Soil Fertility Management Choice in the Maize-Based Smallholder Farming System in Malawi. Hardwick Tchale, Peter Wobst and Klaus Frohberg

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1 Afrcan Assocaton of Agrcultural Economsts. Shapng the Future of Afrcan Agrculture for Development: The Role of Socal Scentsts. Proceedngs of the Inaugural Symposum, 6 to 8 December 2004, Grand Regency Hotel, Narob, Kenya Sol Fertlty Management Choce n the Maze-Based Smallholder Farmng System n Malaw Hardwck Tchale, Peter Wobst and Klaus Frohberg Hardwck Tchale, Center for Development Research, Unversty of Bonn Walter Flex Str. 3, 53113, Bonn, Germany, Emal: htchale@yahoo.co.uk Abstract: The paper analyses the factors that affect smallholder farmers choce of sol fertlty management optons n Malaw usng a two-stage mamum lkelhood estmaton procedure. Usng results from the Double-Hurdle model, the paper estmates the probabltes and ntenstes of fertlzer applcaton condtonal on choce of norganc fertlzer. The fndngs ndcate that relatve wealthy ndcators, human captal, credt and market access, food securty ndex and land pressure are the man factors that greatly nfluence farmers choce and ntensty of nput nvestment. Although there s a hgh and postve correlaton between probablty of adopton and ntensty of applcaton, factors that nfluence adopton are not necessarly the same as those that nfluence the ntensty of applcaton, condtonal on adopton. The paper concludes wth polcy and research mplcatons amed at nformng the debate on enhancng sustanable sol fertlty management among smallholder farmers n Malaw.. Keywords: sol fertlty management, smallholder farmers, Double-Hurdle model, Malaw 1. Introducton Improvng sol fertlty management among smallholder farmers s wdely recognzed as a crtcal aspect n addressng food nsecurty and poverty, especally n Sub-Saharan Afrca, where up to 90% of the populaton n most countres earns ther lvelhood as smallholder farmers (Donovan and Casey 1998; Freeman and Omt 2003). Sustaned sol fertlty management has been an mportant factor n ncreasng productvty, but ths has been a challenge to Sub-Saharan Afrca where on average, the rate of nput ntensty s estmated at between 8-12 kg ha -1 compared to over 83 kg ha -1 for all developng countres (see for example Stoorvogel and Smalng 1990; Mwang 1997). Due to many compellng reasons, whch manfest themselves n ncreasng the relatve cost of norganc fertlzers, a number of tradtonal low-cost sol fertlty management optons have emerged, especally targeted at smallholder farmers 1. In Malaw, over the last sx agrcultural seasons, government polcy has seemngly been promotng the ntegraton of norganc fertlzers and gran legumes wthn the tradtonal maze-based farmng systems. Ths has been seen, for example, through the dstrbuton of norganc fertlzer and gran legume seeds through the Targeted Inputs Programme (TIP) mplemented snce Promoton of ntegrated sol fertlty management stems from the realzaton that smallholder farmers do not have the capacty to apply ether opton n optmal quanttes. Besdes, there are obvous dsadvantages assocated wth ether opton when used ndependently, even n the less lkely event of farmers beng able to apply optmal quanttes. Despte government support, research results stll ndcate dsmal adopton of the optons that have been developed (Kumwenda et al. 1996). One attrbutng factor s that the techncal feasblty of such optons s not consstent wth the actual farm condtons. Moreover, the development process of the optons has not 1 Government supported the development of best-bet sol fertlty optons through the Maze Productvty Task Force startng from the second half of the 1990s. Sol fertlty optons developed through ths programme ncluded, but not lmted to: groundnut (Arachs hypogea), velvet beans (Mucuna prurens), soybeans (Glycne max.) and pgeonpea (Cajanas cajan) ncorporaton ether n rotaton or ntercrop wth maze. Techncal results from research show that these technologes mprove maze yeld sgnfcantly (see for example the work of the Sol Fertlty Network n Eastern and Southern Afrca n Waddngton et al. 2004).

