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Abstract

This study assessed how responsive maize output is to price and non-price factors and how sensitive fertilizer and labour demand are to prices and non-price factors using cross-sectional farm-level data for 334 maize producing households in the High Potential Maize Zone of Kenya. The study employed normalized restricted translog profit function to estimate maize supply and variable input demand elasticities. Results show that maize price support is an inadequate policy for expanding maize supply. Fertilizer use was found to be particularly important in the decisions on resource allocation in maize production. Of the fixed inputs, land area was found to be the most important factor contributing to the supply of maize. It is suggested that making fertilizer prices affordable to small holder farmers by making public investment in rural infrastructure and efficient port facilities, and promoting standards of commerce that provide the incentives for commercial agents to invest in fertilizer importation, wholesaling and retailing would be desirable. Encouraging more intensive use of other productivity enhancing inputs in addition to fertilizer is also suggested, since land consolidation to achieve economies of scale may seem untenable in the light of the existing extensive sub-division of land parcels into uneconomical units.

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