. 19 3.1.1. Cost assessment ........................................................... 19 3.1.2. Benefit assessment ....................................................... 20 3.1.3. Cost benefit analysis of the private processor business model ......................................................................... 25 3.2. Public processor business model .................................. 26 3.2.1. Cost assessment ........................................................... 26 3.2.2. Benefit assessment ....................................................... 28 3.2.3. Cost-benefit analysis .................................................... 32 4. Conclusion and recommendation ..................................... 34 References .................................................................................... 36 December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 3 List of Tables Table 1: Agroecological interventions in the private and public business model ....................................... 13 Table 2: Variables used in the CBA analysis at farm business level ............................................................... 18 Table 3: Total cost incurred in the private processor business model at farm and business level in USD20 Table 4: Annual revenues from the private processor business model at farm level in USD ..................... 21 Table 5: Annual revenue from the private processor business model at business level in thousands USD (Processor) ............................................................................................................................................................ 22 Table 6: Cost-benefit analysis indicators for the private processor business model ................................... 26 Table 7: Total cost incurred in the public processor business model at farm and business level in USD 27 Table 8: Annual revenues from the public processor business model at farm level in USD ...................... 29 Table 9: Annual revenues from the public processor business model at business level (in thousands USD) ....................................................................................................................................................................... 30 Table 10: Cost benefit analysis indicators for public processor business model ........................................ 32 December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 4 Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya Aurillia Manjella Ndiwa Kevin Onyango Peter Bolo Rosina Wanyama Christine Kiria Chege December 2024 Agroecology Initiative Type of report eg Technical Report December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 5 Acronyms and abbreviations ASAL Arid and Semi-Arid land BAU Business-As-Usual CBA Cost Benefit Analysis IRR Internal Rate of Return LMIC Low- and Middle-Income Countries NPV Net Present Value MESPT Ministry of Agriculture in the County level and the Micro Enterprises Support Program December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 6 Abstract Agroecology has been highlighted as a sustainable approach that could support food system transformation in many low- and middle-income countries (LMIC). However, there is limited evidence on the costs and benefits associated with agroecological transition. Moreover, existing evidence is only limited to farm level assessments, yet agroecology assessment needs to be done from a systems perspective. We conducted a cost benefit analysis associated with AE transition along two existing business models in the mango value chain in Makueni County, Kenya. At farm level, the agroecological interventions considered in the analysis include intercropping, activities related to reduced postharvest losses, and the use of organic inputs. At the business level, these interventions include physical expansion of the enterprises, product and market diversification and proper postharvest handling. Our findings show that the benefits associated with agroecological transition are significantly higher than the costs at both farm and business levels. At farm level the net present value (NPV) ranged between USD 300 and USD 400, a positive benefit cost ration (BCR) (>1) with a payback period of two years while the internal rate of return (IRR) ranged between 100% and 325%. At business level the NPV were above USD 10,000 with a positive IRR of between 15% and 37%, a BCR of >1 and a payback period of between three and four years. The results imply that agroecological transition is profitable both at farm and business level, although there is a waiting period which may be a barrier to many smallholder farmers and small businesses. Policy interventions to integrate agroecological approaches across key food value chains would promote sustainable food system transformation especially in vulnerable contexts of LMIC. The social, health, and environmental benefits are also discussed. Key words: Agroecology, Cost Benefit Analysis, Mango value chain, Kenya, Africa, Developing Countries. December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 7 1. Introduction Persistent poverty, malnutrition, and environmental degradation show that the current food system is not delivering as expected in these key aspects, especially in the global south. As such, there is increasing need for a profound food system transformation that can sustainably address these challenges in the context of climate change and variability, and global population increase. In the recent past, agroecology has been highlighted as one of the key approaches that can significantly contribute to sustainable agriculture and food system transformation (Côte et al., 2019; HLPE, 2017, 2019; Wezel et al., 2014, 2020). As a science, a set of practices and social movement, agroecology can contribute to a food system that is economically beneficial, socially fair, and environmentally friendly (Bezner Kerr et al., 2021, 2023; Mouratiadou et al., 2024; Parmentier 2014; Wezel et al., 2014). The call to embrace agroecological approaches has become dominant in global debates around food systems transformation (HLPE, 2017, 2019; IPES-Food, 2016, 2018). In the global south, evidence shows a positive impact of agroecological systems on livelihoods in farming households through enhanced food and nutrition security, improved resource base, improved social capital, and resilience to climate change and variability (Altieri & Nicholls, 2008; Altieri & Toledo, 2011; D’Annolfo et al., 2017; Dittmer et al., 2023; Kansanga et al., 2020; Kansanga et al., 2021; Madsen et al., 2021; Kerr et al., 2022). This implies that there is potential in achieving the multiple benefits of agroecology if locally adapted principles are applied in the right way. Despite the positive impacts of agroecology already reported in different contexts, there is limited evidence on the profitability associated with agroecological transition. The benefits accrued from agroecological interventions need to outweigh the costs to promote adoption, scaling, and sustainability. Most studies that have attempted to assess the costs and benefits of selected agroecological interventions often focus on the context of climate-smart innovations (Sain et al., 2017; Akinyi et al., 2022; Kansanga et al., 2021; Madsen et al., 2021; Ng’ang’a et al., 2021; Roberts et al., 2023). For instance, Akinyi et al. (2022) assessed the profitability of good agricultural practices (including weeding, alternative wetting and drying, proper harvesting dates, proper storage bags etc.), improved seed varieties, commercial fodder production and conservation agriculture (including minimum tillage, mulching, crop rotation and intercropping) on selected value chains in five sub-Saharan African Countries. The results from this study showed significant profitability across the different practices with variation in terms of context. December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 8 