2 adequately ncorporated soco-economc and lvelhood condtons whch are at the core of farmers decson-makng. As such, effectve polcy support n sol fertlty management requres knowledge of the factors that compel farmers to arrve at the choces they make. Thus, the objectve of ths study s to assess the factors that determne smallholder farmers choce of sol fertlty management optons. Ths study focuses on ntegrated sol fertlty management optons nvolvng norganc fertlzer and gran legumes, but more especally the former, because whether or not farmers adopt the low-cost sol fertlty optons, sgnfcant yeld effects are obtaned wth applcaton of norganc fertlzers. Thus norganc fertlzer s stll the key nput that would ncrease the ncentve for adopton of other optons because even the bologcal ntrogen fxaton functon assocated wth gran legumes s greatly reduced when some nutrents are defcent. Whle other studes have approached a smlar problem usng the Heckman procedure (Mnot et al. 1999), logstc analyss (Green and Ng ong ola 1993) and nput demand analyss (Reardon et al. 1999), ths paper compares the results from a jont Tobt and a Double-Hurdle models because we assume that factors that affect farmers choce of an opton should not necessarly be the same as those that affect the ntensty of applcaton. Ths s because the decson to choose a partcular sol fertlty opton s obvously assocated wth some threshold effects. Although the Heckman model has been wdely used to analyze such type of selectvty bas, t s not the most effcent estmator and Kennedy (1998) refers to t as a second best alternatve to the full nformaton mamum lkelhood (FIML) approach. Furthermore, Davdson and MacKnnon (1993) recommend usng the Heckman procedure only to test for the presence of selectvty bas. In terms of polcy relevance, our analyss clearly shows that adopton and ntensty may be dfferent decsons and that estmaton of ntensty on the bass of factors affectng adopton, as mpled by other approaches, may be lable to error. The rest of the paper s arranged as follows: the next secton revews related research and ths s followed by the theoretcal and emprcal specfcaton of the model. Secton three descrbes the data used n the analyss followed by the model dagnostcs and dscusson of results. The fnal secton draws some conclusons and polcy mplcatons from the results. 2. Farmers Choce of Sol Fertlty Management Technologes: Revew of Related Research A revew of the lterature on adopton of both norganc and organc sol fertlty management nputs among smallholder farmers n Malaw reveals very low and nconsstent uptake rates (Green and Ng ong ola 1993; Kumwenda et al. 1995; Mnot et al. 2000). 2 Wth the dsrupton of hybrd maze and fertlzer uptake, whch occurred n the late 1980s and early 1990s, fertlzer use on maze has been contnuously low. Both demand and supply constrants have contrbuted towards the low fertlzer uptake and have renforced a spral of low agronomc productvty, whch results n reduced effectve nput demand. The stuaton has also been aggravated by the stagnant aggregate fertlzer supply and less effectve dstrbuton mechansms. From the demand sde, the major factor that depresses fertlzer uptake s the ncrease n the domestc fertlzer prce relatve to output prce. Because all fertlzers n Malaw are mported, domestc prces are nvarably senstve to devaluaton. 3 The effect has been further compounded because Malaw deprecated ts foregn exchange regme at roughly the same tme when the country s agrcultural polcy serously embarked on full lberalzaton of the nput and output market, whch necesstated the removal of nput subsdes. 4 Supply sde constrants pont to structural problems related to mportaton due to the country s land-locked poston. The bulk of smallholder fertlzer s stll handled through the parastatal nsttutons: Smallholder Farmers Fertlzer Revolvng Fund of Malaw (SFFRFM) and Agrcultural Development and Marketng Cooperaton (ADMARC), because even though the market s lberalzed, prvate traders are few and often fnd t dffcult to gan an ncreasng share of the market due to the poor state of development of 2 Ths s n spte of the donor-funded programmes that dstrbuted free seed and nterest free nput credt wth the am of stmulatng nput use among smallholder farmers. The major programmes ncluded: The Drought Recovery Input Programme (from 1995/96); The Agrcultural Productvty Investment Programme (from 1996/97) and The Starter Pack Scheme now called the Targeted Inputs Programme (from 1998/99). 3 The Malaw Kwacha has been deprecated so many tmes snce 1994, from as low as MK9/US$ to MK45/US$ n 1999 and nearly MK110/US$ as of the present. As such the average prce of a 50kg bag of hgh analyss fertlzers such as 23:21:0+4s, Urea and CAN have ncreased nearly ffteen-fold from an average of MK100 n 1994/95 to over MK1500 at present. 4 The nput subsdes were gradually reduced from 11% n 1994 to zero n 1995/96 (Ng ong ola 1996).

