Incomplete Markets and Fertilizer Use : Evidence from Ethiopia

While the economic returns to using chemical fertilizer in Africa can be large, application rates are low. This study explores whether this is due to missing and imperfect markets. Results based on a panel survey of Ethiopian farmers suggest that w...

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Main Authors: Zerfu, Daniel, Larson, Donald F.
Format: Policy Research Working Paper
Language:English
Published: 2012
Subjects:
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100310104103
http://hdl.handle.net/10986/3721
id okr-10986-3721
recordtype oai_dc
spelling okr-10986-37212021-04-23T14:02:12Z Incomplete Markets and Fertilizer Use : Evidence from Ethiopia Zerfu, Daniel Larson, Donald F. ACCESS TO CREDIT AGRICULTURAL ECONOMICS AGRICULTURAL EXTENSION AGRICULTURAL INNOVATIONS AGRICULTURAL MARKET AGRICULTURAL MARKETING AGRICULTURAL MARKETS AGRICULTURAL OUTPUT AGRICULTURAL PRACTICES AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTION SYSTEMS AGRICULTURAL PRODUCTIVITY AGRICULTURAL RESEARCH AGRICULTURAL SYSTEMS AGRICULTURAL TECHNIQUES AGRICULTURE ASYMMETRIC INFORMATION BANKS BARLEY CEREAL CROPS CEREAL YIELDS CHEMICAL FERTILIZER CHEMICAL FERTILIZERS CLIMATE CLIMATES COMMERCIAL BANK COMMERCIALIZATION COOPERATIVES CREDIT EXTENSION CREDIT MARKETS CREDIT PROVISION CREDIT-WORTHINESS CROP CROP AREA CROP CHOICE CROPLAND CROPS DOWN PAYMENT DUNG ECOLOGICAL ZONE ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY EMPLOYEE EXPENDITURES FALLOWING FAMILIES FARM FARM HOUSEHOLD FARM MANAGEMENT FARM SIZE FARMER FARMERS FARMING FARMING HOUSEHOLDS FARMING METHODS FARMS FERTILIZER FERTILIZER APPLICATION FERTILIZER APPLICATIONS FERTILIZER CONSUMPTION FERTILIZER COST FERTILIZER DISTRIBUTION FERTILIZER MARKET FERTILIZER PRICES FERTILIZER RESEARCH FERTILIZER USE FERTILIZERS FINANCES FINANCIAL MARKETS FOOD DEMAND FOOD POLICY FOOD REQUIREMENT FOOD SECURITY GOVERNMENT POLICY GRAIN GRAIN MARKET GREEN REVOLUTION GROWING SEASON HUMAN CAPITAL IFPRI ILLITERACY INFORMAL LENDERS INTERNATIONAL BANK LABOR MARKET LABOR MARKETS LACK OF CREDIT LAND MARKETS LOAN MAIZE MAIZE PRODUCTION MANURE MARKET DEVELOPMENT MICRO-LENDING MICROFINANCE ORGANIC FERTILIZERS PESTICIDES PHOSPHATE PHOSPHATE FERTILIZERS PRICE VOLATILITY PRODUCE PRODUCTION TECHNOLOGIES PRODUCTIVITY GROWTH PROFITABILITY RAPE REPAYMENT REPAYMENT SCHEDULES SAVINGS SEED SEED TECHNOLOGY SEEDS SMALLHOLDER SMALLHOLDER FARMERS SOIL FERTILITY SOIL QUALITY SOIL TYPE SOILS SORGHUM TRADITIONAL SEEDS TRANSACTION COSTS UNION UREA VILLAGE VILLAGES WHEAT While the economic returns to using chemical fertilizer in Africa can be large, application rates are low. This study explores whether this is due to missing and imperfect markets. Results based on a panel survey of Ethiopian farmers suggest that while fertilizer markets are not altogether missing in rural Ethiopia, high transport costs, unfavorable climate, price risk, and illiteracy present formidable hurdles to farmer participation. Moreover, the combination of factors that promote or impede effective fertilizer markets differs among locations, making it difficult to find a single production technology that is uniformly profitable -- perhaps explaining the inconsistency between field studies finding large returns to fertilizer use in Ethiopia and survey-based studies finding fertilizer use to be uneconomic. The results suggest that households with greater stores of wealth, human capital and authority can overcome these hurdles. The finding offers some encouragement, but also implies a self-enforcing link between low agricultural productivity and poverty, since low-asset households are less able to overcome these problems. The study suggests that the provision of extension services can be effective and that lowering transport costs can raise the intensity of fertilizer use by lowering the cost of fertilizer and boosting the farmgate value of output. 