SUPPLY RESPONSIVENESS OF MAIZE FARMERS IN KENYA: A FARM-LEVEL ANALYSIS
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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.Keywords:
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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 the
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The degree of responsiveness of agricultural supply to input either in the short or long-term production decision is crucial in understanding the role of price and non-price factors in increasing supply. This study analysed output supply and input demand of maize production using a farm survey data of 600 randomly selected maize farmers from all agricultural zones in Kaduna State of Nigeria. Data were analysed using a modified Nerlovian model and set of input demand equations. The results showed that in all estimates (yield and hectarage) long run estimates are greater than the short run values and both were inelastic. The elasticity for lagged own price of maize was 0.23% in the short run and 0.17% in the long run were positive, marginal and inelastic. The hectarage elasticity of supply response for maize is 1.04 in the short run and 0.78 in the long run. The result of the input demand equations showed that the coefficients cost of agrochemical and farm size statistically affect seed, fertilizer and labour demand. The study portrayed that the most critical issues in maize supply are the lack of improved production technology, poor capital investment, land unavailability or poor land tenure system and poor policy incentives. The study recommends that, there is a need for State policy on agricultural research and extension, and adequate input price policies. The government is advised to dissolve the agricultural extension service system to local governments. This will allow agricultural extension system to be more location specific.
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This study uses simple non-separable farm household models calibrated to household, market, farming and policy context conditions in Central and Southern Malawi. The models are used to simulate how household characteristics, design and access to input subsidies affect the demand for improved maize seeds; how increasing land scarcity affects the cropping system and demand for improved maize; and how access to improved maize seeds affects household welfare with varying access to input subsidies. The model simulations demonstrate that a) there is a high risk that access to subsidized improved maize seeds can crowd out commercial demand for improved maize seeds but the effect is very sensitive to household characteristics, market characteristics and relative prices; b) increasing land scarcity increases the demand for improved maize seeds and improved maize facilitates intensification among others through intercropping of maize with legumes such as beans and pigeon peas; c) the welfare effects depend on households ability to utilize the potential of the improved varieties by combining them with complementary inputs.
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Aim: This study examined food crop farmers’ supply responsiveness to selected price and non-price variables. Study Design: Cross-sectional design Place and Duration of Study : The study was carried out in Ejura Sekyeredumasi District in the Ashanti Region of Ghana and data was collected in November 2013. Methodology: A simple random sampling technique was used to sample 250 farmers for the study. Structured questionnaire was used to solicit information from the sampled farmers on production and marketing of maize and cassava. The study used a modified Nerlovian supply model to analyse the data in order to assess farmers’ supply responsiveness to selected price and non-price variables. Results: The results of the study revealed that food crop farmers respond favourably and promptly to incentive package (price or non-price factors) and this reflected in farmers’ output and farm management practices. Conclusion: The study provides evidence to support price incentives and non-price factors on food crop supply response. It suggests that a strong complementary policy instrument involving price and non-price factors will provide a fillip to agricultural productivity.
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The supply response and input demand by farmers using modern rice technology in Laguna, Philippines were estimated using profit function analysis. The results indicate that farmers do maximise short‐term profits and respond to price changes efficiently. The supply elasticity of rice with respect to its own price was approximately unity. Changes in real wages were estimated to have a greater impact on rice profit and supplies than changes in the real prices of mechanised land preparation, fertiliser or pesticides. Production elasticities derived from the profit function were consistent with those estimated directly from the underlying production function.
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This study used a supply response model to determine factors affecting maize supply in Vietnam. It estimated response coefficients from semi-annual time-series data for the period 1986-2011. Using three criteria, it chose the rational expectation hypothesis supply response model (Model I) with the separated price expectation formation hypothesis according to the information set at time (t-1) to estimate the supply response model for maize. Farmers used the available information set to form their expected price. Estimated parameters’ results in Model I indicate that the farmers' supply had a positive response to the expected price of maize, but was negative to that of cassava. This means that maize and cassava are close substitutes in the supply response models. Maize production also positively responds to the amount of fertilizer per hectare, maize area, one-period lagged investment, irrigation, trend variable, and agricultural extension policy. Recommended policies include: enhancement of the judicious use of fertilizers and possible establishment of local factories; increase in maize area by changing the crop structure and multiple cropping with long-term industrial trees like perennials and fruit trees; improvement of the irrigation system in two deltas and in high production regions; increase in government support to farmers; increase in government spending on research and development of new maize varieties; and improvement of the extension system to provide farmers the needed market and technological information.
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Arguments of irrational response of peasants to changes in product prices have been put forward, as have arguments for rational economic behaviour. The paper investigates whether the fanners ' behaviour complies with economic theory - if they respond in an economically rational manner - when they produce a crop both as a staple and cash crop. A Nerlovian partial adjustment Jagged model was used to estimate the maize supply response of fanners in the Middledrifi district of the Eastern Cape to changes in product prices. The results indicate that producers are responsive to price incentives and their response is elastic in both the short (1,23) and long run (1,41). The coefficient of adjustment which measures the speed of adjustment is 0,87. The prices of maize and the competing crop (sorghum) and the areas under maize in the preceding season are found to be important factors to the producers in their land allocation decision making process. The model therefore shows that fanners to cl1anges in product prices to product price changes to changes in product prices.
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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 du Niger (ON) is the largest irrigated rice production area in Mali. In the ON, the use of chemical fertilizers is recommended in the cultivation of improved varieties of rice in all production systems. Given the importance of chemical fertilizer in rice production in the ON, surprisingly little is known about the impact of the fertilizer sub-sector reform program on the demand for fertilizers and the capacity of the ON to support a private-sector fertilizer distribution system. Insights into these questions will ultimately help in assessing the potential for a vibrant and sustainable chemical fertilizer subsector in the ON. The primary objective of this paper is to describe how to carry out a study to assess the impact of the fertilizer reform program on the demand for fertilizer in the Office du Niger. It is planned that data will be collected from both primary and secondary sources in order to implement the proposed models and their extensions. Primary data will be collected from a stratified sample of 30 farms in each rice production system in the ON. Secondary data will be collected by consulting relevant reports written about the ON. Empirical models based on the conventional linear programming framework will be built to represent a typical household in each rice production system in the ON. The models will be run using two types of price vectors: the input prices at the farm gate in the ON before and after the devaluation of the FCFA currency. In each case, it is possible to derive the aggregate potential demand for fertilizer by varying its price. As the price of fertilizer varies, different levels of input use become optimal and, in consequence, a series of price-quantity relationships is developed. The risk of yield variability in food crops and income variability from crop sales resulting from weather and prices will be incorporated through use of the minimization of total absolute deviation (MOTAD) model as developed by Hazell in 1971. The results from the analysis should provide insights about the incentives for farmers to use chemical fertilizers and the capacity of the ON to support a private sector fertilizer distribution system.
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Abstract A restricted profit function is used to estimate jointly the profit and factor demand functions from farm‐level, cross‐sectional data for Mexican wheat varieties in the Indian Punjab. The main focus is analysis of fertilizer demand. The results indicate that output price is a more powerful policy instrument than fertilizer price to influence fertilizer use, output supply, and returns to fixed farm resources, that producers attain allocative efficiency, that education of the farm people contributes significantly to agricultural production, and that profit function is a suitable concept for empirical analysis and interpretation.
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