smallholder market participation concepts and evidence from eastern and southern africa abstract this paper reviews the evidence on smallholder market participation with a focus on staple foodgrains i e cereals in eastern and southern africa in an effort to help better identify what interventions are most likely to break smallholders out of the semi subsistence poverty trap that appears to ensnare much of rural africa the conceptual and empirical evidence suggests that interventions aimed at facilitating smallholder organization at reducing the costs of intermarket commerce and perhaps especially at improving poorer households access to improved technologies and productive assets are central to stimulating smallholder market participation and escape from semi subsistence poverty traps macroeconomic and trade policy tools appear less useful in inducing market participation by poor smallholders in the region

what are the farm level impacts of malawi s farm input subsidy program a critical review this article provides a critical analysis of the current frontier of research evaluating malawi s farm input subsidy program fisp whose main objectives are increasing maize production promoting household food security and enhancing rural incomes we focus on farm level studies in malawi identifying consistent and contrasting research results in order to draw important policy lessons and provide suggested avenues for future research while national production estimates suggested dramatic increases in maize production and productivity during the years of the fisp the farm level studies found relatively modest increases in maize production and yields over the same period consistent with the farm level results of modest maize production increases there has been a relative increase in real maize prices and the country continued to import maize during most of the subsidy program years furthermore there is evidence that better off households gained substantially more than poorer households when they participated in the program together these findings cast some doubt on the fisp s ability to reduce food insecurity and poverty we propose a number of policy lessons and suggestions for rigorous investigation including research that directly measures the causal impacts of the fisp program on poverty in malawi

smallholder dairying under transactions costs in east africa abstract it is argued that dairying is vital to future viability of many small farms in east africa and that high transactions costs for dairy production and marketing limit participation by asset and information poor smallholders case studies from kenya and ethiopia illustrate the role of dairy cooperatives in reducing transactions costs analysis of the determinants of producer prices received by a sample of dairy producers near addis ababa suggests that different levels of access to infrastructure assets and information explain why they contemporaneously accept widely different producer prices for fluid milk

rural development finance in vietnam a microeconometric analysis of household surveys abstract this study examines a the rural household participation in the vietnamese rural credit market b the behavior of a formal lender in response to the credit needs of households and c the impact of credit the rural credit market in vietnam is quite segmented the formal sector specializes in lending for production purposes whereas the informal sector s lending is quite diverse we show that rural households are rational in deciding which sources to ask for a particular kind of loan reputation the dependency ratio of households and the amount of credit applied for by the household are identified as the determinants of credit rationing by the bank credit is shown to have a significant impact on household production

duty fear and tax compliance the heuristic basis of citizenship behavior theory the costs imposed by income tax and other citizenship duties provide powerful incentives to free ride yet the likelihood of getting caught the primary self interested deterrent to free riding is unlikely to be known with much accuracy by most citizens thus the duty heuristic provides not only a direct motivation to comply but also influences behavior through cognitive processes that bias self interested beliefs about the advantages of free riding hypothesis citizens beliefs about their duty to obey laws of the state bias their information processing and judgements about the fear of getting caught and punished for disobedience so citizens reporting greater commitment to obey tax laws systematically overestimate the expected penalty for noncompliance methods regression analysis of survey and tax return data for 445 taxpayers results subjective risk of getting caught is more closely related to duty than to objective risk factors objective audit probabilities affect only taxpayers with greater temptation to cheat but duty influences tempted taxpayers as much as ordinary taxpayers

tax evasion and heuristics a research note abstract the paper examines the heuristics which taxpayers use in making tax evasion decisions the following propositions are tested in an experiment using students first the taxpaper s own level of evasion will be positively related to what he perceives as the levels of evasion by others second taxpayers who have been audited are more likely to assess the probability of audit as higher and therefore decrease their levels of evasion the experimental results fail to support the first proposition but do support the second suggesting the presence of an availability effect

