Improved Legume Seed Demand Systems in Central Malawi: What Do Farmers' Seed Expenditures Say about Their Preferences?

The overall objective of this paper is to assess the demand for improved groundnut, bean, and soybean seed in central Malawi. Specifically, it examines how smallholder farmers respond to changes in market prices of improved legume seed. It also assesses factors that affect the decision to participate in improved seed technology transfer. Considering four commodities namely groundnuts, beans, soybeans and maize, a staple food, the paper estimates a multivariate probit and a linear approximate of the Almost Ideal Demand System (LA/AIDS) using cross section data collected by ICRISAT in 2010. Uncompensated price and expenditure elasticities are reported for the LA/AIDS model. The paper finds high own price elasticities in all four commodities considered. It also indicates that land, household size and education levels affect participation in improved technology. The results further reveal that improved groundnut seed has a substitutive relationship with soybeans. Groundnut and bean cross price elasticity showed an almost unitary relationship with groundnut but groundnut showed complementary relationship with maize seed. Beans showed a less than unitary substitutive relationship with soy and an elastic substitution with maize. Soybean had a substitutive relationship with all seed commodities in question. As pertain expenditure elasticities, farmers would increase expenditure on improved groundnut and beans if their incomes increased. The results also reveal that if farmers’ incomes increase they would reduce soybean’s expenditure share. The results generally show that farmers are very sensitive to changes in improved legume seed prices and incomes.