Is Dirt Cheap ? The Economic Costs of Failing to Meet Soil Health Requirements onSmallholder Farms

Agricultural productivity is hindered in smallholder farming systems due to several factors,including farmers’ inability to meet crop-specific soil requirements. This paper focuses on soil suitability formaize production and creates multidimensional soil suitability profiles of smallholder maize plots in Uganda,while quantifying forgone production due to cultivation on less-than-suitable land and identifying groups of farmersthat are disproportionately impacted. The analysis leverages the unique socioeconomic data from a subnational surveyconducted in Eastern Uganda, inclusive of plot-level, objective measures of maize yields and soil attributes.Stochastic frontier models of maize yields are estimated within each soil suitability class to understand differencesin returns to inputs, technical efficiency, and potential yield. Only 13 percent of farmers are cultivating soil thatis highly suitable for maize production, while the vast majority are cultivating only moderately suitable plots.Farmers cultivating highly suitable soil have the potential to increase their observed yields by as much as 86 percent,while those at the opposite end of the suitability distribution (with marginally suitable land) operate closerto the production frontier and can only increase yields by up to 59 percent, given the current technology set. There isheterogeneity in potential gains across the wealth distribution, with poorer households facing more heavilyconstrained potential. Assuming no change in technologies and management practices used by Ugandan farmers, there arelimited economic gains tied to closing suitability class-specific productivity gaps, or even at the extremereaching the average potential productivity levels observed in the high suitability class.