2012-03-19T18:38:37Z 2012-03-19T18:38:37Z 2010-03-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100310104103 http://hdl.handle.net/10986/3721 English Policy Research working paper ; no. WPS 5235 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper Africa Africa Sub-Saharan Africa East Africa Ethiopia
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ACCESS TO CREDIT
AGRICULTURAL ECONOMICS
AGRICULTURAL EXTENSION
AGRICULTURAL INNOVATIONS
AGRICULTURAL MARKET
AGRICULTURAL MARKETING
AGRICULTURAL MARKETS
AGRICULTURAL OUTPUT
AGRICULTURAL PRACTICES
AGRICULTURAL PRODUCTION
AGRICULTURAL PRODUCTION SYSTEMS
AGRICULTURAL PRODUCTIVITY
AGRICULTURAL RESEARCH
AGRICULTURAL SYSTEMS
AGRICULTURAL TECHNIQUES
AGRICULTURE
ASYMMETRIC INFORMATION
BANKS
BARLEY
CEREAL CROPS
CEREAL YIELDS
CHEMICAL FERTILIZER
CHEMICAL FERTILIZERS
CLIMATE
CLIMATES
COMMERCIAL BANK
COMMERCIALIZATION
COOPERATIVES
CREDIT EXTENSION
CREDIT MARKETS
CREDIT PROVISION
CREDIT-WORTHINESS
CROP
CROP AREA
CROP CHOICE
CROPLAND
CROPS
DOWN PAYMENT
DUNG
ECOLOGICAL ZONE
ECONOMIC ACTIVITY
ECONOMIC DEVELOPMENT
ECONOMIC GROWTH
ECONOMIC POLICY
EMPLOYEE
EXPENDITURES
FALLOWING
FAMILIES
FARM
FARM HOUSEHOLD
FARM MANAGEMENT
FARM SIZE
FARMER
FARMERS
FARMING
FARMING HOUSEHOLDS
FARMING METHODS
FARMS
FERTILIZER
FERTILIZER APPLICATION
FERTILIZER APPLICATIONS
FERTILIZER CONSUMPTION
FERTILIZER COST
FERTILIZER DISTRIBUTION
FERTILIZER MARKET
FERTILIZER PRICES
FERTILIZER RESEARCH
FERTILIZER USE
FERTILIZERS
FINANCES
FINANCIAL MARKETS
FOOD DEMAND
FOOD POLICY
FOOD REQUIREMENT
FOOD SECURITY
GOVERNMENT POLICY
GRAIN
GRAIN MARKET
GREEN REVOLUTION
GROWING SEASON
HUMAN CAPITAL
IFPRI
ILLITERACY
INFORMAL LENDERS
INTERNATIONAL BANK
LABOR MARKET
LABOR MARKETS
LACK OF CREDIT
LAND MARKETS
LOAN
MAIZE
MAIZE PRODUCTION
MANURE
MARKET DEVELOPMENT
MICRO-LENDING
MICROFINANCE
ORGANIC FERTILIZERS
PESTICIDES
PHOSPHATE
PHOSPHATE FERTILIZERS
PRICE VOLATILITY
PRODUCE
PRODUCTION TECHNOLOGIES
PRODUCTIVITY GROWTH
PROFITABILITY
RAPE
REPAYMENT
REPAYMENT SCHEDULES
SAVINGS
SEED
SEED TECHNOLOGY
SEEDS
SMALLHOLDER
SMALLHOLDER FARMERS
SOIL FERTILITY
SOIL QUALITY
SOIL TYPE
SOILS
SORGHUM
TRADITIONAL SEEDS
TRANSACTION COSTS
UNION
UREA
VILLAGE
VILLAGES
WHEAT
spellingShingle ACCESS TO CREDIT
AGRICULTURAL ECONOMICS
AGRICULTURAL EXTENSION
AGRICULTURAL INNOVATIONS
AGRICULTURAL MARKET
AGRICULTURAL MARKETING
AGRICULTURAL MARKETS
AGRICULTURAL OUTPUT
AGRICULTURAL PRACTICES
AGRICULTURAL PRODUCTION
AGRICULTURAL PRODUCTION SYSTEMS
AGRICULTURAL PRODUCTIVITY
AGRICULTURAL RESEARCH
AGRICULTURAL SYSTEMS
AGRICULTURAL TECHNIQUES
AGRICULTURE
ASYMMETRIC INFORMATION
BANKS
BARLEY
CEREAL CROPS
CEREAL YIELDS
CHEMICAL FERTILIZER
CHEMICAL FERTILIZERS
CLIMATE
CLIMATES
COMMERCIAL BANK
COMMERCIALIZATION
COOPERATIVES
CREDIT EXTENSION
CREDIT MARKETS
CREDIT PROVISION
CREDIT-WORTHINESS
CROP
CROP AREA
CROP CHOICE
CROPLAND
CROPS
DOWN PAYMENT
DUNG
ECOLOGICAL ZONE
ECONOMIC ACTIVITY
ECONOMIC DEVELOPMENT
ECONOMIC GROWTH
ECONOMIC POLICY
EMPLOYEE
EXPENDITURES
FALLOWING
