Tahirou Abdoulaye (INRAN/DECOR) John Sanders () (Department of Agricultural Economics, College of Agriculture, Purdue University)
Abstract
New technology introduction in this semiarid region of the Sahel is hypothesized to be made more difficult by three price problems in the region. First, staple prices collapse annually at harvest. Secondly, there is a between year price collapse in good and very good years due to the inelastic demand for the principal staple, millet, and the large changes in supply from weather and other stochastic factors. Thirdly, government and NGOs intervene in adverse rainfall years to drive down the price increases. Marketing strategies were proposed for the first two price problems and a public policy change for the third. To analyze this question at the firm level a farm programming model was constructed. Based upon surveying in four countries, including Niger, farmers state that they have two primary objectives in agricultural production, first achieving a harvest income target and secondly achieving their family subsistence objective with production and purchases later in the year. Farmers are observed selling their millet at harvest and rebuying millet later in the year. So the first objective takes precedence over the second. A lexicographic utility function was used in which these primary objectives of the farmer are first satisfied and then profits are maximized. According to the model new technology would be introduced even without the marketing strategies. However, the marketing strategies accelerated the technology introduction process and further increased farmers’ incomes. Of the three marketing-policy changes only a change in public policy with a reduction of the cereal imports substantially increases farmers’ incomes in the adverse years. In developed countries crop insurance and disaster assistance is used to protect farmers in semiarid regions during bad and very bad (disaster) rainfall years. In developing countries finding alternatives to the povertynutritional problems of urban residents and poor farmers to substitute for driving down food prices in adverse years could perform the same function as crop insurance in developed countries of facilitating technological introduction by increasing incomes in adverse rainfall years.
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Publisher Info
Paper provided by Purdue University, College of Agriculture, Department of Agricultural Economics in its series Working Papers with number
05-07.
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