Crop Production/Industries, Farm Management,

Nagarajan, Latha

Salau, Sheu

Takeshima, Hiroyuki

English

Research Papers in Economics

Nigerian Farmers' Preferences On Specific Timing and Channel for Cereals
and Legume Seeds Delivery–An Empirical Estimation of Willingness to Pay
(WTP) through Mixed Preference Models
Hiroyuki Takeshima
International Food Policy Research Institute, H.takeshima@cgiar.org
Latha Nagarajan
Rutgers University
Sheu Salau
International Food Policy Research Institute
Poster prepared for presentation at the Agricultural & Applied Economics 
Association 2010 AAEA,CAES, & WAEA Joint Annual Meeting, Denver, Colorado, 
July 25-27, 2010
Copyright 2010 by Hiroyuki Takeshima. All rights reserved. Readers may make 
verbatim copies of this document for non-commercial purposes by any means, 
provided that this copyright notice appears on all such copies.Revealed preference results 
Utility from buying seed at t = 0 and 1
Premium WTP for purchasing 1 month closer to planting date (by income level)
Nigerian Farmers' Preferences On Specific Timing and Channel for Cereals and Legume Seeds Delivery
–An Empirical Estimation of Willingness to Pay (WTP) through Mixed Preference Models
Hiroyuki Takeshima1, Latha Nagarajan2, Sheu Salau1
1International Food Policy Research Institute (IFPRI), Nigeria office (H.takeshima@cgiar.org); 2Rutgers University
Selected reference
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market-based property value approaches. Contemporary Economic Policy 23 (3): 357-375.
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Economics 31 (2-3): 149-159.
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Economics 10: 37-49.
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Nigeria and Benin. Environmental and Development Economics 12: 799-825.
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Cambridge, England: Cambridge University Press.
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Zarembka, 105-142. New York: Academic Press.
Meyerhoff J, Liebe U, and Hartje V. 2009. Benefits of biodiversity enhancement of nature-oriented silviculture. Journal of 
Forest Economics 15 (2): 37-58.
Minot N, Smale M, Eicher C, Jayne T, Kling J, Horna D, and Myers R. 2007. Seed development programs in sub-Saharan 
Africa: A review of experiences.
PatunruAA, Braden J, and Chattopadhyay S. 2007. Who cares about environmental stigmas and does it matter? A latent 
segmentation analysis of stated preferences for real estate. American Journal of Agricultural Economics 89 (3): 712-
726.
Rosen S. 1974. Hedonic prices and implicit markets: product differentiation in pure competition. Journal of Political 
Economy 82 (1): 34-55.
1. Research questions
Adoption rates of improved seed are low in Nigeria. Formal sector lack efficient 
distribution seed system , resulting in
• non availability of improved seeds especially during planting time; though 
available at other times of the year that often discourage farmers from 
adopting them
• non availability of seeds through the channels preferred by farmers
Why do farmers prefer particular timing and channels?
• Lower income farmers may prefer to obtain seed around planting date due to liquidity constraints 
; poor maintenance seed storage skills (e.g. legume  crops - cowpea , are highly susceptible to 
storage pests)
• Due to weak certification system, farmers may place higher trust to certain channels from they 
receive or exchange seeds
=> Important to empirically test 
4.  Empirical results and policy implications
Implications of preliminary results
Motivate further studies for assessing the feasibility of 
• private companies, traders to engage in business of distributing improved 
cowpea seeds at particular timings
• Government to provide support for private companies or public 
institutions to distribute the improved seeds at appropriate timing and 
through appropriate channels
Descriptive figures (purchase timing)
Summary of findings
• Evidence for higher WTP for obtaining seed closer to planting date is 
observed for cowpea in both revealed preference model and stated preference 
model
=> Support the hypotheses
• In the revealed preference model, there is no evidence for the variation in 
WTP based on the timing for rice and maize seed
• The WTP estimates from the revealed preference model seems more reliable 
(narrower confidence interval) than from the stated preference model, 
possibly because the WTP in stated preference model is the ratio of estimated 
coefficients
Stated preference results
2. Data
Hypotheses to be tested in this study
• Low income producers have a higher willingness to pay for seed 
that is available closer to the planting date
• Difference in willingness to pay is more evident for cowpea than for 
rice and maize
• Willingness to pay also vary across different channels
Coef Std.err Coef Std.err Coef Std.err
ln(yield) 4.522*** (.664) 4.373*** (.683) 4.369*** (.693)
maturity (days) -.012** (.005) -.011** (.005) -.010* (.006)
ln(price) -.471 (.374) -.485 (.437) -12.564** (5.334)
MPD .014 (.055) -1.405* (.743) -1.470* (.788)
Other farmers .208 (.193) .266 (.193) .266 (.195)
Government / ADP .398* (.210) .377* (.212) .369* (.214)
Agrodealer .311 (.201) .325* (.193) .326* (.197)
ln(price) × ln(income) .924** (.187)
MPD× ln(income) .111* (.059) .115** (.062)
Log-likelihood -279.406 -265.896 -263.380
p-value
Overall fit .000 .000 .000
Pseudo-R2 .096 .097 .106
Observation 892 850 850
State Kano Kaduna Ebonyi
Agro-ecology Dry-
Savannah
Moist-
Savannah
Humid 
tropics
Observations 
(household) 150 150 120
Annual household 
Income (US$) 1667 2400 2500
% of female headed 
household 5 5 18
Household head 
education (years) 7 7 6
Farmsize (ha) 4 3 4
Nearest all-weather road 
(km) 2 1 2
-
2
0
0
0
2
0
0
4
0
0
p
r
e
m
i
u
m
 