3 the rural nfrastructure (Kherallah and Govndan 1999; Ng ong ola et al. 1997). As such, the nput retal prce s substantally hgher thus makng the product hghly unaffordable by the majorty of the smallholder farmers. Relatvely low maze: ntrogen prce ratos have been experenced snce the 1990s because even though both the maze and fertlzer markets are deregulated, the rate at whch fertlzer prce ncreases s hgher relatve to that of maze. Apart from the prce related varables, soco-economc varables such as wealth status, human and physcal captal endowment, nsttutonal support and locaton specfcty.e. access to markets (product, nput and captal), are some key varables that largely explan the choce of sol fertlty management optons (Green and Ng ong ola 1993; Mnot et al. 2000). Natural causes, such as mosture stress due to drought also result n low responses to nputs, whch further depresses the relatve proftablty of sol fertlty nputs. Gven all these constrants, the yeld response of low cost sol fertlty optons s often so low makng such nputs effectvely costly, especally when used wthout norganc fertlzer. 3. Theoretcal and Emprcal Model Tradtonal models that emprcally assess agrcultural household behavour are largely based on the deas portrayed n the orgnal peasant household models of Chayanov (1966) and Sngh et al (1986), among others. The basc dea s that agrcultural households am at mamzng ther consumpton or reducng the varaton of consumpton possbltes. In most developng countres, where t s assumed that some or all markets are dysfunctonal, most agrcultural household models assume that utlty mamzaton s constraned, frst by the resources wth whch to satsfy consumpton, and second by the consderaton of the safety-frst prncple whch requres that consumpton should not fall below certan mnmum subsstence level (see Roy 1952; Thorner et al. 1986; de Janvry et al. 1991). Thus we assume a representatve household that mamzes an ntertemporal utlty from own producton, expressed as a concave functon of consumpton and lesure: hh Max Ut = U ( ca, cm, cl; z ) 1 Where ca, cm and c l are, respectvely, quanttes consumed of own produced agrcultural commodty, a manufactured commodty and lesure; z hh s a combnaton of household characterstcs that nfluence consumpton patterns. Ths equaton mples that n hghly agraran socetes where off-farm sources of ncome are an nsgnfcant share of total household ncome, the ntertemporal utlty U s essentally a functon of own producton of crops whose proceeds are used to fnance the purchase of other essental commodtes not produced on the farm. Ths utlty functon s attaned subject to two condtons: the households ntertemporal resource endowment, whch s gven as a standard budget constrant and the producton technology. These are expressed as: paqa + S = pxqx + pmqm 2 Where pa, pm and pxare the farm-gate prces for agrcultural commodty, manufactured commodty and varable producton nputs, respectvely, qa, qm and q l are the respectve quanttes and S represents exogenous ncome transfers. The producton technology s expressed as: q qa = q( qx, ql, z ) 3 q Where z are farm household characterstcs that nfluence producton. The equlbrum condton mples that the tme a household allocates to own producton s the dfference between total tme endowment and lesure. Thus: cl = T ql 4 Where T s the total tme endowment for the household. Lkewse quantty consumed of the agrcultural commodty should be equal to the quantty produced plus purchases (ncludng carryover stocks), q p mnus sales, q s.

4 ca = qa qs + qp 5 Combnng the utlty mamzaton equaton (1) and the constrants (2-5) yelds the followng Lagrangean functon: Max U = U + λ( paqa + S pmqm pxqx) + φ qa + µ a() v + µ T( T ql cl) 6 Where v= qa qs + qp The frst order condtons from the Lagrangean equaton (6), nclude, but not lmted to: U = qa = 0 (technology constrant) 7 φ U = p a q a + S = p m q m + p x q (cash ncome constrant) 8 x λ U = v = c a = q a q s + q p (equlbrum condton for food) 9 µ a U = c l = T q l (equlbrum condton for labour) 10 µ l The frst order condton (7) mples that the attanment of the household utlty depends very much on the producton functon because ca s one of the arguments n the utlty functon, but also that farmers manly fnance the purchase of manufactured goods c m and external nputs q x through the sale of agrcultural commodtes as shown n the cash ncome constrant (2). As such the choce of the sol fertlty management opton that mamzes producton and net ncome becomes crtcal n the ntertemporal utlty mamzaton decson. The theoretcal framework mples that the decson to chose a gven sol fertlty management opton wll not only depend on the margnal beneft and margnal cost crteron, but wll also depend on the household s ablty to satsfy ts own consumpton, gven the sol fertlty management opton. Thus: q hh qa = q( pa, px, qx, pm, z, z, T, S) 11 When farmers make jont producton and consumpton decsons, producton s nfluenced by factors specfed n equaton 11. Ths forms the bass for the specfcaton of the emprcal model of sol fertlty management choce. A lot of emprcal models have been specfed to explan farmers technology choce decsons. However, as Morrs and Adelman (1998) argue, there s no sngle theory of causaton that can fully embrace the dfferent facets of farmers decson-makng process. Tolman (1967) defnes adopton as a functon of soco-economc and envronmental factors and that t s endogenous to the nteracton of these factors. Düvel (1994) and Adesna et al. (1995), among others, argue that adopton s governed by a set of ntervenng varables, whch nclude ndvdual and technology attrbutes and the way these attrbutes nteract wthn a gven soco-economc envronment. Followng Feder, Just and Zlberman (1985), Rogers (1995) and Thangata et al. (2003), we defne adopton as a decson to make use of an nnovaton as an optmal course of acton n the long-run equlbrum after the decson maker s fully aware of the technology and ts attrbutes. The most commonly used analytcal models n adopton studes are based on the attrbute theory of Lancaster (1966; 1971) and Gorman (1980), whch are an extenson of the earler theoretcal work on dscrete choce by Quandt and Baumol (1966). These models analyze the ratonal decson makng process n choosng among alternatves characterzed by attrbutes that may be unobserved by the analyst but are assumed to be observed and acted upon by the decson-makers. Examples of the most commonly used ratonal choce models nclude but not lmted to; Lnear Probablty models (LPM), Probt and Logt Models (Maddala, 1988; Badu-Forson, 1999). However, Gujarat (1988) reported that the Lnear Probablty Models are not an attractve modelng opton because they tend to be affected by a number of problems ncludng heteroscedastcty, generally lower R 2 values, and possblty of the predcted value lyng outsde the 0-1 (the expected range of a probablty).

