Measuring the potential payoffs from biofortification: The case of high-iron rice in the Philippines

This study examines the potential social rate of return to biofortification, an international plant breeding initiative that develops food crops to contain more micronutrients. We conduct an ex ante cost-benefit analysis of introducing conventionally bred high-iron rice varieties in the Philippines, where rice is the staple food and where iron deficiency remains a public health problem.; We explore several methodologies that focus estimation of potential consumer welfare gains from iron-dense rice. When no changes in the demand for and supply of rice is assumed as high-iron rice varieties are introduced in the market, we explore a non-market framework for welfare measurement through the use of (1) the disability-adjusted life years (DALY) index of health outcomes, a commonly used measure in evaluating projects with health impacts; and (2) a household production model, to derive the implicit demand for dietary iron as a basis for estimating consumer welfare gains from the intervention. Further, using past consumption choices and the estimated shadow price of dietary iron using a household production model, we test to predict whether the demand for rice will change when the improved access to iron through the rice grain is acknowledged by consumers to improve their welfare. We find that the demand for rice can slightly increase using a characteristics model and a complete food demand system. We then estimate potential consumer benefits through (1) consumer surplus changes associated with the projected increase in the demand for rice within a partial equilibrium framework; and (2) food cost savings obtained in a complete food demand system within a general equilibrium framework. Insights from the consumer welfare measurement effort are discussed.; Estimates of potential Philippine consumer welfare improvements from all measurement approaches reveal that benefits from high-iron rice can outweigh its research and development costs. We find that donor contributions supporting biofortification can be worthwhile investments given relatively high benefit-cost ratios ranging from 42 to 5,253 and internal rates of returns of 36% to 96%. We also assess the viability of biofortification relative to existing nutrition interventions. In comparison to iron supplementation through pharmaceutical preparations, breeding for iron-dense rice can be more cost-effective. Yet, under strong assumptions, post-production fortification of rice with iron might be a cheaper way of addressing the iron-deficiency problem in the Philippines. Nonetheless, if the distribution of benefits were considered, biofortification could be an effective complementary strategy particularly in improving the nutrition of subsistence farmers who might be overlooked by the other initiatives, but who will benefit from growing iron-dense rice in their fields.