FRAMEWORK AND INITIAL ANALYSES OF FERTILIZER PROFITABILITY IN MAIZE AND COTTON IN ZAMBIA
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BACKGROUND: Inorganic fertilizers, particularly for use on maize, have been a cornerstone of Zambian government policy to improve smallholder incomes and food security. Investments in the fertilizer supply and credit systems have been costly for the national budget and yet fertilizer consumption among smallholders is low. With limited resources, the Zambian government is currently assessing its programs and seeking to determine the most productive investments to enhance agricultural incomes and production. OBJECTIVES: Inorganic fertilizers will play a role in government programs, but whether or not a single policy is valuable for all farmers depends upon the net gain for the farmers. The research here seeks to demonstrate how to answer the question “Is fertilizer profitable in Zambia for maize and cotton in the smallholder sector?” This study 1 identifies the key components determining profitability and then sets up a framework to evaluate the probability of farmers to obtain profitable results with fertilizer use on maize and cotton. Several cases are selected and the results are evaluated. This study will not present a complete picture of profitability, as that will vary for each farmer. Private profitability for the farmer at market prices will be discussed, leaving social profitability to other researchers. A simple method for farmers and extensionists to use to assess a fertilizer investment is given, to assist in more site specific analysis, given prices and environment. METHODS: Partial budgeting is a standard technique for evaluating an agricultural technology (CIMMYT, 1998). In this case, additional analysis is conducted on the risks involved, assuming distributions for selected variables and then evaluating the effect on private profitability. To organize the work and control for some physical variability, the study was broken into three broad agro-ecological (AEC) regions: Region I 2 is in theKeywords:
Investment
The background of this research was on policy issues of continuing increased subsidies for fertilizer and seed rice from year to year, which was also faced the problem of inefficient economic and government budget allocations, the price disparity between input and output and its derivatives result and also the creation of unreal competitiveness as a result of the use of subsidized inputs. This study aims to determine the “protection coefficient” of subsidized inputs (fertilizer and seeds) and output in agriculture rice plants in Indonesia. Policy Analysis Matrix (PAM) is used to analyze the impact of subsidies on rice crop farming system in Indonesia. The analysis result of the Policy Analysis Matrix (PAM), shows that (1) the rice farming system has the profit of market prices and social prices, (2) government policies are simultaneously protective to the production capability, (3) It has a competitive and a comparative advantage.Keywords: Subsidies on Fertilizer and Rice Seeds, Protection Coefficient, The Policy Analysis Matrix.
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This study assessed how responsive maize output is to price and non-price factors and how sensitive fertilizer and labour demand are to prices and non-price factors using cross-sectional farm-level data for 334 maize producing households in the High Potential Maize Zone of Kenya. The study employed normalized restricted translog profit function to estimate maize supply and variable input demand elasticities. Results show that maize price support is an inadequate policy for expanding maize supply. Fertilizer use was found to be particularly important in the decisions on resource allocation in maize production. Of the fixed inputs, land area was found to be the most important factor contributing to the supply of maize. It is suggested that making fertilizer prices affordable to small holder farmers by making public investment in rural infrastructure and efficient port facilities, and promoting standards of commerce that provide the incentives for commercial agents to invest in fertilizer importation, wholesaling and retailing would be desirable. Encouraging more intensive use of other productivity enhancing inputs in addition to fertilizer is also suggested, since land consolidation to achieve economies of scale may seem untenable in the light of the existing extensive sub-division of land parcels into uneconomical units.
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This paper examines the impact of government funded fertilizer subsidize on national level fertilizer use. We use panel data to investigate how the 2006/07 fertilizer subsidy program in Malawi impacted farmers' decisions to purchase commercial fertilizer. Using a fixed effects estimator to control for time invariant unobservables, we find that when farmers' ability to acquire subsidized fertilizer is treated as exogenous, it has a significant negative impact on commercial fertilizer purchases. We also find that wealth and social networks have a significantly positive impact on who receives subsidized fertilizer. We then use instrumental variables to control for the endogeneity of subsidized fertilizer acquisition affecting commercial purchases. Using a fixed effects estimator on this model demonstrates that acquiring subsidized fertilizer does not have a significant impact on commercial purchases.