rural infrastructure transactions costs and market participation in kenya abstract we develop a conceptual framework for quantifying fixed transactions costs facing semisubsistence households using household survey data from a sample of 324 kenyan maize farmers we jointly estimate household supply and demand schedules and transactions costs econometric results indicate that on average the ad valorem tax equivalent of fixed transactions costs for households in our sample is 15 additional analysis indicates that economic isolation is positively associated with the size of transactions costs to the best of our knowledge ours are the first empirical estimates of the magnitude of fixed transactions costs for agricultural households in developing countries

understanding the process of agricultural technology adoption mineral fertilizer in eastern dr congo summary we analyze the adoption of mineral fertilizer in south kivu we model technology adoption as a three step process including awareness tryout and adoption and empirically analyze these steps using cross sectional farm household data and bivariate and heckman selection probit models we find that awareness about fertilizer is high 57 and mainly determined by education and social capital tryout is low 13 of aware farmers but positively influenced by extension interventions continued adoption is high 70 of tryout farmers but capital constraints are important and not all extension interventions are effective for continued adoption our results entail implications for extension policies in poor areas

unraveling the effect of targeted input subsidies on dietary diversity in household consumption and child nutrition the case of malawi abstract malawi s farm input subsidy program fisp has generated significant attention with several studies showing an increase in maize production since the inception of the program in 2005 but stagnating poverty levels in this study i examine whether and how fisp has affected dietary diversity in household food consumption and child nutrition i find that children under the age of five living in households that received a voucher between 2008 and 2013 for the purchase of fertilizer have a statistically significantly higher at the 1 level weight for age weight for length height and body mass index than children living in non recipient households i also find that households having received a voucher consume cereals nuts vegetables meats and fruits more frequently than non recipient households the analysis uses two stage least squares to account for the endogeneity of selection into the fertilizer subsidy program i test the robustness of these results using child fixed effects the results indicate that past studies evaluating fisp failing to account for the positive gains in child nutrition and household food consumption diversity may be underestimating its benefits

linking risk aversion time preference and fertilizer use in burkina faso this paper investigates whether burkinabe maize farmers fertilizer use decisionsare correlated with their risk and time preferences we conducted a survey and a se ries of hypothetical experiments on a sample of 1 500 farmers we find that morepatient farmers do use more fertilizer but it is only because they plant more maize afertilizer intensive crop rather than because they use more fertilizer per hectare ofmaize planted conversely we find no statistically significant link between risk aver sion and fertilizer use we use a simple two period model which suggests that riskaversion may indeed have an ambiguous effect on fertilizer use

agriculture in africa telling myths from facts a synthesis stylized facts drive research agendas and policy debates yet robust stylized facts are hard to come by and when available often outdated in a special issue of food policy 12 papers revisit conventional wisdom on african agriculture and its farmers livelihoods using nationally representative surveys from the living standards measurement study integrated surveys on agriculture initiative in six african countries at times the findings simply confirm the common understanding of the topic but the studies also throw up several surprises redirecting some policy debates while fine tuning others overall the project calls for more attention to checking and updating the common wisdom this requires nationally representative data and sufficient incentives among researchers and policy makers alike without well grounded stylized facts they can easily be profoundly misguided

the effect of friendly persuasion and gender on tax comliance behavior friendly persuasion in contrast to deterrent measures like tax audits and penalties on underreported taxes is a positive and possibly a cost effective method of increasing taxpayer compliance however prior studies have failed to show that friendly persuasion has a significant impact on compliance blumenthal et al 2001 mcgraw and scholz 1991 in our study in contrast to prior studies we examine the impact of generating and reading reasons supporting compliance as friendly persuasion on individuals income reporting behavior as well as control for gender effects specifically we predict an interaction effect between friendly persuasion and gender on compliance behavior we carried out a 2 friendly persuasion and control 2 men and women full factorial experiment where participants earned 30 by completing two questionnaires participants in the friendly persuasion group were required first to generate and second to read a list of reasons why they should comply fully afterwards participants in both groups were asked to report the income they earned and pay tax on the reported income the results show a significant main effect for gender as well as a significant interaction effect between gender and friendly persuasion on income reported women in the friendly persuasion group reported significantly higher income compared to men in that group other comparisons were not significant policy implications for increasing taxpayers ethics and compliance are highlighted