FAMILIES
FARM
FARM HOUSEHOLD
FARM MANAGEMENT
FARM SIZE
FARMER
FARMERS
FARMING
FARMING HOUSEHOLDS
FARMING METHODS
FARMS
FERTILIZER
FERTILIZER APPLICATION
FERTILIZER APPLICATIONS
FERTILIZER CONSUMPTION
FERTILIZER COST
FERTILIZER DISTRIBUTION
FERTILIZER MARKET
FERTILIZER PRICES
FERTILIZER RESEARCH
FERTILIZER USE
FERTILIZERS
FINANCES
FINANCIAL MARKETS
FOOD DEMAND
FOOD POLICY
FOOD REQUIREMENT
FOOD SECURITY
GOVERNMENT POLICY
GRAIN
GRAIN MARKET
GREEN REVOLUTION
GROWING SEASON
HUMAN CAPITAL
IFPRI
ILLITERACY
INFORMAL LENDERS
INTERNATIONAL BANK
LABOR MARKET
LABOR MARKETS
LACK OF CREDIT
LAND MARKETS
LOAN
MAIZE
MAIZE PRODUCTION
MANURE
MARKET DEVELOPMENT
MICRO-LENDING
MICROFINANCE
ORGANIC FERTILIZERS
PESTICIDES
PHOSPHATE
PHOSPHATE FERTILIZERS
PRICE VOLATILITY
PRODUCE
PRODUCTION TECHNOLOGIES
PRODUCTIVITY GROWTH
PROFITABILITY
RAPE
REPAYMENT
REPAYMENT SCHEDULES
SAVINGS
SEED
SEED TECHNOLOGY
SEEDS
SMALLHOLDER
SMALLHOLDER FARMERS
SOIL FERTILITY
SOIL QUALITY
SOIL TYPE
SOILS
SORGHUM
TRADITIONAL SEEDS
TRANSACTION COSTS
UNION
UREA
VILLAGE
VILLAGES
WHEAT
Zerfu, Daniel
Larson, Donald F.
Incomplete Markets and Fertilizer Use : Evidence from Ethiopia
geographic_facet Africa
Africa
Sub-Saharan Africa
East Africa
Ethiopia
relation Policy Research working paper ; no. WPS 5235
description While the economic returns to using chemical fertilizer in Africa can be large, application rates are low. This study explores whether this is due to missing and imperfect markets. Results based on a panel survey of Ethiopian farmers suggest that while fertilizer markets are not altogether missing in rural Ethiopia, high transport costs, unfavorable climate, price risk, and illiteracy present formidable hurdles to farmer participation. Moreover, the combination of factors that promote or impede effective fertilizer markets differs among locations, making it difficult to find a single production technology that is uniformly profitable -- perhaps explaining the inconsistency between field studies finding large returns to fertilizer use in Ethiopia and survey-based studies finding fertilizer use to be uneconomic. The results suggest that households with greater stores of wealth, human capital and authority can overcome these hurdles. The finding offers some encouragement, but also implies a self-enforcing link between low agricultural productivity and poverty, since low-asset households are less able to overcome these problems. The study suggests that the provision of extension services can be effective and that lowering transport costs can raise the intensity of fertilizer use by lowering the cost of fertilizer and boosting the farmgate value of output.
format Publications & Research :: Policy Research Working Paper
author Zerfu, Daniel
Larson, Donald F.
author_facet Zerfu, Daniel
Larson, Donald F.
author_sort Zerfu, Daniel
title Incomplete Markets and Fertilizer Use : Evidence from Ethiopia
title_short Incomplete Markets and Fertilizer Use : Evidence from Ethiopia
title_full Incomplete Markets and Fertilizer Use : Evidence from Ethiopia
title_fullStr Incomplete Markets and Fertilizer Use : Evidence from Ethiopia
title_full_unstemmed Incomplete Markets and Fertilizer Use : Evidence from Ethiopia
title_sort incomplete markets and fertilizer use : evidence from ethiopia
publishDate 2012
url http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100310104103
http://hdl.handle.net/10986/3721
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