Estimation of Hybrid maize seed demand in Zambia

Abstract

The purpose of this study was to estimate farmer responsiveness to changes in the price of hybrid maize seed as well as to changes in the seed price of alternative crops. In determining this responsiveness, it was hoped that some light would be shed on the best way to improve maize production as part of achieving food security and increasing rural incomes. Given the food security concerns that have arisen in the recent past and the changes in the agricultural arena, it is necessary to gain an understanding into the way farmers are likely to behave given changes in their environment. Because seed plays a major role in increasing farmer productivity, the achievement of these goals implies that there needs to be in place a seed supply system that delivers more seed, higher yielding seed, and better storing seed. The question that a policy maker might ask, and one that this research hoped to shed some light on is, what is the best way that this can be done?The demand for Hybrid maize seed was estimated econometrically using a linear regression model. The explanatory variables were own price of hybrid maize seed, and the seed prices of related crops namely soybeans, millet and sorghum. Seed prices for the different crops were collected from Zamseed. The maize seed price data used were the data for MM 604. It was not possible to obtain actual maize seed sales data and therefore crop production figures were used as proxies.It was found that maize seed demand is not responsive to changes in price or changes in the price of alternative crops. Possible reasons for this are that maize is a staple food and that the majority of farmers that grow maize do not do so because of the profit motive. Rather, they grow maize for survival reasons or because it is what they have grown accustomed to.The implication of this is that government policy interventions that reduce seed price will not result in increased demand and would only prove wasteful. It is therefore recommended that government interventions should not include policies that control prices but focus more on helping the private sector in the marketing of seed. Changes in seed price that might come about because of costs incurred by the seed companies in research and marketing would not reduce demand.