state conditional fertilizer yield response on western kenyan farms 15 16 17 we acknowledge with gratitude support from the rockefeller foundation the united states agency for 18 international development usaid leadership enhancement in agriculture program leap and the 19 coupled natural and human systems program of the biocomplexity initiative of the national science 20 foundation through grant bcs 0215890 the world agroforestry center icraf graciously hosted 21 the lead author for part of the research and provided soil test results we are also grateful to james

fertilizer market development a comparative analysis of ethiopia kenya and zambia abstract this article synthesizes case studies from kenya zambia and ethiopia to assess how differences in the implementation of fertilizer marketing policies have affected the costs and risks borne by marketing actors the investment response by private traders and fertilizer consumption financial cost accounting techniques indicate that domestic marketing costs account for 50 or more of farm gate prices the sum of importer wholesaler and retailer profit margins generally account for less than 10 there are opportunities to reduce domestic marketing costs through the following reducing port fees coordinating the timing of fertilizer clearance from the port with up country transport reducing transport costs through port rail and road improvements reducing high fuel taxes and reducing the uncertainty associated with government input distribution programs that impose additional marketing costs on traders estimated reductions in the farm gate price of fertilizer from implementing the full range of options identified in each country range from 11 to 18 price reductions of this magnitude if passed along to farmers would increase farmers effective demand for fertilizer investments in selected publically provided goods often considered outside the scope of fertilizer marketing policy per se strongly affect the costs of fertilizer farmers willingness to pay for it and hence the performance of markets

the economics of poverty traps and persistent poverty empirical and policy implications the moral and economic imperatives to intervene in poverty traps motivate the identification of poverty traps and their structural causes so as to inform the design of appropriate policy responses however empirical identification remains challenging because of poverty traps complexity after reviewing mechanisms that can generate poverty traps we focus on one multiple financial market failures emphasising its heretofore underappreciated testable implications including specific behaviours that are rational only in the presence of a poverty trap we therefore recommend tests for these behaviours rather than more econometrically challenged efforts to directly test for poverty traps in estimated asset dynamics

soil quality and fertilizer use rates among smallholder farmers in western kenya studies of fertilizer use in sub saharan africa have been dominated by analyses of economic and market factors having to do with infrastructure institutions and incentives that prevent or foster increased fertilizer demand largely ignoring how soil fertility status conditions farmer demand for fertilizer we apply a switching regression model to data from 260 farm households in western kenya in order to allow for the possibility of discontinuities in fertilizer demand based on a soil carbon content scc threshold we find that the usual factors reflecting liquidity and quasi fixed inputs are important on high scc plots but not on those with poorer soils external inputs become less effective on soils with low scc hence the discernible shift in behaviors across soil quality regimes for many farmers improved fertilizer market conditions alone may be insufficient to stimulate increased fertilizer use without complementary improvements in the biophysical conditions that affect conditional factor demand

peasant household behaviour with missing markets some paradoxes explained a model of peasant household behavior under varying degrees of household specific food and labor market failures is constructed to show that these structural features can explain several well known patterns of peasant response which have often been attributed to peculiar motives presumed specific to peasants the model explains sluggish response to cash crops prices and high instability in perceived food and labor scarcities the key role of manufactured consumer goods prices in stimulating peasants effort in cash crops production the effectiveness of taxation as opposed to incentives in stimulating cash crops production and the key role of technological change in food production to enhance cash crop production results are obtained analytically in the case of one market failure and by numerical simulation with more than one

