Acreage Response to Price and Risk: The Case of Tobacco in Malawi

Duncan M Chembezi

European Review of Agricultural Economics, 1991, vol. 18, issue 1, 85-102

Abstract: This article presents an empirical investigation of the importance of price and its riskiness among Malawi's commercial and smallholder tobacco producers. Employing a simple econometric risk model, the study finds commercial farmers to be both price-responsive and risk-averse. The response is, however, inelastic. Price risk is empirically less important among smallholder farmers. Substantial bias in estimated coefficients and overall model performance are observed when risk variables are omitted from the equation. This underscores the importance of risk consideration in supply response analyses. Copyright 1991 by Oxford University Press.

Date: 1991
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