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

Perhaps the strongest factor determining fertilizer use is whether or not the household grows cotton.
Almost all (97 percent) of cotton growers use fertilizer but less than one-quarter (24 percent) of
farms not growing cotton use fertilizer. Furthermore, cotton farmers use almost three times as
much fertilizer than do non-cotton farmers that use fertilizer. Of course, cotton farmers (located in
the center and north) also have larger farms, but even on a per-hectare basis, cotton farmers use
more fertilizer. The overall intensity of fertilizer use is 92 kg/ha among cotton growers and just 16
kg/ha among other farmers (see Table 4.1.60). These sharp differences are due to the fact that
cotton farmers have access to fertilizer on credit, while other farmers generally do not, as well as to
the economic returns from fertilization of cotton.
Regression analysis of fertilizer demand This section uses regression analysis to
examine the factors influencing the amount of fertilizer applied on a given plot. Because many
plots receive no fertilizer, the standard linear regression model would produce biased results. For
this reason, we use the Heckman model, 8 which generates one equation describing the decision
whether or not to use fertilizer and another equation describing the quantity used, assuming that
some fertilizer is applied.
The factors influencing the decision to use fertilizer on a given plot are summarized as follows:
Other things equal, a large household is more likely to use fertilizer than a small one. This
result is understandable given the labor requirements of fertilizer application, the increased
weeding associated with fertilizer use, and the fact that household members are the main
source of labor for Bénin farmers.
Ethnicity has a surprisingly strong effect on whether or not a farmer uses fertilizer. A
household from the Fon (ethn1) or Nago (ethn3) group is less likely to use fertilizer, while
one from the Adja (ethn2) group is more likely relative to other groups. These differences
may agro-climatic variation, since ethnic groups tend to be geographically concentrated in
Bénin.
8
The Heckman model describes a situation in which a dependent variable, y, is generated by the
standard process y = x + u1, except that y and possibly some of the x’s are only observed when P = (z +
u2) > 0.5, where (.) is the cumulative normal density function, z is a vector of explanatory variables, is a
vector of coefficients, and u2 is an error term distributed N(0,1). If, as is often the case, u1 and u2 are
correlated, estimating these two relationships separately will generate biased and inconsistent estimates of .
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.
56