Similarly, Ng’ang’a et al. (2021) found that the returns from six out of the seven climate smart practices assessed in Ghana were profitable enough for scaling. Notably, most of these studies view agroecology from a farm level perspective and therefore assessments are largely done to understand how smallholder farm households are impacted by the various agroecological practices. However, agroecology needs to be assessed from a food system perspective by incorporating the downstream actors in the value chain such as processing companies and other businesses. The current study aims to fill this gap in the literature by providing evidence on the costs and benefits of agroecological transition for farms and businesses in Makueni County in Kenya, with a focus on the mango value chain. The study applied a cost benefit analysis (CBA) to quantify the costs vis-a-vis benefits for the selected enterprises, and a qualitative method to assess the social, health, and environmental implications of these interventions. With the growing interest in agroecology, the results from this study will provide evidence of viability of agroecological approaches at farm and business level. This will help key stakeholders in making informed decisions regarding resource allocation and investment priorities in targeted food value chains. The next subsection gives a brief overview of the mango value chain in Kenya. 1.1. The mango value chain in Kenya Mango is a nutritious fruit which supports livelihoods and agricultural economies globally (Chay, 2019; Honja, 2014; Lebaka et al., 2021; Onyango et al., 2023). In Kenya, mango is the second most important fruit crop in terms of production after bananas. Between 2018-2020, mangoes contributed 5.75% of the total value of fruit exports (which was third highest after avocado and pineapples), 5% of the gross domestic product (GDP), and 2% of the national GDP in Kenya (AFA- Horticultural Crops Directorate, 2020; USAID-KAVES, 2015). According to the AFA-Horticultural Crops Directorate (2020) report, the area under production increased from 56,090ha to 63,437ha in 2020, which was a 13% increase when compared to 2019. This increase in acreage partly contributed to the marginal increase (1%) in the value of production (KES 118.9M) within the same period. Production of mangoes in Kenya is more dominant in the Eastern and Coastal regions, accounting for about 79% of the national acreage (USAID-KAVES, 2015; Afa- Horticultural Crops Directorate, 2020; Bien & Soehn, 2022). Specifically, Makueni, Lamu, and Kilifi December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 9 were ranked the leading counties in mango production in 2019, contributing 19.7%, 19.0%, and 12.2% of the total value of production respectively (AFA-Horticultural Crops Directorate, 2020). Small- and medium scale farmers account for 80% of the total mango production in Kenya. From an ecological lens, mango trees contribute significantly to environmental sustainability as they are long-lived, have deep expansive roots with a dense biomass which promotes carbon sequestration and maintains soil health and stability, thus minimizing soil and nutrient erosion (Swain et al., 2012; Naik et al., 2018; Rupa et al., 2022). Moreover, their litter also enhance the soil with organic matter, which improve soil nutrition and support soil biodiversity (Swain et al., 2012). Mango trees also contribute to the overall biodiversity of the ecosystem by providing a habitat for various animals including birds, insects, and small mammals. Diversification of the production systems with mango trees therefore promotes synergy and enables farmers to diversify their income streams and minimize the associated risks. Despite these, the mango value chain is constrained by multiple challenges that hinder realization of its full potential. These include recurrent fruit pests (especially fruit fly infestation), poor-quality planting materials, limited storage facilities, poor market access, exploitation by middlemen, postharvest losses, poor infrastructure among others (Siddiq et al., 2017; AFA-Horticultural Crops Directorate, 2020; Muriithi et al., 2020). From the business perspective, an assessment of the mango value chain shows the existence of three dominant business models in Makueni County (Onyango et al., 2023). These comprise; i) a conventional business model that is largely informal, and in which farmers harvest mangoes and sell to local markets directly or through intermediaries/brokers who in turn sell to local or export markets. In most instances, this model is characterised by consistently low returns for farmers due to price distortion, high postharvest losses, inadequate storage/processing facilities, and poor infrastructure which hinders access to external markets beyond (Mongi et al., 2013; Onyango et al., 2023; Uckert et al., 2023), ii) a formal public processor business model where farmers produce mangoes and sell to a public processing company through cooperatives, and iii) a formal private processor business model where farmers sell their produce to private processing companies through organised farmer groups. An in-depth assessment of these business models from an agroecological lens show that the public and private processor business models have a potential for agroecological transition at both farm and business level (Biovision Foundation, 2019; Onyango et al., 2023). Incorporating or enhancing selected agroecological practices in December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 10 these two models could help in alleviating the challenges inherent in the conventional business model. However, it is important to understand the costs and benefits associated with such improvements, and hence their viability, which forms the basis for this study. The subsequent sections of this paper are as follows: Section two presents a detailed description of the methods used for data collection and analyses including a description of how the CBA was designed, and how the key indicators were computed. Section three shows the results from the analysis for each of the three business models and the discussion, and the conclusion is presented in the last section. December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 11 2. Methodology 2.1. Study area The study was conducted in Makueni County, which is one of the 47 counties in Kenya. It is situated in the Southeastern part of the country and borders the following counties: Machakos to the North, Kitui to the East, Taita Taveta to the South, and Kajiado to the West (GMC, 2023). The County lies between Latitude 1º 35´ and 3° 00´ South and Longitude 37º10´ and 38º30´ East with an area of 8,176.7 KM2 (GMC, 2023). It is divided into nine national government administrative sub-counties including Kathonzweni, Kibwezi, Kilungu, Makindu, Makueni, Mbooni East, Mbooni West, Mukaa and Nzaui. According to the 2019 Kenya Population and Housing Census (KPHC), the County population was 987,653 consisting of 489,691 males, 497,942 females and 20 inter-sex, with an intercensal population growth rate of 2.2% per annum (KNBS, 2019). The County is predominantly inhabited by the Akamba community who form approximately 97% of the total number of inhabitants (GMC, 2023). Figure 1: Map of Makueni County Makueni County is largely an Arid and Semi-Arid land (ASAL) that is prone to frequent droughts. The County experiences two rainy seasons in a year: the long rains experienced during the March-June season which average around 140mm, and the short rains experienced during the October – December season with a higher precipitation of approximately 300mm. The mean annual temperatures in the region range between 22.7 to 24.0 Degrees Celsius. The agricultural December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 12 sector is the most important driver of economic growth in Makueni County, accounting for 78% of the total household income (KNBS, 2019). According to the County Government of Makueni (2022), 63% of the total land mass (482,040 ha) is arable land characterized by good soil for agricultural production. The main crops produced are maize, beans, pigeon peas, millet, sorghum, sweet potatoes, vegetables, and cassava. The County has a high potential for horticultural crops, specializing in the commercial production of fruits (such as mangoes, avocados, oranges, pixies, pawpaw, bananas, watermelons, and lemons) and vegetables (tomatoes, onions, capsicum, cabbages, chilli, capsicum, and other leafy green vegetables). 