Farmers’ Willingness to Pay for Improved Agricultural Technologies: Results from Field Experiment Babati, Tanzania Apurba Shee, Carlo Azzarri and Beliyou Haile AR-ESA Annual Meeting July 1 2016, Dar es Salaam

Outline Introduction and objective Experimental design and survey Econometric framework Empirical results Concluding comments

Introduction and objective Promotion of sustainable intensification of agriculture, introduces improved technologies such as improved seeds and fertilizers But it is not clear whether small holder farmers would be willing to pay for these technologies, and what factors determine their informed demand for technologies This study elicits willingness to pay (WTP) using stated preference based contingent valuation (CV) experiment conducted with 400 households in Tanzania Most contingent valuation studies in developing countries have focused on consumer preferences (Durand-Morat et. al 2016) Limited research on producers’ preferences

Introduction and objective WTP is usually defined as the maximum amount that an individual would be willing to pay for a good or service without losing his/her utility Since hybrid seed and inorganic fertilizer are marketable goods and the farmers in the area under investigation were exposed to these technologies, stated preference approach by double-bounded CV method appears most appropriate We follow Hanemann, Loomis and Kanninen (1991) approach, known as dichotomous CV with follow-up or double-bounded CV

Experimental design

Econometric framework and results Variables Estimates Standard error Mean WTP for fertilizer 27277.08* 1362.98 Sigma 24779.03* 1305.24 Mean WTP for hybrid maize seed 12933.26* 259.48 4511.65* 223.19 * Indicates statistical significance at 99% confidence level

Empirical results

Concluding comments The average WTP is found to be 61.6% higher for hybrid maize seed and 14.7% lower for inorganic fertilizer compared to their average market prices locally available in 2013 Education of household head, maize productivity and extension services are found to influence farmers’ WTP positively, whereas farmers risk aversion preferences and distance to nearest supply market have a significant negative influence Considering the finding that farmers risk preferences influence WTP negatively, it would be important policy recommendation to introduce agricultural insurance or other risk mitigating instruments to boosting farmers demand for improved agricultural technologies