5 The dscrete decson of whether to use norganc fertlzers and how much to apply s estmated usng two models: a censored Tobt model (Just and Zlberman 1984; Freeman and Omt 2003) and a Double-Hurdle model (Cragg 1971). The observed data on farmers use of norganc fertlzers contan a cluster of zeros and some very low applcaton rates. 5 Thus norganc fertlzer use data s censored from the lower tal by specfyng the level of ntensty below whch a farmer s not regarded as havng adopted, n order to control for the smallholder farmers that have been beneftng from the Targeted Inputs Programme (TIP) for the past sx seasons. Thus the Tobt model assumes a latent varable x that s generated by the followng functon: ' = β xz + ε 12 Where s the latent varable that truncates the norganc fertlzer use, z s a vector of farmer household characterstcs and norganc fertlzer attrbutes perceved by the farmer, β s a vector of coeffcents and ε s a vector of error terms, assumed to be ndependently and normally dstrbuted wth mean zero and 2 constant varanceσ. Gven ths functon, the specfcaton of the farmers norganc fertlzer adopton wll be expressed as: = f d and = 0 f < d 13 Where d s an establshed threshold that dstngushes norganc fertlzers adopters to non-adopters. The probablty functon for the non-adopters s: ' β xz px ( < d) =Φ 14 σ and the densty for the adopters s gven as: ' 1 β z x Θ f( ) σ σ f( d) = = 15 ' px ( d) β z x Φ σ Where Φ(.) and Θ(.) are the standard normal cumulatve and probablty densty functons (cdf and pdf), respectvely. The densty functon represents the truncated regresson model for those farmers whose observed norganc fertlzer ntensty s greater than the threshold.e. the adopters. The log-lkelhood functon for the Tobt model s gven as a summaton of the probablty functons for both adopters and non-adopters. β z 1 x β z ln L = ln 1 Φ + ln Θ ' ' x x < d σ 16 d σ σ The ssue of whether or not to estmate a jont Tobt model n adopton studes arses when one assumes that the z that affect a farmers decson to chose to apply norganc fertlzers also ncrease the mean amount to be appled (e.g. Ln and Schmdt 1984; Kachova and Mranda 2004). In the case of smallholder agrculture, the decson to apply fertlzer s lkely to be nfluenced by some threshold effects, such as cash constrants and other resource endowments, thus, we hypothesze that the decson process s rather comprsed of two stages. Other researchers have relaxed the assumpton nherent n the jont Tobt model 5 Ths was observed to be the case mostly because of the Targeted Inputs Programme that dstrbuted small packs of norganc fertlzer and seed to farmers.

6 by specfyng a Double-Hurdle model n whch the adopton and determnaton of the level of ntensty of applcaton are seen as a two-step procedure (see for example Cragg 1971). In ths specfcaton, the decson model treats adopton separately from the level of ntensty, and mples the estmaton of separate equatons n 17 and testng f there s any sgnfcant dfference n the lkelhood ratos. Cragg (1971) observed that n cases where adopton decsons are nfluenced by threshold effects, the decson to adopt mght n fact precede that on ntensty of adopton. To test ths assumpton we chose to compare the results of the two models. Based on the specfcaton by Cragg (1971) and Moffat (2003), the Double-Hurdle model essentally contans two equatons: 1 f d y = and = zβ + ε y = zβ + u 0 f < d ε where N, 2 17 u 0 0 σ Where y s a dependent dchotomous choce varable, takng on value of 1 f the rate of norganc fertlzer s equal or greater than the threshold rate, d or 0 f t s less than the threshold rate. y =. varable for the ntensty equaton condtonal on 1 y s dependent β and β are the parameters for the frst and second hurdles, respectvely. The estmated form for both stages and the expected parameter sgns s specfed as: Where y = βo + β1sex + β2age + β3educ β4depratio + β5lhscap β6plm + β7phyv + β8btob + β9ymin + β10lsu + β11mxcess + β12credit + β13ext + β14fsi β15inpcost β16lnlb + ε β 's are the parameters to be estmated, SEX, AGE, EDUC are respectvely, the sex, age and educatonal level of the household head, DEPRATIO s the dependency rato wthn the household, LHSCAP s the per capta land holdng sze, PLM, PHYV and PTOB are respectvely, the proporton of land allocated to local maze, hybrd maze and tobacco, YMIN s the mnmum ncome requrement for basc lvelhood, LSU s the lvestock unts, MXCESS s dummy varable measurng the household s access to an output and nput market, CREDIT s a varable whch ndcates the amount of agrcultural credt the household obtaned wthn the season, EXT s the frequency of extenson contact, FSI s the food securty ndex, INPCOST s the proportonate cost of sol fertlty management n total household expendture, LNLB s the land to labour rato and ε s a normally dstrbuted error term. Measurement unts for these varables are provded n Table Data The study s based on data collected from a household and plot level data conducted n three agroecologcal zones n Malaw from May to December The data was collected usng a structured questonnare admnstered to a random sample of about 390 households. The characterstcs of the varables across all farmer groups dfferentated by the choce of the sol fertlty management opton are presented n Table 1. The soco-economc characterstcs nclude the human captal aspects such as age, sex and educatonal level of the household head, the dependency rato wthn the household as well as the household s wealth status ndcators such as the food securty ndex, the mnmum subsstence requrement and the asset endowment (proed by amount of lvestock unts and land: labour 18

7 rato) 6. The land: labour rato s partcularly mportant because of the need to test the assumpton that as land pressure ncreases, farmers are lkely to ntensfy ther sol management efforts so as to mprove productvty. Table 1: Explanatory varables n the model Varable Acronym Summary statstcs Inorganc Integrated Total fertlzer only Organc Total count (%) N= Sex (dummy 0,1) SEX Male Female Age (years) AGE 43.4 (15.6) 43.8(15.6) 43.6(15.7) Educaton (years) EDUC 5.2(1.0) 3.1(1.1) 4.1(1.0) Dependency rato (%) DEPRATIO 63.1(15.4) 59.7(17.6) 61.2(16.8) Land holdng sze LHSCAP 0.30(0.3) 0.29(0.26) 0.299(0.26) (ha/capta) % local maze area PLM 18.5(16.6) 30.5(13.1) 25.3(14.0) % hybrd maze area PHYV 23.3(22.2) 9.2(2.7) 16.9(12.0) % burley tobacco area PTOB 16.3(14.0) 4.4(11.9) 10.2(12.9) Mnmum Income YMIN ( ( ( ) (MK/year) 7) 7) Lvestock unts (LSU) LSU 0.56(0.08) 0.16(0.04) 0.33(0.06) Market access (km) MXCESS 4.50(1.0) 4.86(0.6) 4.70(0.8) Credt access (MK/year) CREDIT ( ( ) ( ) ) Extenson access (No. of EXT 0.61(0.9) 0.43(0.8) 0.51(0.9) vsts per month) Food securty Index (%) FSI 68.2(27.3) 33.4(26.1) 48.4(31.7) Input nvestment cost (%) INPINV 36.1(35.4) 44.2(47.6) 39.3(38.2) Sol fertlty ndces % Ntrogen TOTALN 0.12(0.08) 0.09(0.07) 0.11(0.07) % sol organc matter ORGANM 1.04(0.4) 1.08(0.5) 1.06(0.5) P H SFI_3 5.82(0.75) 6.34(0.73) 6.11(0.79) Bulk densty (g cm -3 ) SFI_4 1.65(0.3) 1.62(0.3) 1.64(0.3) Land: Labour rato LNLB (0.027) 0.020(0.016) 0.020(0.022) Fgures n parenthess are standard devatons. Sg. at 10%; sg. at 5%; sg. at 1%. We also nclude varables that defne the croppng pattern of the households such as the proporton of total land allocated to man smallholder crops: local maze, hybrd maze and burley tobacco as well as access to 6 The food securty ndex s calculated as the percentage of total Calorfc requrements satsfed from ts own producton, or usng ncome generated from own producton. The mnmum subsstence requrement s derved as the mnmum calores per capta per year multpled by the number of consumpton unts wthn the household. A lvestock unt for tropcal speces s equvalent to 250 kg lve-weght (De Leeuw and Tothll 1990). Input nvestment cost s calculated as the proporton of total nput cost n total farm ncome.