2.2. Sampling and data A multistage sampling procedure was used to identify the respondents in the study. In the first stage, Makueni County was purposively selected as one of the counties in the ASAL area that is characterized by frequent droughts which affect smallholder farmer. In the second stage, the mango value chain was selected owing to its significant contribution to the livelihoods of the majority of residents in Makueni County. In the third stage, key mango business models in the County were identified and selected; these comprised the private, public, and conventional business models. In the fourth stage, the private and public business models were selected for assessment because they have the potential for agroecological transition compared to the informal business model. In the final stage, a representative number of respondents were selected from each of the business models for farm and business level cost-benefit assessments. At farm level, a list of farmers from the two business models was compiled and a simple random sampling procedure was used to select a total of 10 farmers-five from each model. At the business level, one representative from the public and private processing companies with a comprehensive knowledge of the associated costs and benefits was selected. In addition, one representative was selected from the cooperative, which acts as an intermediary between farmers and the public processing company. For data triangulation, validation experts from different organizations working directly in the mango value chain were also interviewed. This included representatives from the Ministry of Agriculture in the County level and the Micro Enterprises Support Program (MESPT). December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 13 Both quantitative and qualitative data were collected using a pretested semi-structured questionnaire. Trained enumerators conducted interviews using Paper and Pencil Interview (PAPI) approach, and subsequently, the data were entered into a customized excel sheet for CBA analysis. Prior to the survey, an ethical clearance of the study was sought from the Alliance of Bioversity International and CIAT’s Internal Review Board (IRB). 2.3. Mango business models Prior to the CBA study, a value chain assessment was conducted to identify existing businesses along the mango value chain (Onyango et al., 2023). The results from this study showed the existence of three business models in the mango value chain in Makueni County: a public business model where farmers sell mangoes to public processors through cooperatives, a private processor model where farmer groups sell their mangoes to private processing companies, and a conventional model where farmers sell their produce to directly to the markets or through middlemen. Table 1: Agroecological interventions in the private and public business model Actor Interventions Public processor i) Product diversification (specifically organic products) ii) Diversification of marketing channels iii) Postharvest handling practices (use of proper transportation materials like crates, support in training on postharvest handling and storage) Private processor i) Physical expansion of the production facility ii) Product diversification iii) Market diversification iv) Organic input production using the black soldier fly (BSF) v) Capacity building on postharvest handling practices Farmers (those supplying both private and private processors) i) Intercropping of mango trees with other crop like maize and beans ii) Use of organic inputs in the production of the mango and intercrops iii) Postharvest handling practices (including training on proper postharvest handling and storage, use of locally improvised cooling collection centers (e.g., charcoal coolers or simple shades), and more efficient procurement and delivery processes.) December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 14 An in-depth assessment of these models in a subsequent report showed that the private and public processor business models had the potential for agroecological transition and were therefore selected for the CBA analysis (Chege et al., 2024). Table 1 shows the selected interventions for agroecological transition at farm and business levels in the two models: These interventions were selected by the research team together with farmer representatives and the businesses. The public processor business model involves three key players: organized farmer groups, a farmer’s cooperative, and a public processing company. In this model, the cooperative acts as an intermediary between mango producers and the public processor. Under the business-as- usual (BAU) scenario, the cooperative procures mature but unripe mangoes from constituent farmer groups and sells most of the mangoes to the public processor, while the rest is sold to the local fresh fruit market. Preliminary assessment of this model shows that the actors strive to integrate various agroecological principles including recycling, participation, synergy and co- creation of knowledge. However, it is characterized by low biodiversity, use of synthetic agro- chemicals, and high postharvest losses. Agroecological transition in this model can be achieved by intercropping the mango tress with non-competing crops such as legumes, use of organic inputs, and reduction of postharvest losses at farm level. Usually, intercropping improves soil health, increases farm biodiversity, enhances synergies across the production system, and promotes resilience through income diversification at the farm level. The use of organic inputs serves to reduce use of synthetic agro-chemicals at all levels of the mango value chain eventually promoting soil health and food safety. Postharvest measures include training on proper postharvest handling and storage, use of locally improvised cooling collection centres (e.g., charcoal coolers or simple shades), and more efficient procurement and delivery processes. At business level, this transition can be achieved through diversification of the product portfolio (specifically increase the number of organic products), diversification of markets for the products, and proper postharvest handling to reduce losses. The private processor business model has two main actors; farmers organized into producer groups and a private processing company. Under the BAU scenario, the private processor buys quality-inspected mangoes from the contracted farmers in specific producer groups. The private December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 15 processing company trains farmers on good agricultural practices including proper postharvest handling to ensure the mangoes produced are of high quality. Additionally, the processor undertakes activities such as harvesting, sorting, grading, and transporting the mangoes from the farms to the company. Although the model integrates several agroecological principles including some degree of recycling, input reduction, synergy, soil health, and co-creation of knowledge, there is potential to include more principles. At farm level, aagroecological transition can be achieved by use of organic inputs, intercropping and proper postharvest handling. At the business level, the transition can be achieved through physical expansion of the enterprise to increase the volume of produce purchased by farmers, product and market diversification, which ultimately promotes economic diversification. 