An Economic Assessment of Banana Genetic Improvement and ...

90 CHAPTER 7
by-products of other farm activities, and
there is virtually no market for sales or purchase
of these inputs. 1 Use of the organic
fertilizers increases the productivity of land
allocated to banana, which increases the
amount of bananas available for household
consumption and the surplus for sale. The
yield effect of organic fertilizers is significantly
superior to those of the traditional
technology, especially when soil fertility
has deteriorated. When markets are imperfect,
differences in household endowments
create differences in levels of investment in
soil management practices.
The application of organic fertilizers
requires additional resources in the form of
labor or cash income to hire labor. The
farmer incurs some variable cost (in terms
of time or money paid to hired labor) to
gather, transport, and apply the organic fertilizers.
Reliance on family labor in production
implies that leisure is valued by its
marginal worth to the household rather than
as an opportunity cost imputed from a market
wage rate.
The farmer also bears a fixed cost of
information acquisition. Information about
the recommended technology can be obtained
from extension educators, other farmers’
experiments in the community, and/or
from own experimentation. Following the
structural adjustment programs implemented
in Sub-Saharan Africa, including
Uganda, access to agricultural extension by
the majority of small farmers was curtailed
significantly. Farmer experimentation and
social learning are currently the primary
sources of information about new technologies.
Even when extension is provided,
agents tend to give general information, and
a farmer who is less familiar with the improved
technology may decide to allocate a
small portion of his/her land to gain more
knowledge about its relevance, resulting in
partial use of the technology.
Banana output under the improved management
technology ( f l ) is:
q 1 = f 1 _ A
1
, L, F XF, XM, Kti . (1)
Following the model of Isham (2000)
and Feder and Slade (1984), it is assumed
that the stock of knowledge evolves as a
function of experience in years with the
technology (τ), a set of diffusion parameters
(Ω D ) and different forms of social capital
(Ω S ). Diffusion parameters include cumulative
contact with the extension educators and
other formal information institutional factors
within the community. The stock of knowledge
can be expressed as:
K t = k(τ, Ω D , Ω S ).
The traditional management technology
uses only labor (L) and land to produce banana
output for a given set of farm characteristics
(Ω F ) and market constraints (Ω M ). The
knowledge stock is excluded from the banana
production using the traditional management
technology, because the technology has been
in the communities for many years and all
farmers are assumed to have full information
about it. Banana output under the traditional
management technology is given by the following
production function:
T T T
q = f _ A , L XF, XMi . (2)
The two technologies compete for land
allocated to banana production (A 1 + A T =
Ā). The household can choose to manage all
its bananas with the improved management
technology or with the traditional management
technology. The household also has
the option to allocate part of the banana
area under the improved management technology
and the remainder of the banana
area to the traditional technology. The share
of the banana area the farmer allocates to
the improved management technology (δ)
1
Household demand for this type of input is conditional on its own supply.