Risk Preference Responses to Fertilizer Expenditures: A Case of Maize Smallholder Farmers in Iringa and Arusha Regions in Tanzania

Abstract

Initiatives have been tested to improve usage and expenditures on inorganic fertilizers; most did not yield the expected results, particularly in highly maize-growing highlands. This study evaluates the usage of inorganic fertilizers and the influence of maize farmers’ risk preferences on expenditure in inorganic fertilizers in the Iringa and Arusha regions. Data were adopted from an Agronomic Panel Survey (APS) from 129 maize farmers’ household heads (HHs), randomly selected within a spatial sampling frame in the maize-growing regions of the Southern and Northern highlands of Tanzania. Data were analyzed using descriptive statistics and Tobit model. Results revealed that the majority of maize farmers (64%) did not apply inorganic fertilizers on maize plots. Results further showed statistical significance for the Arusha region (p<0.001), non-schooling (p<0.05), primary education (0.01), ordinary secondary education (p<0.05), number of plots (p<0.05) and size of the maize plot (p<0.001) in predicting inorganic fertilizer expenditures when Tobit model was estimated. Nevertheless, risk-preferred maize farmers statistically influenced fertilizer expenditure when both highlands were included. The study recommends a model comprising risk preferences, geographical factors, and household characteristics in studying farmers’ decisions on expenditure of inorganic fertilizers in respective regions and districts to uncover the location specificity and improve maize production.