2.4. Analytical approach A Cost-Benefit Analysis (CBA) is used to evaluate the economic profitability of the selected interventions in the private and public processor business models. It is is a systematic approach of assessing the potential costs and benefits associated with implementing a given intervention (Mishan & Quah, 2021). Additionally, content analysis was used to evaluate the qualitatively captured social, environmental, and health costs and benefits accrued from the interventions. The study utilized four CBA decision criteria and content analysis as discussed below: 2.4.1. Net Present Value (NPV) NPV is a financial metric used to assess the profitability of an intervention. By factoring in the time value of money, NPV discounts future cash flows to their present value. Following Mogaka et al. (2022), equation (1) was used to estimate the NPV of the improved agroecological models by comparing with the business-as-usual (BAU) scenario. 𝑁𝑃𝑉𝐽 𝐼𝐴𝑀−𝐵𝐴𝑈 = ∑𝑡=1 𝑇 1 (1+𝑟)𝑡 [∑𝑗=1 𝑗 {𝑂𝑗𝑡 ∗ (△ 𝑌𝑗𝑡 𝐼𝐴𝑀−𝐵𝐴𝑈 −△ 𝐶𝑗𝑡 𝐼𝐴𝑀−𝐵𝐴𝑈)}]………………….. (1) Where NPV is the net present value, IAM is the improved agroecological model, BAU is the business as usual, 𝑂𝑗𝑡 is the price of the crop output that is affected by the intervention in the December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 16 improved model, △ 𝑌𝑗𝑡 𝐼𝐴𝑀−𝐵𝐴𝑈 is the change in yield or output after transitioning to the agroecological improved business model and △ 𝐶𝑗𝑡 𝐼𝐴𝑀−𝐵𝐴𝑈is the change in costs of production or processing of transition to the improved agroecological business model, t is the time (from 0 to the total time period T), , j is the output or commodity affected by the intervention and r is the discount rate. A positive NPV implies that the benefits from the interventions outweigh the associated costs and therefore the transition is profitable, while a negative NPV means that the costs associated with the intervention outweigh the benefits, and therefore the transition will lead to losses. 2.4.2. Internal rate of Return (IRR) IRR is the discount rate at which the NPV of cash flow equals to zero. That is the rate of return where the present value of cash inflows is the same as the present value of cash outflows. Equation (2) was used to compute the IRR for the interventions. 𝑁𝑃𝑉 = ∑ 𝐶𝑡 (1+𝐼𝑅𝑅)𝑡 𝑇 𝑡=0 = 0……………………………………………………………………… (2) where 𝐶𝑡 is the cost at time t, r is the discount rate, t is the time (from 0 to period T) and T is the total time. A positive IRR that exceeds the assumed discounted rate (cost of capital on investment), implies that the intervention is profitable and viable 2.4.3. Cost-Benefit Ratio (CBR) CBR is a financial metric that shows the cost-effectiveness of an intervention. It helps to assess whether the benefits justify the costs of the transition by comparing the present value vis-a-vis the present cost of an intervention. Equation (3) illustrates how CBR was estimated. 𝐵𝐶𝑅 = ∑ 𝐵𝑡 (1+𝑟)𝑡 𝑇 𝑡=0 ∑ 𝐶𝑡 (1+𝑟)𝑡 𝑇 𝑡=0⁄ ……………………………………….…………………………… (3) Where 𝐵𝑡 is the benefit at time t, 𝐶𝑡 is the cost at time t, r is the discount rate, t is the time (from 0 to period T) and T is the total time over which the assessment is done. A CBR greater than one December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 17 (1) indicates that the benefits exceed the costs and therefore the intervention generates positive returns, while a CBR less than one (1) indicates that the costs outweigh the benefits. 2.4.4. Payback period The payback period is a decision-making tool used in CBA to evaluate the time required for an investment to generate enough cash flows to recover its initial cost. A shorter payback period reduces the investment risk and generate more profit (Crundwell, 2008) Payback period = Initial investment Annual cash inflow …..…….………………………………………………………. (4) 2.4.5. Content analysis We employed content analysis to evaluate the qualitatively captured social, health, and environmental benefits and costs of agroecological interventions within the identified business models. Analysis of the qualitative data was done using NVivo software. The analysis was largely about the positive and negative concepts of social, health, and environmental impacts of integrating selected agroecological innovations at both household and community levels in short, medium and long terms. Texts containing these concepts were coded and analyzed to generate meaningful inferences in the context of agroecology. The analysis observed the four technical criteria to ensure the inferences drawn have “Truth values”. These included identification of all important factors in the data related to each concept analyzed with a view to ensuring credibility (internal validity), contextualizing each analysis by describing applicability to ascertain transferability (external validity). The questions were asked to all the respondents sampled to triangulate their perspectives on the different concepts under analysis thereby enhancing dependability and credibility of the data. Finally, we ensure confirmability by making objective inferences relying on the data alone. 2.5. Variables used in the model Table 2 presents a summary of variables used in the CBA at farm/producer and business levels. The selection of variables was based on evidence from previous studies that analysed costs and benefits of similar interventions (Kumar et al., 2016; Sain et al., 2017; Er et al., 2021; Mogaka et al., 2022; Ng’ang’a et al., 2021; Roberts et al., 2023) December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 18 Table 2: Variables used in the CBA analysis at farm business level Variable Description Farm level (farmers) Business level (processors) side Yield/output The total quantity of produce per unit area (kg /acre) The total quantity of processed product/fresh product (tonnes /year) Output prices The market price of the output (USD/kg) The market price of the product such as the processed or fresh products (USD/tonne) Input prices The market price of the inputs used in production (USD /unit) The market price of the inputs used in production (USD /unit) Discount rate Interest rate on investment based on the commercial bank Interest rate on investment based on the commercial bank US dollar exchange rate Exchange rate of the local currency to USD (KES to USD) Exchange rate of the local currency to USD (KES to USD) Machinery costs The cost of purchasing, operating, and maintaining machinery and equipment used production such as wheelbarrow, hoes, machete and other farm equipment (USD) The cost of purchasing machinery used by the firm and in production, transportation etc. (USD ) Input costs Cost of inputs required in production such as fertilizers, pesticides, seeds, water and manure (USD/ unit) The cost of input used in processing such as spices, preservatives (USD/unit) Labour costs Cost of labour required in production such as weeding, ploughing, spraying (USD / year) The costs of compensating the employees such as wages, salaries and health insurance ((USD/year) Services costs Cost of services that the farmers use such as sharpening and repair (USD/year) Cost of services in the business such as professional fees, consulting fees, legal fees, finance costs and marketing (USD/year) Operation cost Cost incurred from harvesting until the product reach the market such as harvesting, shelling costs, drying (USD/year) These are costs incurred on day-to-day basis in business such as utilities, rent, raw materials and equipment maintenance (USD/year) Business model life cycle The number of years that the farmers is expected to implement the intervention and will be in the business model The number of years that the business is expected to implement the intervention and will be in the business model December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 19 3. Results and discussion In this section we present the CBA results for different actors in the private and public processor business models in the mango value chain. The results include the quantitative estimates of costs and benefits, and qualitative results of the social, environmental, and health benefits associated with agroecological transition. 