8 credt and extenson. Attrbutes of the sol fertlty opton nclude the nput cost as a proporton of the net farm ncome as well as the sol fertlty ndces (defned by the percentage of N and percentage of sol organc matter). We expect all resource endowment and wealth proxy varables to be postvely related to the lkelhood and level of fertlzer uptake because wealther farmers are capable of takng rsks snce they are more lkely to have addtonal resources to fall back on (see Feder et al. 1985; Clay et al. 1998; Freeman and Omt 2003). Smlarly, farmer educaton level and frequency of extenson contact are lkely to postvely nfluence farmers demand for norganc fertlzers because exposure to techncal nformaton may make farmers more adept to acqure, nterpret and use techncal advce. Access to credt s also expected to ncrease the lkelhood as well as the ntensty of applyng norganc fertlzers because t relaxes the lqudty constrant. The croppng pattern s also lkely to nfluence uptake of sol fertlty management optons. In most cases experence has shown that farmers that decde to grow nput ntensve crops such as hybrd maze and burley tobacco are more lkely to apply norganc fertlzer and at relatvely hgher rates than those that do not grow these crops. Food securty ndex s ncluded on the premse that a hgher food securty ndex mples that the household s more self-suffcent n food and such households are lkely to be better off smallholders that are lkely to apply hgher levels of norganc fertlzer. Otherwse, households wth lower food securty ndex are for most part of the year pre-occuped wth survval or copng mechansms and have less tme to manage ther own farms. We also antcpate an nverse relatonshp between share of subsstence ncome n total ncome and nput use. The technology attrbutes are meant to assess whether farmers percepton of the proftablty of the sol fertlty optons as well as the fertlty of ther plots do nfluence ther choce of an opton and the level of ntensty once the choce has been made. The proftablty varable s expected to be postvely related to nput use whle the effect of the sol fertlty ndces depends on ther mpact on yeld. Because of the mpact of transactons costs on the nput budget, we expect farmers who are close to nput and output market to be more lkely to adopt and use hgher levels of norganc fertlzers compared to those n remote areas. 5. Results and Dscussons The results for both the jont Tobt and Double-Hurdle model are presented n Table 2. Comparson of these results confrms our hypothess that factors affectng the decson to adopt norganc fertlzer mght not necessarly nfluence (by same magntude and drecton) the ntensty of norganc fertlzer applcaton. In the jont Tobt model, the Log Lkelhood rato, gven by the Ch-square statstc test s hghly sgnfcant at 1% level ndcatng that the chosen ndependent varables ft the data reasonably well. The R-squared value s also acceptable gven the cross-secton data we used for the analyss. In the dagnoss, we noted some moderate level of skewness, especally gven the censorng of the dependent varable. Thus we chose to use the Box-Cox transformaton n order to avod volatng the normalty assumpton (Moffat 2003). The results from the jont Tobt model ndcate that level of educaton, farmers age, per capta land holdng sze, the percentage of land allocated to hybrd maze and burley tobacco, market access, number of extenson vsts, credt access, food securty ndex have a postve and sgnfcant nfluence on farmers level of ntensty of norganc fertlzer. Other varables that are postvely related to ntensty of use of norganc fertlzer, but are not sgnfcant are the asset status (proed by lvestock unts LSU); the degree of land pressure (proed by the land to labour rato); the sol fertlty ndces (plot level % sol organc matter and total ntrogen) and the locaton specfc dummes. As expected, the proporton of nput cost n total household expendture s negatve and sgnfcantly related to ntensty of nput use. Most of the results confrm our a pror expectatons and are consstent wth other research fndngs. For example, t s plausble that educated or experenced farmers are more lkely to opt for norganc fertlzers because as other research fndngs have reported, educaton ncreases farmers productvty by mprovng

9 the level of understandng whch makes them able to effectvely process techncal nformaton relatvely faster than uneducated farmers. In the absence of hgher educaton, t s experence that makes a dfference (Kabede et al. 1990; Freeman and Omt 2003; Jagger and Pender 2003; Adesna 1996; Adesna and Znnah 1993 and Adesna et al. 2000). Per capta land holdng sze s also an mportant varable that explans farmers ablty to apply norganc fertlzers because ths enables the household to dversfy ts croppng patterns nto cash crops such as burley tobacco. Ths s supported n ths study by the postve and sgnfcant effect of the proporton of land under hybrd maze and burley tobacco. However, when land s consdered relatve to the avalable labour, we see that land pressure s also postvely (although not sgnfcant) related to ntensty of norganc fertlzer. Ths confrms that smallholder households facng land pressure are more lkely to adopt mproved sol fertlty management technologes as a means to ntensfy productvty to meet ther consumpton needs (Adesna 1996). Improvements n market access and provson of seasonal agrcultural credt are more lkely to ncrease farmers ntensty of applyng norganc fertlzers because they all reduce the relatve cost of fertlzers, the former through the reducton n transactons costs whch nvarably reduce the retal prce of fertlzers and the later through ts effect of reducng the farmers lqudty constrants (Mwang 1997). In ths analyss, we controlled for the nput cost as a proporton of farmers total expendture, and ths varable comes out hghly sgnfcant as a dsncentve for farmers to ncrease the level of norganc fertlzers. The other varable that nfluences norganc fertlzer ntensty s the food securty ndex. Farmers that are food nsecure are less lkely