Profitability Of Fertilizer Use On Maize By Small-Scale Farming Households In Zambia

Multi-year nationwide survey data is used to estimate maize yield response functions and determine profitability of fertilizer use by small-scale farmers in Zambia. Most previous research on economics of fertilization used estimates of yield response to nutrients based on experimental or simulation data and seldom investigated region-specific and management-specific effects. In this paper we address the main issues arising from using large survey data and estimate maize yield response functions for different groups of households that have various management practices and soil conditions in two major agro-climatic zones. Profitability of fertilizer use is determined for each group in each zone and the results provide the following messages. First, households that obtained fertilizer on time and used animal draught power or mechanical power for land preparation are more likely to find fertilizer use profitable than other groups of households located in the same district. Second, farmers' proximity to the provincial centers has a significant impact on the profitability of fertilizer use. Greater distances and transport costs from provincial centers erode the profitability of fertilizer use. Third, high time preferences for money also reduce the profitability of fertilizer use. Thus, despite achieving relatively high physical crop response rates to fertilizer use in some areas, small farmers may find fertilizer use unprofitable until efforts are made to reduce transportation costs and implicit interest rates as well as to ensure more timely delivery of fertilizer.