3.1. Private processor business model 3.1.1. Cost assessment Table 3 shows the trend in key cost estimates for agroecological transition in the private processor business model over a four-year period. The upper panel shows the cost estimates for the bundle of interventions at farm level i.e., by producers/farmers, while the lower panel shows the costs at business level. At the farm level, the results show that the total cost of the agroecological interventions in the first year was estimated at USD 760 per acre. The highest costs were observed on inputs and labor which account for 54.1% and 25.7% of the total cost respectively. By the fourth year, the total cost of the intervention is estimated to increase up to USD 854 per acre, with the largest proportion of this being allocated on inputs and labor (91.4%). This could be attributed to the additional intercrops (maize and beans) which require additional farm inputs thereby increasing the costs. Over the four-year period, the proportion of costs allocated to machinery and equipment decreases from 16.5% to 5.2% of the total cost. This is attributed to the fact that the first year involves the purchase of new machinery and equipment while the subsequent years would involve minimal machinery costs associated with maintenance. During this period, the operations costs are expected to be the lowest, ranging from 2.0% -1.8% of the total costs for the respective years. At the processor/business level (lower panel of Table 3), the results show that the total costs were estimated at USD 2.28 million in the first year. Of this, 37.7% (USD 858, 191) December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 20 was allocated to labor, 37.5% (USD 853,429) on operations, 23.2% (USD 528,627) on machinery and equipment, 1.5% (USD 34, 774) on services and 0.1% (USD 2,720) on inputs. The total cost is estimated to decrease to USD 1.78 million in the fourth year. From the second to fourth year, the cost of operation and labor remain relatively unchanged, with both accounting for up to 96.1% of the total budget. On the contrary, no significant cost is expected on machineries and equipment by year four since most of the investments are made in the first year. However, the cost of services doubled from year 2 because the machines and equipment would require servicing in the subsequent years. Table 3: Total cost incurred in the private processor business model at farm and business level in USD Variable Farm/producer level Year 1 Year 2 Year 3 Year 4 Machineries and equipment 125.18 2.91 0 44.25 Inputs 410.93 591.99 592.42 592.85 Services 12.88 14.37 14.43 14.49 Labor 195.42 186.83 186.83 186.83 Operation costs 15.53 15.53 15.53 15.53 Total cost 759.95 811.63 809.21 853.95 Processor/business level Machineries and equipment 528,626.71 18,861.84 0 0 Inputs 2,720.11 2,934.86 429.49 429.49 Services 34,774.52 68,217.61 68,217.61 68,217.61 Labor 858,191.93 86,3345.83 863,345.83 863,345.83 Operation costs 853,429.81 841,399.40 841399.40 841,399.40 Total cost 2,277,743.08 1,794,759.54 1,773,392.33 1,773,392.33 3.1.2. Benefit assessment 3.1.2.1. Economic benefits Table 4 shows the economic benefits of the bundled interventions to farmers. Despite the heavy investment in the first year of the interventions, the results in column five show that there was no substantial difference in terms of revenue generated between a production system with and without the intervention. This is expected as the first year December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 21 involves heavy investments to initiate the intervention and requires considerable time to observe significant the returns (Sain et al., 2017). However, there is a substantial increase in estimated revenue to be generated from the three crops between the two scenarios from the second year onwards, and this ranged from a minimum of 14.0% on beans in year two to 80.6% on the same crop in year four. When looking at the individual enterprises, the results show that the revenue from mangoes is expected to increase from USD 340 in the first year to USD 453 in the fourth year for the BAU scenario representing a 24.9% change. With interventions, the revenue from mangoes is expected to significantly increase from USD 340 to USD 648, representing a 90.5% change. Similarly, the interventions are projected to boost revenues from maize and beans. Maize revenue is expected to rise from USD 253 in the first year to USD 324 in the fourth year, while bean revenue is projected to grow from USD 109 to USD 196 over the same period. Overall, the results indicate a general upward trend in revenues across the four years and significant growth in the production system due to the interventions, compared to the business-as-usual (BAU) scenario. This improvement can be attributed to the higher productivity resulting from the inherent benefits each crop gains from the bundled agroecological interventions. The changes in the improved model result in an overall increase of approximately 31.38% in total revenue over the four years. Table 4: Annual revenues from the private processor business model at farm level in USD Year Crop BAU model With intervention Percent change 1 Mango 340.01 340.01 0.00 Maize 252.80 252.80 0.00 Beans 108.73 108.73 0.00 2 Mango 374.02 493.92 32.06 Maize 252.80 288.36 14.07 Beans 108.73 153.11 40.82 3 Mango 411.42 647.82 57.46 Maize 252.80 323.92 28.13 Beans 108.73 196.39 80.62 4 Mango 452.56 647.82 43.15 Maize 252.80 323.92 28.13 Beans 108.73 196.39 80.62 Total revenue 3024.13 3973.19 31.38 Notes: BAU, Business-as-usual December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 22 Table 5 shows the revenues from the business enterprise. The revenue is derived from the sale of eight different products labelled P1-P8. The diversification of the processed products and market resulted in inclusion of P6 in the export market, and introduction of a new product in the company (P8). Table 5: Annual revenue from the private processor business model at business level in thousands USD (Processor) Year Product BAU With intervention Percentage change 1 P1 824.62 824.62 0.00 P2 632.78 632.78 0.00 P3 365.07 365.07 0.00 P4 257.70 257.70 0.00 P5 182.53 182.53 0.00 P6 0.00 19.33 - P7 171.80 171.80 0.00 P8 0.00 8.59 - 2 P1 824.62 870.44 5.56 P2 633.23 1205.57 90.38 P3 365.07 438.08 20.00 P4 257.70 322.12 25.00 P5 182.53 164.28 -10.00 P6 0.00 19.33 - P7 171.80 188.98 10.00 P8 0.00 8.59 - 3 P1 824.62 916.25 11.11 P2 633.67 1773.06 179.81 P3 365.07 511.10 40.00 P4 257.70 386.54 50.00 P5 182.53 146.03 -20.00 P6 0.00 38.68 - P7 171.80 206.16 20.00 P8 0.00 17.18 - 4 P1 824.62 916.25 11.11 P2 634.11 1774.30 179.81 P3 365.07 511.10 40.00 P4 257.70 386.54 50.00 P5 182.53 146.03 -20.00 P6 0.00 38.69 - P7 171.80 206.16 20.00 P8 0.00 17.19 - Total revenue 9740.67 13671.04 40.35 Notes: BAU, Business-as-usual December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 23 The interventions therefore introduce two new products, P6 and P8, which generate additional revenue of USD 19,327 and USD 8,590 respectively. This represents a 1.15% increase in total revenue for year one when compared to the BAU scenario. From the second to the fourth year, a higher revenue is expected for systems with interventions when compared to BAU for most products. However, in P5, a lower revenue for the is observed for a production system with intervention compared to BAU because of its reduction in the local market. The results for year two show a 32.1% higher aggregate revenue for the systems with interventions, while years three and four show a 64.1% higher revenue. Overall, the results show a positive impact of the bundled interventions on the company's revenue. The changes in the improved model result in an overall increase of approximately 40.35% in total revenue over the four years. 