to apply hgher levels of norganc fertlzers. Ths s the key varable that perpetrates the food nsecurty trap because wthout any external nterventon, a chroncally food nsecure household s less lkely to break out of the trap. The results from the Double-Hurdle regresson on the decson to adopt norganc fertlzer ndcate that educaton, land holdng, croppng patterns, credt, land pressure and food securty sgnfcantly explan the varaton n the decson to nvest n sol fertlty management through norganc fertlzer applcaton. Unlke n the jont Tobt model, land to labour rato s hghly postve and sgnfcantly related to norganc fertlzer uptake, confrmng the hypothess that as land pressure ncreases, farmers resort to more productve ways of ntensfcaton. Market access and food securty are also sgnfcantly related to the decson to apply norganc fertlzer. Although the extenson varable s postve, t s not sgnfcant. The fndng that extenson s not sgnfcant n explanng norganc fertlzer adopton may suggest that extenson n tself does not ncrease farmers chances of adoptng norganc fertlzer. Ths may not at all be surprsng because n the case of Malaw, snce the demse of the Smallholder Agrcultural Credt Admnstraton (SACA) n the early 1990s, the provson of publc extenson servce has been completely de-lnked from credt servces. Also, there s research evdence of mxed performance of publc extenson systems n dssemnatng techncal nformaton, especally due to budget cuts towards the provson of publc extenson servces (Barrett et al. 2002). We also note that the frst hurdle s negatvely affected by the nput cost, mplyng that most farmers are not able to afford norganc fertlzer largely due to the cost element. The sgnfcance of credt supports conventonal wsdom that, other factors beng equal, t s the cash constrant that would compromse farmers ablty to fnance the purchase of fertlzers and ths has justfed the provson of seasonal agrcultural credt. In terms of the area-specfc dummes, the results ndcate that smallholder farmers n Mzuzu agro-ecologcal zone are more lkely to apply norganc fertlzers than those of Llongwe. Among other reasons, Mzuzu s located n the northern regon where average poverty levels are lower than those of other regons (Government of Malaw 2000). In the case of the ntensty equaton, we note that sex, age and educaton are just as mportant n explanng the ntensty, condtonal on adopton of norganc fertlzer, as other varables such market access, extenson, food securty and land pressure. Thus male and experenced farmers are more lkely to apply hgher quanttes of norganc fertlzer. However, n ths case, the land pressure varable becomes negatve, mplyng that as land ncreases relatve to labour, farmers are unable to apply hgher amounts of organc fertlzer. Wth lmted opportuntes to hre n labour, large farms are just as unproductve as smaller farms, thus not beng able to afford norganc fertlzer. As such, whle per capta land holdng sze s mportant n explanng adopton, t does not sgnfcantly nfluence the ntensty decson once the adopton decson has been made. Experence has shown that ncreased pressure on agrcultural land drves away excess labour to off-farm actvtes, and the revenue generated from off-farm actvtes s seldom used to fnance the purchase of nputs. The other ssue we note from the ntensty equaton s that norganc fertlzer ntensty

10 s lkely to be hgher on land wth hgher sol fertlty ndex. Ths s because of hgh response rates that enable farmers to afford norganc fertlzers. Table 2: Mamum lkelhood estmates for the jont Tobt and Hurdle models Varable Jont Tobt estmates Double-Hurdle estmates Coeffcent Margnal Selecton equaton Intensty equaton (std. errors) effects Coeff. (Std. error) Coeff. (std.error) Age 0.24 (0.2) (2.57) 0.12(0.04) Sex 5.16(4.7) (0.08) 2.50(0.15) Educaton 12.12(2.5) (9.4) 5.15(0.42) Land holdng sze 6.43(9.83) (0.73) 0.50(2.43) % local maze area -0.17(0.09) (4.75) -0.06(0.03) % hybrd maze area 0.009(0.1) (0.70) 0.02(0.017) % tobacco area 0.12(0.14) (0.64) 0.01(0.06) Lvestock unts 2.61(2.52) (14.68) 0.44(0.43) Market access 5.61(5.76) (0.56) 4.41(2.56) Credt access 0.94(1.1) (0.15) 0.40(0.23) Extenson access 6.81(3.90) (16.36) 3.49(1.17) Food securty ndex 0.43(0.08) (8.71) 0.12(0.02) Input cost -2.08(0.44) (0.37) -0.21(0.12) Land: labour rato 0.06(0.11) (3.49) -0.03(0.02) Total ntrogen 49.06(29.6) (18.33) -0.15(7.20) Sol organc matter (5.8) (2.72) 4.04(0.58) Mzuzu ADD 8.30(5.9) (3.09) 2.02(1.86) Llongwe ADD 2.91(5.7) (2.93) 0.19(1.47) Constant -82.1(17.3) (3.75) (4.11) No. of obs Ch-square LL_functon Pseudo R Sgma Lambda 0.80 Note: (P<0.000); (P<0.05); (P<0.10) 6. Conclusons and Polcy Implcatons These results ndcate the relatve mportance of each of the varables dscussed n the adopton and ntensty analyss and may specfcally pont to areas or strateges that may have to be consdered n order to mprove farmers ablty to adopt, and ncrease ntensty of use of norganc fertlzers. For example, the major hurdles n terms of probablty of adopton and ntensty of applcaton are capacty to afford and access nputs as well as the perceved ncentves. The results ndcate an nverse relatonshp between the nput output rato (Input cost varable) and both the probablty and ntensty of fertlzer applcaton. Controllng for other factors, market access s postvely related to choce and ntensty. The other capacty varable that s postvely related to the frst hurdle s the land:labour rato. Food secure households are three tmes more lkely to adopt and apply hgher levels of norganc fertlzers than food nsecure households. Our results ndcate that although n general there s a postve correlaton between probablty of adopton and ntensty of fertlzer applcaton, we note some dfferences wth regard to the factors that nfluence the two decsons. We note that whle resource endowment n land, relatve cost and access are mportant factors that allow farmers to be able to surmount the frst hurdle, soco-economc varables such age and sex of the household head also nfluence the ntensty of applcaton.

