Low-Quality Seeds, Labor Supply and Economic Returns: Experimental Evidence from Tanzania

Abstract

Low productivity in agriculture is a major cause of poverty and food insecurity in Africa. One explanation for low productivity is the widespread presence of low-quality inputs on local markets (“lemon technologies”), which causes uncertainty among farmers and erodes incentives for adoption. We report the results from a field experiment in Tanzania to study the impact of improved maize seeds in a context where we exogenously vary seed quality and uncertainty about seed type. The analysis is at the level of experimental plots owned and managed by farmers (not the entire farm). While improved seed positively affects harvests and reduces the probability of crop failure among fully-informed farmers, these benefits are attenuated significantly when farmers are uncertain about the seed type they receive. The main channel linking uncertainty to lower harvest levels is the re-allocation of labor—a complementary input. The presence of lemon inputs on the market for modern inputs impedes learning about the profitability of these inputs and increases the yield gap by slowing down adoption in subsequent periods