3.1.2.2. Social and health benefits The results from the private processor business model for production systems with interventions show that there are strong linkages between the farmers and the processor through formal contractual arrangements. The contracts define the roles and terms of engagement which guarantee mutual benefits. The processor sources products directly from the farmer groups thereby contributing to economic empowerment of the farming community and their inclusion in the market system. The trading relationship in the private processor model also creates a sense of community ownership and participation within these communities, as they feel valued and recognized for their contributions to the supply chain. The interventions in this model therefore encourage synergy and active participation within communities. By involving local communities in decision-making processes and business activities, for example in price negotiation, the processor also fosters a sense of ownership and pride among community members. This participation extends beyond economic activities to include social initiatives, environmental conservation efforts, and cultural preservation, further strengthening community bonds. December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 24 From the farmers point of view, the business model with interventions offers opportunities for collaboration, knowledge-sharing, and collective action. There is a lot of exchange of knowledge and expertise as training is embedded in all the interventions. Farmers are trained by the processor as they learn from each other's experiences, traditional practices, and modern agricultural techniques, leading to the co-creation of knowledge and social capital that benefits the entire community. This is supported by Kansanga et al. (2020) who reported that participatory agroecology intervention that focuses on training and knowledge sharing promotes social capital in the community. This is also achieved through the interactions between the private processor’s staff and farmers. The intervention of organic inputs encourages the farmers to work together in producing the inputs as well as collaborating with the processor through a circular economy to provide bio-inputs to the farmers under an arranged check off system, and thus supporting a landscape that is free from chemicals. From processor's perspective, “If a farmer uses organic inputs and their neighbor in the same locality uses chemical inputs, it affects the farmer's products, and they will not be considered organic”. This encourages the community to work together and build trust between the private processor and the mango farmers. By working together farmers address common challenges, share resources, and celebrate successes, strengthening social bonds and cohesion within rural communities. These interventions were also associated with health benefits that could not be quantified. For instance, farmers mentioned that using organic inputs helps them to consume foods that are free from harmful chemicals, experience better overall health, and have lower risks of chronic illnesses associated with pesticide residues. The agroecological transition associated with the interventions also reduces exposure of farmers to pesticides thus reducing acute health issues such as skin irritations and respiratory problems. According to the processors, growing a variety of crops enhances food security for the farmers and the community by reducing overdependence on single crops, and thus increasing the dietary diversity. This is supported by Bezner Kerr et al. December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 25 (2023) who reported that, agroecological practices and more complex agroecological systems supports improved food security and nutrition 3.1.2.3. Environmental benefits At business level, the processor incorporated production of organic input using waste materials from the processing plant. Processing organic inputs contributes to environmental sustainability directly and indirectly. Directly, it reduces the overall carbon footprint by reducing waste and need for new raw materials, further cutting down greenhouse gas emissions at the firm level. Indirectly, processors contribute to the uptake of organic inputs by making them available and accessible to farmers, thus contributing to environmental sustainability at the community level. From the farmers' side, the use of organic inputs helps to improve the soil and productivity, minimize external costs of purchasing inorganic fertilizers and pesticides, and their reliance. This reduces the amounts of chemicals released into the environment, hence reducing environmental pollution within the farming activities and lowering the carbon footprint associated with manufacturing of inorganic chemicals. Organic inputs also promote biodiversity by supporting the soil organisms, diverse plants and improving water retention and quality, cumulatively resulting in a healthier ecosystem. 3.1.3. Cost benefit analysis of the private processor business model As described in section 2.4, this study employs four parameters in the cost-benefit analysis of agroecological interventions in the mango business models. Table 6 shows a comparison of the net present value (NPV), internal rate of return (IRR), cost-benefit ratio (CBR) and payback period at farm (for mango producers) and business (the private processor) levels. Results show that adopting agroecological innovations among mango producers yields a NPV of USD 369 per producer and USD 55,802 for the private processor annually. The positive values imply that it is profitable to invest in December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 26 agroecological innovations in the private processor business model. Additionally, the results show that adoption of agroecological innovations has an IRR of 325% for the farmers and 16% for the private processor. This reflects the considerable economic advantages of agroecological practices across the business model. Results show that adoption of agroecological innovations in the private processor model has a BCR of 1.23 and 1.79 for the farmers and the private processor respectively. A business venture with a BCR greater than one (1) is considered profitable (the benefits outweigh the costs) and worth investing in. Finally, the results show that investing in agroecological innovations in the private processor model in the mango value chain has a payback period of two (2) years for the farmers and four (4) years for the private processor. Table 6: Cost-benefit analysis indicators for the private processor business model Indicator Farmers Processor Net Present Value (NPV) 369.35 55,802.43 Internal Rate of Return (IRR) (%) 324.97 16.30 Benefit Cost Ratio (BCR) 1.23 1.79 Payback period (Years) 2.00 4.00 3.2. Public processor business model 3.2.1. Cost assessment Table 7 shows the estimated cost for agroecological transition in the public processor model over a four-year period. The upper panel shows the results from the farmers while the lower panel shows the results from the processor. At farm level, the total cost of production was highest in the first year (USD 558) and then reduces marginally in the subsequent years. This is expected as the initial year involves heavy investments including the cost of adopting the interventions necessary for transition (43.0%). In the first year, the highest proportion of the costs went to labor (43.0%), followed by inputs (21.6%), operational costs (17.1%) and machineries and equipment (16.0%). In the subsequent December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 27 years, the total cost is expected to drop by 21.3%, 24.1%, and 24.7% in the second, third and fourth year respectively when compared to the first year. This is attributed is the reduction on the cost of machinery and equipment which account for less than 2% from the second to