Estimating the impact of sericulture adoption on farmer income in Rwanda: an application of propensity score matching

ABSTRACT

The adoption of an agricultural technology is often seen as a way to overcome the constraints imposed by the existing resources and/or production methods. As a small landlocked country, Rwanda sought to develop the capability to produce silk, a high value-to-volume ratio product, as a means to overcome the constraints of high transportation cost of exports. Sericulture was also seen as a handy strategy to boost rural farmer income by putting previously less productive land to use for mulberry plantations. Because sericulture was not introduced randomly, this study relied on observational data and applied propensity score matching to estimate its income and poverty reduction effects in six rural districts. The results indicate that sericulture adoption had beneficial effects both on increasing income and reducing poverty. The strengthening of related skills development and the supporting infrastructure remains crucial for the sericulture to successfully diffuse and yield economic benefits commensurate with its potential.

KEYWORDS:

• agricultural technology adoption
• sericulture
• propensity score matching

Notes

1. An earlier draft of this article was presented at a HSRC seminar in Cape Town on 26 April 2016. Another earlier version of this article was previously published as part of UNU-MERIT’s Working Paper series.

2. Shortages of land and water, constant threat of soil erosion, and farmers’ limited access to credit are some of the other major constraints that restrict output expansion in the agricultural sector.

3. Silk is a high value product and its market is guaranteed. Its demand is strong, especially in India, where it consistently exceeds supply. Fresh silk cocoons can fetch a price between US$2.7 and US$7.5 per kilo while silk yarn cost between $40 and $60 a kilo on international markets. The value of silk being tenfold that of cotton on world markets, a farmer adopting sericulture and using recommended standard practices was projected to add a net annual income of about FRW 1000000 (or US$2000) to his traditional revenue. Mulberry trees take 6 months to produce leaves for harvest after first planting and 3 months after pruning.

4. However, due to quality restrictions, the amount of usable silk in each cocoon is considerably smaller.

5. The idea of introducing silk production in Rwanda was first brought up in 2005 by UTEXRWA's managing director, Raj Rajendran, seeking a solution for the raw material sourcing problems of his textile factory. Sericulture adoption was projected to also easily fit in the country's development strategy by providing poor farmers with the possibility to train in silkworm rearing and earn income by producing silk threads that would serve as input for his textile factory (Rajendran, 2011).

6. Demand for silk and silk products remains strong in word markets, especially in India, where it constantly exceeds available supply. The market for final silk yarns and fabrics in therefore assured.

7. Despite the popularity of the matching estimator among analysts, Heckman and Lozano (2004) have pointed out that it may still carry some new sources of bias due to the selection of unobservables, the failure of common support condition, or the failure to control for local differences between treatment and control groups.

8. EICV data are available at the Rwandan National Institute of Statistics (www.statistics.gov.rw).

9. The National Sericulture Centre (NCS), the unit of the Rwandan Ministry of Agriculture in charge of stimulating sericulture adoption, reported to be operating only four provincial centres and to have piloted sericulture activities in 40 cooperatives across the country, with membership of more than 2000 farmers (Rwanda Development Board, 2013).

10. In the areas of our studies which are located in the four provinces of the country, poverty is still highly prevalent among farmers and the depth and severity of the poverty indices show a sizable degree of propensity to fall below the poverty line and a disparity among the poor.