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This study focuses on the challenge of developing fertilizer best management practices (BMPs) for agricultural producers that would both optimize the crop production and minimize water quality impacts from agricultural operations. The overall objective is to develop recommendations to improve BMP development process by allowing for a more comprehensive consideration of production and marketing risks affecting farmers’ production choices. Specifically, we use linear stochastic plateau production function to evaluate risks associated with the alternative levels of fertilizer application and prices for Florida potato production. Such analysis helps us to determine under what conditions alternative fertilizer BMP recommendations can be too restrictive, and how likely these conditions to occur. The results of the study are summarized in the form of recommendations for BMP development process in Florida and other states that use BMP as the primary tool to address nutrient water quality issues in agricultural areas.
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Using a unique household level panel data collected from the major maize producing regions of Ethiopia, this study assesses the role of crop diversification in minimizing the downside risks associated with the use of improved seed and chemical fertilizer in maize production. Empirical results show that maize-legume intercropping and rotation increases the average maize yield and reduces downside risk as captured by the estimated yield distribution using Endogenous Switching Regression models and quintile moment approaches. Controlling for plot and household level characteristics that may induce selection bias in technology adoption, maximum yield was obtained on plots with maize-legume rotation or intercropping sequences. The contribution of crop diversification in reducing downside risk in maize yield was higher when diversification was applied to plots that received improved seed and chemical fertilizers. In addition to the technical support provided to smallholder farmers on the use of improved seed and chemical fertilizer in maize production, the existing agricultural extension program in Ethiopia may also need to give due emphasis to both spatial and temporal crop diversification practices to enhance crop productivity further and reduce the potential downside risk hampering smallholder farmers initiatives in investing in purchased agricultural inputs in maize production. Acknowledgement : The authors would like to acknowledge two projects financially supported the collection of panel data used in this study: Sustainable Intensification of Maize-Legume cropping systems for food security in Eastern and Southern Africa (SIMLESA) project funded by the Australian Center for International Agricultural Research (ACIAR) and Diffusion and Impact of Improved Varieties in Africa (DIIVA) project funded by Bill and Melinda Gates Foundation (BMGF) through Bioversity International which collaborated with the Standing Panel for Impact Analysis (SPIA) in the CGIAR and CIMMYT. Views in this paper are of the authors. The usual disclaimer also works here.
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This study investigates the impact of contract farming (CF) in baby corn production on yield, irrigation costs, fertilizer costs and usage of chemical fertilizer. We find that adoption of CF by baby corn smallholders, after controlling for characteristics of both control and treatment groups, leads to higher yields and lower spending on fertilizers and irrigation. Additionally, CF in baby corn farming leads to a reduction in the use of chemical fertilizers (Urea and DAP). Thus, CF intervention benefits the livelihood of smallholders, reduces environmental degradation and reduces stress on groundwater without compromising yield.
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Abstract The adoption of HYVs (High Yielding Varieties), for increased farm profitability, and the accelerated supply of cereals are important objectives for Bangladesh agriculture. In this paper, we have investigated the manner in which price and non-price factor affect these three criteria, based upon a model of rational variety choice. The model is empirically implemented using translog profit functions and a switching regression framework, and applied to a cross-sectional farm-level dataset of Bangladeshi farms for the 1996 crop year. Results indicate that rice prices, land availability, irrigation, rural infrastructure, labour wages and prices of animal power services are important factors, while fertilizer price plays a marginal role. Given these results, the policy of liberalization of agricultural inputs (particularly fertilizers) and reforms to maintain high rice prices during harvest seasons appear sound since these allow producers to receive rice prices close to world levels without burdening the government with input subsidies. Result also shows that educated Bangladeshi farmers substitute their time inputs away from agriculture, resulting in lower HYV adoption, farm profitability and rice supply. Keywords: HYV adoptionresource allocation decisionsprofitabilityBangladeshJEL-classification: Q12O33C31 Notes 1. This is akin to the relative advantages of estimating structural form versus reduced form equations. It is always possible to go from the structural form to the reduced form, but not vice versa. 