the fourth year when compared to 16% in the first year. The costs are incurred on labor are expected to increase from 43% in the first year to 53.7% in the second year and then remain relatively unchanged until the fourth year. On the contrary, the costs on labor are expected to decrease marginally from 21.6 % to 20.7% in the second year and thereafter remain relatively unchanged. The lowest cost is observed on services which account for 2.3% in the first year and about 4% in the subsequent years. The significant reduction in the cost of machinery and equipment in the second year implies that farmers may begin to realize the benefits of the agroecological transition. The fourth year demonstrates the maturity phase of the business model with stable costs. The minimal machinery expenses suggest that the equipment is still in good working condition while stable input, labor, and operational costs indicate a predictable and manageable financial environment for farmers. From the second year, the total costs stabilize at around USD 440-450 annually, and this is crucial for long-term financial planning and sustainability. The reduction in costs after the initial year also indicates the economic viability of the agroecological improved business model Table 7: Total cost incurred in the public processor business model at farm and business level in USD Variable Farm/producers Year 1 Year 2 year 3 year 4 Machineries and equipment 89.12 0.00 8.76 2.95 Inputs 120.62 90.85 91.15 91.46 Services 12.88 17.27 17.35 17.44 Labor 239.80 235.50 239.08 239.08 Operation costs 95.20 95.20 95.20 95.20 Total cost 557.62 438.83 451.56 446.14 Business Machineries and equipment 48668.58 2798.85 0.00 0.00 Inputs 5025.05 5025.05 5025.05 5025.05 Services 6215.10 7407.00 7407.06 7407.12 Labor 17895.49 20472.44 20472.44 20472.44 Operation costs 19382.25 19382.25 19382.25 19382.25 Total cost 97186.47 55085.60 52286.80 52286.86 December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 28 At business level, the total cost incurred in the first year was estimated at USD 97,187, with 50.1% being incurred on machineries and equipment (Table 7). The other costs are allocated to operational (19.9%), labor (18.4%), services (6.4%) and inputs (5.2%). Similarly, the high initial investment is attributed to the cost of setting up the infrastructure and acquiring necessary equipment, laying the foundation for agroecological transition and upcoming operations. In the second year, the total cost drops by 43.3% compared to the first year, and then further drops by 46.2% in the third and fourth years. This significant decline is associated with reduction on the costs associated with machinery and equipment from the second year. However, the costs associated with operations, labor, services and inputs increase significantly in the second year and then remain relatively stable afterwards. For instance, in the second year, the costs of labor and services increase by more than 100% when compared to the first year, while the costs of inputs and operations increase by 76.4% during the same period. 3.2.2. Benefit assessment 3.2.2.1. Economic benefits Table 8 shows the revenues of the farmers with or without interventions in the four-year period. In the first year, both models generate the same total revenue of USD 497. This indicates that the improvements in the agroecological model have not yet taken effect, and both systems perform identically. In the second year, the total revenue for the BAU model is projected to increase by 8.6% while that with interventions is expected to increase by 48.6%. This implies that the impact of the interventions starts to be realised in the second year of implementation which can be attributed to reduced costs for initial investments. Moreover, this can also be associated with the positive change in revenues derived from all crops, especially mangoes which show a substantial increase. In the third year, the revenue gap widens further. December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 29 The improved model generates USD 979 compared to the BAU model’s USD 586, which implies a 67% difference in revenues. Again, the largest gains are seen in mangoes and maize, suggesting that the agroecological practices significantly enhance productivity. By the fourth year, the improved model continues to outperform the BAU model. The total revenue for the improved model remains at USD 979, while the BAU model’s total revenue is USD 637. This consistent performance indicates that the benefits of the improved practices are sustained over time. Moreover, the revenues in the fourth year are 28.3% and 97.1% higher than the revenues in the first year for the BAU and model with interventions respectively. The results here are consistent with previous studies which show a positive association between the selected agroecological interventions (intercropping, use of organic inputs and reduced postharvest losses) and productivity and revenue to the small-scale farmers (Rahman et al., 2022) Table 8: Annual revenues from the public processor business model at farm level in USD Year Crop BAU With intervention Percent change 1 Mango 322.12 322.12 0.00 Maize 103.08 103.08 0.00 Beans 71.58 71.58 0.00 2 Mango 354.33 483.18 36.36 Maize 113.39 154.62 36.36 Beans 71.58 100.21 40.00 3 Mango 389.76 644.24 65.29 Maize 124.84 206.16 65.14 Beans 71.58 128.85 80.01 4 Mango 428.74 644.24 50.26 Maize 137.15 206.16 50.32 Beans 71.58 128.85 80.01 Total revenue 2259.73 3193.29 41.31 Notes: BAU, Business-as-usual Table 9 presents the total revenue of the cooperative with and without the agroecological interventions over a four-year period. In the first year, P1-P3 generate similar revenues in the two models. However, P4 has a significantly higher (+25%) revenue under the production system with intervention when compared to the BAU. As a result, the model with intervention generates approximately 0.5% more revenue than the BAU. In the December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 30 second year, the model with intervention is projected to generate a substantial increase in total revenue, amounting to USD 111,618 compared to the BAU model's USD 89,260, which equates to a 25.0% increase. This is attributed to increased revenues from all the products and low costs associated with adoption of interventions during the second and subsequent years. The revenue in the third year is estimated to increase further for the models with interventions (+49.6%) compared to BAU, and thereafter remain stable in the fourth year. Over the four-year period, the cumulative revenue for the model with interventions is USD 468401, which is approximately 31.2%higher than the BAU model. Table 9: Annual revenues from the public processor business model at business level (in thousands USD) Year Products BAU With intervention Percent change 1 P1 29.12 29.12 0.00 P2 48.50 48.50 0.00 P3 9.92 9.92 0.00 P4 1.72 2.15 25.00 2 P1 29.12 33.89 16.37 P2 48.50 55.75 14.94 P3 9.92 19.84 100.00 P4 1.72 2.15 25.00 3 P1 29.12 38.65 32.74 P2 48.50 62.99 29.87 P3 9.92 29.75 200.00 P4 1.72 2.15 25.00 4 P1 29.12 38.65 32.74 P2 48.50 62.99 29.87 P3 9.92 29.75 200.00 P4 1.72 2.15 25.00 Revenue 357.04 468.40 31.19 3.2.2.2. Social and health benefits Integration of the selected agroecological interventions encompasses training and collaboration among value chain actor in the public processor business model thus fostering a more trusting and friendly environment. By encouraging farmers to work together at collection centres, the model enhances interaction and cooperation within the community, promoting a sense of unity and mutual support. The business model also December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 31 provides the good business relationship between the farmers and cooperative and help in reducing the side selling. The cooperative contributes to ensuring food safety by using proper transportation structures like crates. This reduces physical damage and contamination during transportation which minimizes the health-related risks among consumers, reduces post- harvest losses, and minimizes nutrient loss in the fruits thus promoting consumption of nutrient-rich products. Moreover, proper harvesting techniques reduce physical damage and contamination of fruits, allowing adequate and high-quality fruits to be supplied on the markets. According to farmers, intercropping promotes dietary diversity among households which is essential for ensuring nutrient adequacy among vulnerable populations especially young children and women of reproductive age. Ngoma et al. (2023) also reported positive association between sustainable intensification including intercropping with dietary diversity. In addition, organic food production reduces the use of chemical pesticide which reduces exposure to harmful chemicals when working on the farms and thus lowering the risks associated with non-communicable diseases like cancer. This is consistent with findings by Baudry et al. (2018) who reported that high consumption of organic food is associated with low rates or cases of cancer in France. 