Impact Of Agricultural Market Reforms On Smallholder Farmers In ...

Table 5.14 provides a definition and descriptive statistics for the explanatory variables used in the
analysis.
Determinants of the decision to use fertilizer in Malawi. Table 5.15 shows the factors
that influence the decision to use fertilizer. The results can be summarized as follows:
Secondary education has a significant effect on the likelihood to use fertilizer.
Presumably, a higher level of education increases the awareness of farmers about the
benefits of fertilizer. Age of the household head, household size, and household
composition are all statistically insignificant.
Keeping everything else constant, female-headed households may be more likely to
use fertilizer than male-headed ones, although this effect is only significant at the 8
percent level and the difference in the probability is only 2 percentage points. This
suggests that when other factors are controlled for, there is no gender bias against
women in fertilizer use.
Plot size increases the likelihood of using fertilizer. For each 1 hectare increase, the
probability of using fertilizer on the plot rises by 12 percent. The coefficient on the
squared plot size variable indicates that this effect tampers off as plot size increases.
Total farm size, on the other hand, has no effect on the probability of using fertilizer.
The regional dummies suggest that farmers in the North are most likely to apply
fertilizer to a given plot, other factors held constant, followed by farmers in the Center
and then farmers in the South. This result confirms the evidence that fertilizer use in
the South is more limited.
The price of fertilizer does not seem to have a significant effect on the probability of
using fertilizer. The wage variable and the price of tobacco are also statistically
estimating these two relationships separately will generate biased and inconsistent estimates of .
Heckman proposed a two-step procedure, but computational capacity now allows simultaneous estimation
of , , and =cov(u 1 ,u 2 ) with maximum likelihood methods. Thus, the Heckman procedure generates one
set of coefficients predicting the probability that a household will use fertilizer (P) and another set ( )
predicting the volume of fertilizer used (y) provided it uses some.
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