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Modeling the Effects of Input Market Reforms on Fertilizer Demand and Maize Production: A Case Study of Kenya

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  • Sheahan, Megan
  • Ariga, Joshua
  • Jayne, T.S.

Abstract

Kenya is one of the few countries in sub-Saharan Africa experiencing an impressive rise in fertilizer use on food crops grown by smallholder farmers since the liberalization of input markets starting in the early-1990s. The impacts of these reforms and associated private sector investments on national fertilizer use and food production have never been rigorously quantified, though doing so could shed new light on policy makers’ options for raising food crop productivity in the region. This study estimates a double-hurdle model of fertilizer demand that controls for common forms of unobserved heterogeneity then simulates the effect of changes in fertilizer prices and distances from farm to the nearest fertilizer retailer associated with fertilizer market liberalization on the demand for fertilizer and the production of maize, the major staple crop in the country. The study concludes that over the period 1997-2010 the reduction in real fertilizer prices associated with input market liberalization is estimated to have raised maize yields by 15 to 100 kg/ha, depending on the province and year. Low average physical response rates of maize to fertilizer application in high fertilizer consuming areas of Kenya limits the degree to which increased fertilizer use via liberalization policies translates into food production improvements. These increases in maize yield specifically linked to changes in fertilizer prices accounted for between 1 and 11 percent of changes in maize production between survey years.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 150697.

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Date of creation: 2013
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Handle: RePEc:ags:aaea13:150697

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Keywords: Agricultural and Food Policy; Crop Production/Industries;

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  1. Coady, David P, 1995. "An Empirical Analysis of Fertilizer Use in Pakistan," Economica, London School of Economics and Political Science, vol. 62(246), pages 213-34, May.
  2. Mather, David & Jayne, Thomas S., 2011. "The Impact of State Marketing Board Operations on Smallholder Behavior and Incomes: The Case of Kenya," Food Security International Development Working Papers 120742, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  3. Jayne, T. S. & Argwings-Kodhek, Gem, 1997. "Consumer response to maize market liberalization in urban Kenya," Food Policy, Elsevier, vol. 22(5), pages 447-458, October.
  4. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
  5. Jacob Ricker-Gilbert & Thomas S. Jayne & Ephraim Chirwa, 2010. "Subsidies and Crowding Out: A Double-Hurdle Model of Fertilizer Demand in Malawi," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(1), pages 26-42.
  6. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-98, January.
  7. Freeman, H. Ade & Kaguongo, Wachira, 2003. "Fertilizer market liberalization and private retail trade in Kenya," Food Policy, Elsevier, vol. 28(5-6), pages 505-518.
  8. William J. Burke, 2009. "Fitting and interpreting Cragg's tobit alternative using Stata," Stata Journal, StataCorp LP, vol. 9(4), pages 584-592, December.
  9. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  10. Andre Croppenstedt & Mulat Demeke & Meloria M. Meschi, 2003. "Technology Adoption in the Presence of Constraints: the Case of Fertilizer Demand in Ethiopia," Review of Development Economics, Wiley Blackwell, vol. 7(1), pages 58-70, February.
  11. Ariga, Joshua & Jayne, Thomas S., 2009. "Private sector responses to public investments and policy reforms: The case of fertilizer and maize market development in Kenya," IFPRI discussion papers 921, International Food Policy Research Institute (IFPRI).
  12. Jayne, Thomas S. & Muyanga, Milu, 2012. "Land Constraints in Kenya’s Densely Populated Rural Areas: Implications for Food Policy and Institutional Reform," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134723, Agricultural Economics Society.
  13. Jayne, T. S. & Govereh, J. & Wanzala, M. & Demeke, M., 2003. "Fertilizer market development: a comparative analysis of Ethiopia, Kenya, and Zambia," Food Policy, Elsevier, vol. 28(4), pages 293-316, August.
  14. Omamo, Steven Were & Mose, Lawrence O., 2001. "Fertilizer trade under market liberalization: preliminary evidence from Kenya," Food Policy, Elsevier, vol. 26(1), pages 1-10, February.
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