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Farmers’ Willingness to Pay for Improved Agricultural Technologies: Evidence from a Field Experiment in Tanzania

Author

Listed:
  • Apurba Shee

    (Natural Resources Institute, University of Greenwich, Chatham ME4 4TB, UK)

  • Carlo Azzarri

    (International Food Policy Research Institute, 1201 Eye St, NW, Washington, DC 20005, USA)

  • Beliyou Haile

    (International Food Policy Research Institute, 1201 Eye St, NW, Washington, DC 20005, USA)

Abstract

Initiatives on the sustainable intensification of agriculture have introduced improved technologies tailored to farmers’ local conditions by trial demonstration with free provision of improved seeds and fertilizers. It is not clear, though, whether smallholder farmers would be willing to pay for these technologies, and what factors determine their informed demand. Using a contingent valuation experiment, combined with information at baseline among 400 households in Northern Tanzania, this study measured farmers’ willingness to pay (WTP) for hybrid maize seed and local inorganic fertilizer. Farmers’ WTP was estimated using a dichotomous contingent valuation with follow-up model. Results showed that the average WTP was 61% higher for hybrid maize seed, and 15% lower for inorganic fertilizer, than their respective average local market prices during the reference period, suggesting that farmers were willing to pay a premium for hybrid maize seed, while they did not seem to be interested in fertilizer purchase at current market price. Moreover, since improved access to extension services was found to positively affect farmers’ WTP, strengthening extension services could be a suitable policy intervention to increase farmers’ demand for improved technologies. On the other hand, farmers’ risk aversion was negatively correlated with WTP for both technologies. This result suggests that encouraging risk reduction options, such as agricultural insurance, could be a useful policy strategy for boosting farmers’ demand for improved agricultural technologies.

Suggested Citation

  • Apurba Shee & Carlo Azzarri & Beliyou Haile, 2019. "Farmers’ Willingness to Pay for Improved Agricultural Technologies: Evidence from a Field Experiment in Tanzania," Sustainability, MDPI, vol. 12(1), pages 1-13, December.
    • Handle: RePEc:gam:jsusta:v:12:y:2019:i:1:p:216-:d:302151
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    5. Rodrigo Abed & Haroon Sseguya & James Flock & Silvanus Mruma & Hamisi Mwango, 2020. "An Evolving Agricultural Extension Model for Lasting Impact: How Willing Are Tanzanian Farmers to Pay for Extension Services?," Sustainability, MDPI, vol. 12(20), pages 1-13, October.

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