11 These results have a number of mplcatons n terms of sustanng smallholder agrculture, whch s crtcal n arrestng food nsecurty and poverty. Frst, snce the choce of the sol fertlty management opton s hghly dependent on the capacty of the farmer to afford such nvestment, there s need for a more pro-poor focused approach to acheve sustanable sol fertlty management among smallholder farmers. Agrcultural polcy can be made more pro-poor f t focuses on programmes that would promote the prvate ncentves of sustanable sol fertlty management optons. For nstance, ncreased budgetary support to agrcultural research and development, extenson, seasonal agrcultural credt and promoton of access to vable sol fertlty technologes n the rural areas would help reduce the opportunty costs that farmers perceve when makng decsons on approprate sol fertlty management optons. Secondly, gven that factors that affect adopton are not necessarly the same as those that nfluence ntensty, t s mportant to consder both stages n evaluatng strateges amed at promotng sustanable sol fertlty management n the smallholder sub-sector. Acknowledgements The paper was prepared wth the support from the Polcy Analyss for Sustanable Agrcultural Development (PASAD) group of the Internatonal Doctoral Program (IDP) at the Center for Development Research, Unversty of Bonn. Fundng for the research was provded through the German Academc Exchange Servce (DAAD). The Authors sncerely acknowledge the fundng. However, the opnons expressed n ths paper are those of the Authors and do not reflect the vews of PASAD, Center for Development Research or DAAD. Bblography Ade Freeman, H., and J.M. Omt Fertlzer use n sem-ard areas of Kenya: analyss of farmers adopton behavour under lberalzed markets. Nutrent Cyclng on Agro-ecosystems 66: 23-31, Kluwer Academc Publshers, Netherlands. Adesna, A.A Factors affectng the adopton of fertlzers by rce farmers n Cote d Ivore. Nutrent Cyclng Agroecosystems 46: Adesna, A.A. and J. Badu-Forson Farmers percepton and adopton of new agrcultural technology: evdence from analyss n Burkna Faso and Gunea, West Afrca. Agrcultural Economcs Vol. 13: 1-9. Adesna, A.A. and M.C. Znnah Technology characterstcs, farmers perceptons and adopton decsons: a Tobt model applcaton n Serra Leone. Agrcultural Economcs Vol. 9: Adesna, A.A., D. Mbla, G.B. Nkamleu and D. Endamana Econometrc Analyss of Adopton of Alley Farmng by Farmers n the Forest Zone of South West Cameroon. Agrculture, Ecosystems and Envronment 80: Badu-Forson, J Factors affectng adopton of land enhancng technology n the Sahel: Lessons from case study of Nger. Agrcultural Economcs 20: Barrett, C.B., Place, F., Aboud, A., and Brown, D.R The challenge of stmulatng adopton of mproved natural resources management practces n Afrcan agrculture. In: Barrett, C.B., Place, F., and Aboud, A. (Eds.). Natural resources management n Afrcan agrculture: Understandng and mprovng current practces. CAB Internatonal, Wallngton, UK, pp Byerlee, D., wth P. Anandajayasekeram, A. Dallo, B. Gelaw, P.W. Hesey, M. Lopez-Perera, W. Mwang, M.Smale, R.Trpp and S.Waddngton Maze Research n Sub-Saharan Afrca: An overvew of past mpacts and future prospects. CIMMYT Economcs Workng Paper Meco, D.F.: CIMMYT. Chayanov, A.V The theory of peasant economy. In: D. Thorner, B. Kerblay and R.E.F. Smth (Eds.). Irwn, Homelands, Illnos. Clay, D., Reardon, T., and Kangasnem, J Sustanable ntensfcaton n the hghlands tropcs: Rwandan Farmers nvestment n land conservaton and sol fertlty. Economc Development and Cultural Change 46: Cragg, J.G., Some statstcal models for lmted dependent varable wth applcaton to the demand for durable goods. Econometrca 39: de Janvry, A., M. Fafchamps and E. Sadoulet Peasant Household Behavor wth Mssng Markets: Some Paradoxes Explaned. Economc Journal 101(409):

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