Willingness to Pay for Fertilizers at Unsubsidized Price in Togo
Journal Title: Scholars Journal of Economics, Business and Management - Year 2016, Vol 3, Issue 10
Abstract
Over the period 2005-2014, the amount of fertilizers’ subsidy to farmers grew sharply in Togo. Nevertheless, the government aims at removing this subsidy in the coming years.This work determines the farmers’ willingness to pay for fertilizers at unsubsidized price and the factors likely to affect this willingness. The investigation covered a sample of 405 producers of cereals selected in three regions of Togo according to a two stage random sampling technique. Through contingent valuation, it appeared that farmers are willing to pay a premium about 13% regarding the current price of fertilizer. The estimation of Cragg model revealed that the standard Tobit model is very limitative to understand farmers’ decision-making process. The results show that if the farmers’ decision-making is positively influenced by young age, male gender, married status, education, experience in fertilizer use and the participation to Quick Start, the prepaid amounts, as for them, are affected mainly by the size of farm, non-farm income and distance to fertilizers sale points. The results do imply that the benefits of present subsidy are mostly being captured by the larger, richer and better located farmers who might well be willing to pay market prices, and also probably use the bulk of fertilizer. The results have twofold implication. Firstly, given the present characteristics of farms, and the depressive effect on fertilizers consumption subsequent to the total removal of price subsidy, it will be wise to envisage a gradual reduction of the current level of subsidy, first from 25% in year 1 and then 50% in year 2. Secondly, the government should experiment better methods, for example, voucher systems, to encourage poorer and more marginal farmers to use fertilizer. Keywords:Willingness to pay, Subsidized price, Fertilizers, Cragg Model
Authors and Affiliations
KoffiYovo .
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