rural financial markets in developing countries their use and abuse until recently the use of agricultural credit as a developmental tool seemed clear and straightforward most concerned people believed that increases in the volume of cheap credit were necessary to boost agricultural production and that the rural poor could be brought into the mainstream of development through supervised credit programs it seemed that certain ideal types of rural credit institutions offered the promise of meeting farmers credit needs and that experience in the industrialized countries with cooperatives and specialized agricultural finance institutions could be effectively transplanted to low income countries this collection of readings highlights facets of rural financial markets that have often been neglected in discussions of agricultural credit in developing countries it moves beyond a narrow concern with the simple provision of credit to a broad consideration of the performance of rural financial markets and of ways to improve the quality and range of financial services for low income farmers it reflects new thinking on the design administration evaluation and policy framework of rural finance and credit programs in developing countries

transactions costs and agricultural household supply response we develop and estimate a model of supply response when transactions costs create a situation where some producers buy others sell and others do not participate in markets we present two rationales for why producing households may have different relationships to the market proportional and fixed transactions costs using data on mexican corn producers we estimate an empirical model that allows for separate tests of the significance of both types of transactions costs revealing that both fixed and proportional transactions costs matter for the estimation the results provide consistent estimates of supply elasticity and measures of the relative importance of factors determining both proportional and fixed transactions costs

an ordered tobit model of market participation evidence from kenya and ethiopia do rural households in developing countries make market participation and volume decisions simultaneously or sequentially this article develops a two stage econometric method to test between these two competing hypotheses regarding household level marketing behavior the first stage models the household s choice of whether to be a net buyer autarkic or a net seller in the market the second stage models the quantity bought sold for net buyers sellers based on observable household characteristics using household data from kenyan and ethiopian livestock markets we find evidence in favor of sequential decision making the welfare implications of which we discuss

understanding fertilizer adoption and effectiveness on maize in zambia abstract increased fertilizer use will likely be crucial for raising and sustaining farm productivity in africa but adoption may be limited by ineffectiveness under certain conditions this article quantifies the impacts of soil characteristics on maize response to fertilizer in zambia using a nationally representative sample of 1453 fields combining economic farm management and soil analysis data depending on soil regimes average maize yield response estimates range from insignificant 0 to 7 maize kg per fertilizer kg for the majority of farmers the estimated average value cost ratio is between 1 and 2 meaning fertilizer use would be fiscally rational barring uncertainty and transfer costs since transfer costs exist and outcomes are uncertain however many farmers may sensibly pause before deciding whether to adopt fertilizer this suggests shifting the emphasis of chronically low fertilizer use in africa away from explanations of market failure toward greater emphasis on improving fertilizer efficacy

is increasing inorganic fertilizer use for maize production in ssa a profitable proposition evidence from nigeria inorganic fertilizer use across sub saharan africa is generally considered to be low yet the notion that fertilizer use is too low is predicated on the assumption that it is profitable to use rates higher than currently observed there is however limited empirical evidence to support this using a nationally representative panel dataset this paper empirically estimates the profitability of fertilizer use for maize production in nigeria we find that fertilizer use in nigeria is not as low as conventional wisdom suggests low marginal physical product and high transportation costs significantly reduce the profitability of fertilizer use apart from reduced transportation costs other constraints such as soil quality timely access to the product and availability of complementary inputs such as improved seeds irrigation and credit as well as good management practices are also necessary for sustained agricultural productivity improvements

walking inside the potential tax evader s mind tax morale does matter we conduct an empirical study on the determinants of the psychological costs of tax evasion also known as tax morale as a preliminary step we build a model of tax evasion including non monetary considerations show the relationship between tax compliance and tax morale in the empirical analysis of tax morale we find using a binomial logit model that the justification of tax evasion can be explained by the presence of grievance in absolute terms those who feel that taxes are too high those who feel that public funds are wasted and those who accept underground economic activities and grievances in relative terms the suspected level of others tax evasion the sense of duty and the level of solidarity are also relevant factors but to a lesser extent