W
T
P
 
(
%
)
100 1,000 10,000 100,000
Annual household income (US$)
Stated preference
-
1
0
0
-
5
0
0
5
0
1
0
0
p
r
e
m
i
u
m
 
W
T
P
 
(
%
)
100 1,000 10,000 100,000
Annual household income (US$)
Cowpea seed (revealed preference)
Symbol Definition
t Period
Akt initial endowment 
ckt consumption of goods k at t
fk a function of θk
It income from other sources at time t
mkt net sales of goods k at t 
pkt prices 
qkt quantity of goods k produced at t
st seed purchase quantity at t
sk* total quantity of purchased seed usable for the production of k at t = 1
ut Utility
wkt seed price for k at t
xkt use as inputs at t
zq other factors that affect the total factor productivity
zu other residual factors 
ψkt net sales of farmer-owned seed of the same variety at time t 
θk cost incurred to preserve seed during the storage (per-unit cost)
Ωt non-productive liquid assets
πk net profit per unit of seed bought at t = 0
ωkt price of farmer-owned seed of the same variety
Household Utility Maximization 
For farmers with U0 < U1 given the set of parameters including seed prices wkt, there is a premium ε the seed sellers can charge in addition 
to wk1 which the farmer is still willing to pay at t = 1 if the seed is available
2 time periods
• t = 0: substantially before the planting date
• t = 1: immediately before planting and including subsequent production season
Seed purchased at t = 0: incurs cost for storage/preservation and risk of loss, but 
may also lead to profit if it can be resold at higher price at t = 1
Willingness to pay for obtaining seed at planting date
Revealed preference and stated preference
Revealed preference: simple hedonic form
ln(pij)  = αij + βttij + βt,income(tij·ln(incomej)) + 
βt,income,crop(tij·ln(incomej)·cropij) + βchannel channelij + βcci + βxxij + vij
pij = price paid for seed i by household j (natural log) 
tij  = months to planting date (MPD)
ln(incomej) = annual household income of household j (natural log) 
channelij = channel (sellers) of seed i
ci  = key household characteristics of household j
xi  = key attributes of seed i
WTP premium (%) for 1 month closer to planting date = 
βt+βt,income·ln(incomej)+βt,income,crop(ln(incomej)·cropij)
Stated preference
Choice experiment: 
• Farmers are given 2 hypothetical options defined by the 5 parameters (Table) with their 
current varieties as benchmark, and choose preferred option
Parameters used for options and levels
Conditional logit:  I(Select = 1,  do not select = 0) 
= αij + βttij + βt,income(tij·ln(incomej)) + βpln(pij)
+ βchannel channelij + βcci + βxxij + vi
WTP for 1 month closer to planting date = [βt + βt,income ln(income)] / βp
Parameters Levels
Price Same, − 25%
Yield Same, + 25%
Maturity length Same, − 25%
Channels Other farmers, government, agrodealers, village chief
Months to planting date 0, 1, 3
OLS 2SLS
Coef Std.err Coef Std.err Coef Std.err Coef Std.err
Month to planting date (MPD) -.054** (.022) .249 (.277) -.099 (.512) .308 (.497)
MPD*rice .233 (.378) .972 (.669) .417 (.629)
MPD*cowpea -1.643** (.630) -1.879* (1.085) -2.557** (1.270)
MPD*ln(income) -.019 (.018) .004 (.032) -.019 (.032)
MPD*ln(income)*rice -.022 (.027) -.058 (.039) -.034 (.039)
