This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: Smallholder farmers in sub-Saharan Africa adopt agricultural inputs, including fertilizer, at low rates, contributing to low agricultural productivity. Previous research has shown that insufficient information and distrust in the quality of products for sale in local markets are among the reasons for low rates of fertilizer adoption and application.
In a new study published in the American Journal of Agricultural Economics, University of Illinois Urbana-Champaign researchers examined the agricultural marketplace in Tanzania, finding that frequent turnover among local agro-dealers affects farmer perceptions of product quality and has implications for broader market functioning. "Agricultural inputs are experience goods: you don't know if a product is of good quality until after purchase and use. For fertilizer, you might not know for several months because the plant's agronomic response to the application only becomes observable over time.
In markets with such information asymmetries, economists have shown that consumers tend to rely a lot on the reputation and trust of sellers as a proxy for the unobservable quality of the product," said co-author Hope Michelson, professor in the Department of Agricultural and Consumer Economics, part of the College of Agricultural, Consumer and Environmental Sciences at U. of I. Michelson's research team has been collecting data in Tanzania's Morogoro region for a decade, gaining insights into agro-dealer operations, soil quality, farmer production systems and farmer perceptions of agricultural inputs. The team has established that a common perception among smallholder farmers in Tanzania—as in other parts of the world—is that fertilizer for sale in the market is of poor quality and lacks important nutrients, lowering its agronomic effectiveness.
The puzzle is that, despite widespread perceptions of quality problems, independent testing across multiple studies and laboratories shows that fertilizer sold in the region is consistently of good quality, Michelson said. Understanding—and ultimately correcting—farmers' misperceptions about fertilizer quality remains a persistent and important challenge for both policy and research. The Illinois researchers have gone back to the same markets again and again, surveying agro-dealers and sampling and testing their fertilizer.
Over the years, the team noticed that agro-dealers had a very high rate of exit from the market, higher than that of other small businesses operating in the region. "We set out to document these rates of agro-dealer turnover and to benchmark them against what we observe in other developing countries among micro and small enterprises. We wanted to understand the drivers and motivations for these high entry and exit rates and to explore whether there was a systematic relationship between agro-dealer turnover and farmer beliefs about fertilizer quality in these markets," said corresponding author Alix Naugler.
She conducted the research as a master's student in ACE and is currently pursuing a doctoral degree in applied economics and management at Cornell University. Naugler conducted fieldwork in Tanzania with local collaborators, including co-author Christopher Magomba, professor at Sokoine University of Agriculture, and a team that helped with data collection. The researchers traveled across the region to speak with farmers and agro-dealers.
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