Productivity and Welfare Implications of Switching to Improved Varieties from Oil Palm Research in Southern Benin

The purpose of this paper is to examine the impact of the improved varieties of oil palm on farm-level performance and aggregate welfare. The study employs primary data collected from a sample of 1142 oil palm plantation-owning households. Endogenous switching regression treatment model was first used to account for self-selectivity and endogeneity in adoption decision to estimate yield and cost impacts that were subsequently inserted into the economic surplus modelling for accurate measurement of the supply-shift parameter used to compute the welfare effect. Findings show signifcant impacts of adopting improved oil palm varieties on yield and production cost. Farmers who used improved varieties enjoy 38% increase in yield that requires 45% increase in cost of production. These changes in yield and cost led to a research induced shift in palm oil supply of 82%, resulting in an increase in total economic surplus of US$ 56 millions per annum with 59% accrued to consumers. This gain from adoption could lift nearly 47 thousand people (1% of total poor) out of poverty per annum. These findings underscore the need of more investments in oil palm research and diffusion of research products which could be seen as effective tools to tackle poverty.