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Abstract
The use of fertilizer among small-holder farmers is critical to agricultural and economic development in Sub-Saharan Africa. Farmers must decide if they will invest in fertilizer prior to receiving information about the ensuing returns to that particular investment. We, therefore, seek to understand how farmers form and use expectations about the returns to fertilizer use. We construct two distributions of fertilizer return outcomes: a simulated, “site-modeled” distribution, corresponding to typical conditions, and a “recent-year” distribution, corresponding to actual experienced returns in the past three years. We analyze how these two distributions each predict fertilizer use according to Tanzanian household survey data. We find that, with regard to both distributions, high levels of returns (associated with lower yields) and high variability in returns are both predictive of lower levels of fertilizer use.