In two distinct essays, we seek to achieve one overarching objective:
establishment of the potential profitability of hermetic Purdue Improved Crop Storage
(PICS) technology for small producers in Sub-Saharan Africa. We first present a simple
methodology, targeted to a non-economist storage research audience, to measure the
profitability of storage protection for marketing producers in developing countries. We
examine the relationship between the value of a stored commodity and required price
seasonality for profitable storage under a range of possible fixed costs of storage and
opportunity costs of capital. The cost of storage protection has a larger relative effect on
profitability with low-value commodities such as maize, while the opportunity cost of
capital has a larger effect on profitability with high-value commodities such as beans and
cowpeas. An example is drawn with maize in Malawi, contrasting the profitability of
storage protection with hermetic PICS bags versus government-subsidized chemical
protectants. Results show that while PICS bags economically outperform chemical
protectants, price seasonality and thus profitability varies greatly both by year and region of the country.
We secondly seek to analyze current storage practices and investment in Malawi,
while also understanding the economic consequences of insect and mold damage for a
marketing producer. For marketing maize producers in Africa, economic losses in
storage can result from both dry weight losses and price discounts for damaged grain.
While weight loss ranges under various storage treatments are widely recorded in East
and Southern Africa, price discounts for insect and mold damage are undocumented in
informal markets. We use a choice model with physical samples of maize to estimate
preferences of Malawian maize traders in the immediate post-harvest season of relative
maize abundance and then repeat the experiment in the lean season of relative maize
scarcity. Severe discounting for insect damage is present for most traders. In the lean
season, this discounting logically increases in magnitude as traders store longer before
resale. However, discounts measured by traditional metrics may be exaggerated in
intensity, as demonstrated by the Equality Constrained Latent Class (ECLC) method for
identifying and correcting for attribute non-attendance bias. Price non-attendance was
identified in a majority of the sample population and correcting coefficients results in
reductions of WTP estimates by about 75%. To supplement CE analysis, we crossreference
these methods with a more simple contingent valuation approach. All methods
employed indicate price discounts for insect grain damage are much more severe than
researchers have found in West Africa, indicating the value of maize storage protection in
Malawi may be greater than first determined through meta-analysis. Maintaining
demonstrated efficacy, there is thus reasonable economic evidence to suggest that PICS
bags can be profitable for Malawian maize producers