Dillon, Brian

English

Research Papers in Economics

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An Estimable Model of Farmer Choice With Observed Price, Weather and 
Pest Expectations
Brian Dillon - Department of Economics - Cornell University – bmd28@cornell.edu
Poster prepared for presentation at the Agricultural & Applied Economics Association’s 2011 AAEA and NAREA Joint Annual Meeting
Pittsburg, PA, July 24-26, 2011
Goals of Paper
This paper addresses the following questions: 
1. How do the subjective distributions that farmers hold 
over uncertain future outcomes – crop yields, pest 
pressure, rainfall and output prices – influence 
production decisions at intermediate stages?
2. What is the value to the farmer of reductions in 
uncertainty at intermediate stages of production?
Contributions:
• First paper, to my knowledge, that uses high frequency 
input data and high frequency expectations data to 
study agricultural production
• First agricultural panel study in Africa that uses data 
gathered by phone 
• More generally, first dynamic resource allocation 
problem studied with observation of decision makers’ 
expectations over uncertain random variables
Data and Setting
Evolution of Yield Distributions Measuring Subjective Distributions
Using sheets like the one below, respondents indicate their 
subjective distributions by allocating a fixed number of 
stones, beans or seeds to the bins of a histogram:
“Cotton Yield
(Mafurushi per acre)”
Model and Estimation Procedure
 
0  5  1  2  3  4  6  8  7 
9 
MAVUNO YA PAMBA 
(Mafurushi/heka) 
1 Mafurushi ~= 89 Kilograms
Data Collection:
• 300 cotton farmers from 15 villages in NW Tanzania
• Baseline survey in summer 2009
• 198 farmers given a phone at baseline, to be used for 
high frequency interviews
• Calling schedule and provisions for phone charging 
made within each village
• Every 3 weeks we called each farmer to gather data on 
input use, labor, credit, crop and livestock transactions, 
subjective expectations, and other relevant matters
• Follow-up survey in summer 2010 with all 300 farmers
For details on phone survey methodology see my paper
“Using Mobile Phones to Collect Panel Data in Developing
Countries” forthcoming in Journal of International
Development
Cotton in Tanzania:
• Primary cash crop in NW Tanzania
• Produced exclusively for export, by ~450,000 smallholders
• Accounts for about 15% of Tanzania’s ForEx earnings
• Arguably the most competitive Ag output sector in TZ
Evolution of Price Distributions
As expected, deviation of yield expectation from eventual 
yield realization decreases as the cultivation period 
progresses
Surprisingly, average price distributions tracked changes in 
world prices over the survey period, despite an apparent 
lack of information sources
Results
On the way…
Following Fafchamps (1993), I estimate a CES model with 
preferences over leisure and consumption (which is 
tantamount to harvest revenue), subject to budget and 
hours constraints.
Objective function:
Copyright 2011 by Brian Dillon.  All rights reserved.  This draft not for citation or circulation – final draft pending.

An Estimable Model of Farmer Choice With Observed Price, Weather and Pest Expectations

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Research Papers in Economics