3.2.2.3. Environmental benefits Agroecological practices such as use of organic inputs and reduced use of synthetic agro- chemicals have been associated with low emissions and enhanced biodiversity by protecting beneficial flora and fauna (Bolo et al., 2021; Christmann, 2020; Bezner Kerr et al., 2023) as well as improving the overall soil health and environmental sustainability (Bolo et al., 2023; 2024; Gamage et al., 2023). Besides, the use of organic inputs were reported as essential for improving soil water retention. The use of organic inputs is also associated with increased nutrient mineralization and availability for crops, reducing the costs incurred by the resource-constrained smallholder farmers in purchasing the inorganic fertilisers (Bolo et al., 2024). Use of organic products were also found to reduce December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 32 health-related risks to the community. For instance, reduced use of synthetic agrochemical reduces the risks associated with direct and indirect exposure to harmful active ingredients which may pose risk to human health. Intercropping was reported to help in improving soil health through increases in organic carbon and reduction in soil erosion (Martin-Guay et al., 2018; Rosa-Schleich et al., 2019; Morugán-Coronado et al., 2020; Alcon et al., 2020). Besides, intercropping also increase nutrient availability by stimulating biological fixation of nutrients, enhancing proliferation of beneficial soil microbes and promoting beneficial plant-soil-microbial interactions (Bolo et al., 2021). In the improved business model, beans are intercropped with maize and mango thus helping in biological nitrogen fixation and suppression of weeds and pests. 3.2.3. Cost-benefit analysis Table 10 shows the CBA results for farmers and the cooperative in the public processor business model. The positive NPV at farm level indicates that the mango production system with agroecological interventions considered in this study is more profitable than the BAU by 362 USD per acre per year. The IRR (105%), exceeds the discount rate (13.59%), indicating a highly attractive investment with significant returns. The BCR value shows that for every dollar invested by the farmers, they receive USD 1.69 more in benefits. This implies that the benefits of transitioning to the agroecological improved business model outweigh the costs, and thus validating the economic feasibility of the interventions. This is consistent with Midega et al. (2014) who reported more benefits in intercropping of maize and legumes on the eastern shores of Lake Victoria in western Kenya. Table 10: Cost benefit analysis indicators for public processor business model Indicator Business Model actors Net Present Value (NPV) 362.30 11,948.44 Internal Rate of Return (IRR) (%) 105.41 36.85 Benefit Cost Ratio (BCR) 1.69 8.96 Payback period (Years) 2.00 3.00 December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 33 In terms of payback period, the results show that it would take two years for the farmers to generate enough cash flow to recover the initial investments. A short payback period reduces the investment risk and is crucial for small scale farmers who may have limited access to financial resources. On the business side, the large NPV (USD 11,948) for the cooperative shows that agroecological interventions considered in this study have a potential to generate significant net gains over the investment period. Similarly, the value of IRR (37%) is greater than the discount rate (13.59%) indicating a financially sound model and solid return on investments. The BCR value shows that for every dollar invested, the cooperative receives USD 8.96 in benefits. The payback period for the cooperative is 3 years, which is slightly longer than that for farmers. However, a 3-year period is still relatively short, and the cooperative can recover its initial investment in a reasonable time frame December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 34 4. Conclusion and recommendation The findings of this study underscore the potential for agroecology in enhancing profitability and sustainability in the mango value chain in Kenya. The integration of agroecological practices such as intercropping, postharvest loss management, and organic inputs at farm level has demonstrated a positive influence with regards to economic and environmental performance as observed in the positive net present value (NPV), higher internal rate of return (IRR) and greater cost-benefit ratio (CBR). Moreover, the transition to these models offers significant social and health benefits to the community including but not limited to reduced exposure to harmful/toxic agro chemicals, enhanced ecological synergy and increased social collaboration and bonding in the society. While the short, medium, and long-term economic viability of agroecological transition is evident in the mango value chain, the substantial initial investment required poses a challenge, particularly for smallholder farmers and new entrants on the business side. To overcome this hurdle, strategic progressive investments and partnerships with financial institutions are crucial. Additionally, this study highlights the importance of operational efficiency in maximizing the cost-effectiveness of agroecological interventions, with private processor models showing superior performance compared to public processor models. Finally, the agroecological transition in the mango value chain in Kenya presents a promising pathway to sustainable development. By addressing barriers related associated with initial investment and leveraging the strengths of different actors and stakeholders, it is possible to unlock the full potential of the value chain for the benefit of all actors, especially the farmers, processors, and the wider community. Policy interventions to integrate agroecological approaches across key food value chains would promote sustainable food system transformation especially in vulnerable contexts of low- and middle-income countries. 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G., Kerr, R. B., Barrios, E., Gonçalves, A. L. R., & Sinclair, F. (2020). Agroecological principles and elements and their implications for transitioning to sustainable food systems. A review. Agronomy for Sustainable Development, 40(6), 40. https://doi.org/10.1007/s13593-020-00646-z https://www.fao.org/family-farming/detail/en/c/386209/ December 24 | Cost Benefit Analysis of Agroecological Transition: A Case of Mango Value Chain in Kenya 40 Name, Title, c.chege@cgiar.org Name, Title, c.chege@cgiar.org CGIAR is a global research partnership for a food-secure future. CGIAR science is dedicated to transforming food, land, and water systems in a climate crisis. 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