2. This section is based on Mark Pitt's model of technology adoption. We only provide a synopsis of the model here. Readers interested in further details are referred to Pitt (1983) Pitt, M. M. 1983. Farm-level fertilizer demand in Java: a meta-production function approach. American journal of agricultural economics, 65: 502–508. [Crossref], [Web of Science ®] , [Google Scholar]. 3. By characterizing farmers as profit maximizers, we are ignoring considerations of risk. Parikh and Bernard (1988) Parikh, A. and Bernard, A. 1988. Impact of risk on HYV adoption in Bangladesh. Agricultural economics, 2: 167–178. [Crossref] , [Google Scholar] tackle the issue of risk and HYV adoption in Bangladesh. 4. Input and output prices vary in rural Bangladesh during periods of peak demand. For example, the price of fertilizers and labour wage soar dramatically during peak sowing seasons. Several factors beyond the control of the farmers are largely responsible for such variation in price, including hoarding by wholesalers, supply disruptions due to frequent transport strikes and other similar events, and relative shortage of hired labour during peak transplanting season. 5. The index of infrastructure was constructed using the 'cost of access' approach. A total of 13 elements were considered for its construction. These are 1 primary market, 2 secondary market, 3 storage facility, 4 rice mill, 5 paved road, 6 bus stop, 7 bank, 8 union office, 9 agricultural extension office, (10) high school, (11) college, (12) thana (sub-district) headquarter, and (13) post office. The distance of these facilities from the village and the travel cost incurred to access these facilities was utilized to construct the index. High index value refers to high under-developed infrastructure (for details of construction procedure, see Ahmed and Hossain 1990 Ahmed, R. and Hossain, M. 1990. Developmental impact of rural infrastructure in Bangladesh, Washington, DC: International Food Policy Research Institute. IFPRI Research Report #83 [Google Scholar]). 6. The index reflects the underdevelopment of infrastructure, and therefore, a positive sign indicates a negative effect on the dependent variable (i.e. HYV adoption) and vice versa.
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• The question of optimal fertilizer intensity has a long history and is still relevant from several perspectives. • While it is obvious that the optimal input use contributes to economic benefits for the farmer, understanding the economically optimal use of nitrogen fertilizer may help to address environmental policies more efficiently. • Literature shows that nitrogen (N) fertilizer applications to agricultural crops often exceed the rate recommended by officials or advisors. One possible explanation is farmers’ response to uncertainty. • This study contributes to this question based on long term crop response data in Canada and Germany.
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The study involved interviewing a large number of stakeholders in fertilizer value chain, collection of data on costs and margins from the key actors in the value chain, as well as household survey data. In this paper, we present the key findings from that study. In particular, the paper presents estimates of detail costs and margins in the value chain, econometrically derived profitability and yield responses, and the costs of government’s fertilizer promotion policies. Based the estimates of the costs and margins in the fertilizer value chain, the study argues that the current value chain will not be sustainable unless the scale of operation, as well institutional capacity, of the primary cooperatives goes up.
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Agricultural sustainability requires that the individual farm firm be competitive and profitable while simultaneously enhancing environmental quality and the natural resource base upon which the farm firm and agricultural economy depends. The reliance of conventional agriculture systems on purchased inputs external to the firm presents possible challenges to the long-term sustainability of the system. Crop rotation systems are one cropping system alternative that can reduce agriculture's dependence on external inputs through internal nutrient recycling, maintenance of the long-term productivity of the land, and breaking weed and disease cycles. Decision criteria to choose among competing crop rotation systems can include impact on soil quality and fertility, environmental quality, and farm profitability. However, most of the comparative economic analysis work reviewed for this paper considered only farm profitability as a criterion to rank alternative crop rotation systems. Most rotation research is focused around a target crop that is the foundation for the crop rotation system. When corn is the target crop, comparative profitability performance of continuous corn vs. corn grown in rotation showed that neither system is consistently more profitable than another. Corn yield in Michigan does respond favorably to crop diversity. Wheat as the target crop in rotation tends to outperform continuous wheat both in terms of profitability and income risk. Sugar beet prices hold the key in determining the profitability ranking of alternative sugar beet-based crop rotations. Potato in rotations tends to outperform continuous potato both in terms of yield and profitability. Future studies addressing the economic performance of crop rotations need to consider the environmental benefits/costs both on and off the farm site that accrue to society. Keywords: Agricultural sustainability, external inputs, soil quality and fertility, environmental quality, crop rotations, comparative economic analysis, farm profitability.
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