the definition of part time employment a switching regression model with unknown sample selection rejecting the standard less than thirty five hours per week categorization of part time workers this paper offers an empirically justified definition of the part time employed the definition is based on the distinction through wage payments that employers make between a high hours full time and a low hours part time group of workers a switching regression model of wage equations with deterministic but unknown sample selection is estimated resulting in a significant split between high hours and low hours workers that is higher than the standard definition wage differentials are calculated and decomposed and estimates from the structural choice model are presented copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

technology diffusion outcome variability and social learning evidence from a field experiment in kenya this article explores the mechanisms through which social learning mediates technology diffusion we exploit an experiment on the dissemination of biochar a soil amendment that can improve fertility on weathered and or degraded soils we find that social networks transmit information about the average benefits of adoption but also its risk and that observed variability inhibits uptake to a greater degree than positive average results engender it paradoxically this relationship is stronger among networks that do not discuss farming but disappears among farmer networks that do this is resolved with a simple model of social learning about conditional rather than unconditional benefit distributions as farmers observe factors associated with outcomes in their networks they constrain the distribution of their own potential outcomes this conditional distribution diverges from the unconditional distribution that the econometrician observes we conclude that social learning is characterized by implicit model building by sophisticated decision makers rather than simple herding towards observed good results

quantifying the impact of services liberalization in a developing country the authors consider how service liberalization differs from goods liberalization in terms of welfare the level and composition of output and factor prices within a developing economy in this case tunisia despite recent movements toward liberalization tunisian service sectors remain largely closed to foreign participation and are provided at high cost relative to many developing nations the authors develop a computable general equilibrium cge model of the tunisian economy with multiple products and services and three trading partners they model goods liberalization as the unilateral removal of product tariffs restraints on services trade involve both restrictions on cross border supply mode 1 in the gats and on foreign ownership through foreign direct investment mode 3 in the gats the former are modeled as tariff equivalent price wedges while the latter are comprised of both monopoly rent distortions arising from imperfect competition among domestic producers and inefficiency costs arising from a failure of domestic service providers to adopt least cost practices they find that goods trade liberalization yields a gain in aggregate welfare and reorients production toward sectors of benchmark comparative advantage however a reduction of services barriers in a way that permits greater competition through foreign direct investment generates larger welfare gains service liberalization also requires lower adjustment costs measured in terms of sectoral movement of workers than does goods trade liberalization and it tends to increase economic activity in all sectors and raise the real returns to both capital and labor the overall welfare gains of comprehensive service liberalization amount to more than 5 percent of initial consumption the bulk of these gains come from opening markets for finance business services and telecommunications because these are key inputs into all sectors of the economy their liberalization cuts costs and drives larger efficiency gains overall the results point to the potential importance of deregulating services provision for economic development

tax avoidance as a sustainability problem this manuscript proposes that tax avoidance can be better understood and mitigated as a sustainability problem tax avoidance is not just a financial problem for tax authorities but one that erodes critical common spaces necessary for the smooth functioning of regulatory compliance organizational integrity and society defining tax avoidance as a sustainability problem offers a broader and more holistic understanding of the organizational and societal consequences of tax avoidance behavior sustainability is also a mature and legitimized concept that can readily incorporate taxation a variety of established sustainability metrics have the capacity to incorporate anti tax avoidance measures or publicize firms that engage in fair tax practices this manuscript concludes that integrating sustainability principles in conjunction with important extant work on corporate social responsibility and taxation can advance the goals of decreasing the occurrence and acceptability of tax avoidance