MPD*ln(income)*cowpea .124*** (.047) .159* (.084) .194* (.100)
ln(yield) -.029 (.030) -.039 (.053) -.117 (.108) -.210* (.107)
Channel – other farmers -.058 (.098) -.050 (.133) -.213 (.130) .207 (.327)
Channel –ADP / Government .013 (.100) -.032 (.145) -.077 (.133) -.080 (.361)
Channel – agrodealer .350*** (.115) .364** (.167) .157 (.142) -.291 (.363)
cowpea .253*** (.092) .357*** (.119) .012 (.273) .182 (.304)
rice -.399*** (.099) -.338** (.130) -.503 (.394) -.119 (.392)
maturity (days) -.001 (.002) -.001 (.002) -.002 (.002) -.002 (.002)
size (large = 1, small = 0) -.004 (.064) -.003 (.068) -.025 (.075) .039 (.077)
palatable (1 if yes) .214** (.099) .206** (.084) .134 (.105) .157 (.104)
Household size -.004 (.004) -.003 (.004) -.001 (.004) .004 (.005)
ln(farmsize) -.025 (.044) .012 (.048) -.009 (.059) .022 (.062)
Kaduna -.121 (.122) -.079 (.173)
Ebonyi -.502*** (.151) -.356 (.123)
Intercept 4.186*** (.438) 4.446*** (.375) 5.454*** (.756) 5.711*** (.705)
p-value (overall fit) .000 .000 .000 .000
R2 .191
p-value (overidentification) .449 .399
Observation 635 635 549 635
95% 
confidence 
interval
Upper
5% Median
Lower 
5%
Revealed preference model
• Lower income farmers exhibit positive 
WTP for obtaining cowpea seed closer to 
planting date (with 95% significance level)
• The premium farmers are willing to pay is 
about 5% at the median income, but can be 
30% at the lower income
Stated preference model
• Lower income farmers exhibit positive 
WTP for obtaining seeds closer to planting 
date (all of cowpea, rice and maize)
• The premium farmers are willing to pay is 
about 20% at the median income, can be 
100% at the lower income
• The accuracy of WTP is, however, low as 
indicated by wide confidence interval
3.  Conceptual framework
0 2 4 6 8 10
0 2 4 6 8 10
Cowpea Maize
Rice
(x-axis: Months between seed purchase and planting)
0
4
0
4
0 5 10
0 5 10
Cowpea Maize
Rice
P
r
i
c
e
 
(
U
S
$
 
/
 
k
g
)
(x-axis: Months between seed purchase and planting)
2
2
Most seed is purchased no earlier than 2 months 
before planting date for rice, and 1 month before 
planting date for cowpea and maize
Timing of seed purchase by crop
Prices paid for seed are generally higher near the 
planting date, particularly for cowpea and rice, 
although less so for maize
Prices paid for seed by crop and timing
Household characteristics (Median of data)
Potentially endogenous: 
Instrumented with ownership 
and values of various assets, 
storage space
Key contributions of the study
Empirical methods
- Employ both revealed and stated preference models to test the stated hypotheses
Policy implications
• Feasibility of participation of private sector to engage in timely distribution of improved 
seed for certain crops through appropriate channels in Nigeria
Kano
Kaduna
Ebonyi

Nigerian Farmers' Preferences On Specific Timing and Channel for Cereals and Legume Seeds Delivery–An Empirical Estimation of Willingness to Pay (WTP) through Mixed Preference Models

Nigerian Farmers' Preferences On Specific Timing and Channel for Cereals and Legume Seeds Delivery–An Empirical Estimation of Willingness to Pay (WTP) through Mixed Preference Models

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