breaking ground unearthing the potential of high resolution remote sensing soil data in understanding agricultural profits and technology use in sub saharan africa summary there is a growing interest in how land degradation affects the welfare of the rural poor especially where environmental conditions continue to worsen and the future of ecosystem health remains uncertain nowhere is this more important than in sub saharan africa where rural poverty remains high and pressure on natural resources continues to build at the same time generating more agricultural profits on this land remains crucial to reducing poverty this research asks how changing land quality as measured by soil organic carbon soc content affects agricultural profitability and agricultural technology adoption for poor farmers in tanzania it is the first to match high resolution remote sensing soil data to nationally representative household plot surveys using the world bank s living standards measurement study and world agroforestry centre s land degradation surveillance framework we employ a household fixed effects model that isolates soc contributions to plot level agricultural profits finding positive changes of 7 8 per acre per year for each gram per kilogram change in soc with higher sensitivity to soc differences for farmers with worse quality land soc and fertilizer use also exhibit a positive synergistic interaction with plot level agricultural profits despite this however we find that soc levels do not factor into fertilizer adoption decisions and land quality has a smaller role in how farmers assign value to their land compared to how it contributes to profits partly because of a lack of matched high resolution and nationally representative environmental and socioeconomic data researchers and policymakers typically have not been able to include land quality as a primary dimension on which to analyze agricultural profitability and technology use in sub saharan africa we conclude that this should be a major factor in both targeting rural development and environmental policies and understanding impacts of long run land health declines on the world s poor

the complex dynamics of smallholder technology adoption the case of sri in madagascar this article explores the dynamics of smallholder technology adoption with particular reference to a high yielding low external input rice production method in madagascar we present a simple model of technology adoption by farm households in an environment of incomplete financial and land markets we then use a probit model and symmetrically censored least squares estimation of a dynamic tobit model to analyze the decisions to adopt expand and disadopt the method we find that seasonal liquidity constraints discourage adoption by poorer farmers learning effects both from extension agents and from other farmers exert significant influence over adoption decisions

factors explaining the low and variable profitability of fertilizer application to maize in zambia it is widely recognized that an african green revolution will require greater use of inorganic fertilizers often made comparisons note that fertilizer use rates in africa are just 10 20 of those in asia europe and the americas most attempts to explain relatively low adoption of fertilizer assume yield responses to inorganic fertilization warrant higher application rates and hypothesize that observed use rates are limited by market based factors another explanation may be that application rates are low because african yields are less responsive to inorganic fertilizer than yields in other regions and less responsive than analysts perceive examining the case of zambia we evaluate whether yield response to fertilizers could explain adoption and application rates a model of yield response is constructed and a combination of estimators is employed to mitigate potential biases related to correlation between fertilizer use and unobserved heterogeneity as well as stochastic shocks results indicate higher fertilization rates would be marginally profitable or unprofitable in many cases given commercial fertilizer and maize prices phosphoric fertilizer is particularly unprofitable on acidic soils which are common in zambia and other areas of sub saharan africa we propose feasible recommendations for diversifying the current government strategy to enhance crop productivity

a selectivity model of household food marketing behavior in sub saharan africa the agricultural household s discrete decision of whether to participate in coarse grain markets is separated here from the continuous decision of how much to sell or buy conditional on participation failure to participate in markets results from high fixed transactions costs a selectivity model endogenously switches households into alternative market participation states correcting for bias caused by the exclusion of unobservable variables affecting both discrete and continuous decisions improved market information increases the probability of participation by sellers while access to cereals processing technology increases quantities transacted by both sellers and buyers conditional on participation

the impacts of hybrid maize seed on the welfare of farming households in kenya this paper explores the impacts of hybrid maize adoption on the welfare of farming households in kenya we use a four year panel dataset to estimate the effects of hybrid seed use on four indicators of household welfare namely income assets inequality and poverty results show that use of hybrid seed not only contributes to higher annual income but also to raising the value of assets possibly reflecting longer term welfare effects further we find that use of hybrid seed reduces the depth of poverty and that the amount planted reduces inequality as expected impacts differ between major and minor maize growing areas of the country maize farmers who do not use hybrid seed are clearly disadvantaged this calls for continued public and private investments in the infrastructure and policy process that supports a competitive liberalized seed industry and improved access of smallholder farmers to well adapted affordable hybrids