William J. BurkeChapter 1 is an analysis of the determinants of maize yield response to fertilizer applications using longitudinal data collected in 2004 and 2008 from 7,127 smallholder maize fields. The Instrumented Pooled Correlated Random Effects estimator is employed to control for several statistical considerations often overlooked in the social science literature on smallholder production. The model is specified such that response rates to fertilizer application are conditional on certain farmer practices and the agro-ecological conditions under which maize is grown. Findings indicate top dressing is more effective than basal fertilizer on Zambian soils with average response rates of 4.2 kg/kg and 3.0 kg/kg respectively. This however masks a wide range of variability in fertilizer's effectiveness. Top dressing response rates, for example, can be nearly 50% lower on coarse, sandy soils and on plowed fields where the majority of the topsoil is disturbed. Basal fertilizer is vulnerable to nutrient "lockup" in the acidic soils that prevail throughout Zambia. Average marginal yield response to basal fertilizer is just 2.1 kg/kg on the highly acidic soils where 51% of our sample fields are located. On semi-neutral soils, response rates can more than triple up to 7.6 kg/kg on average. Unfortunately, only 2% of our sample (and a similar proportion of all Zambian maize fields) are in areas where semi-neutral soils prevail. Given transportation costs and average products, this study demonstrates that fertilizer use is unprofitable for most Zambian farmers at commercial prices, which has important implications for the long-run viability of subsidy programs. Specifically, if fertilizer is unprofitable for farmers commercially, there is no possibility for a successful "phase out" of a subsidy program after which farmers would continue to use commercial fertilizer. Chapter 2 addresses issues pertaining to marketing and trade policies. Expensive interventionist grain marketing and trade policies in many Southern African countries are frequently born from uncertainty regarding potential private sector performance. These policies have limited the activity of the private sector, which perpetuates the uncertainty over its potential performance. Indeed, many studies conclude that grain markets in Southern Africa are not integrated with each other and other world markets at least partially due to government policies and the transfer costs they impose.This study employs the price transmission model introduced by Myers and Jayne (forthcoming) using data from various sources to determine whether long-run spatial price equilibriums exist, and to measure the speed at which price shocks are transmitted. The key innovation in this research is the focus on markets that are connected through informal trade across international borders, specifically focusing on a pair of markets in Zambia and The Democratic Republic of Congo and a pair of markets in Malawi and Mozambique.In short, this study shows that when we examine the price relationship between markets that are relatively unimpeded by interventionist trade policies and when we control, to the extent possible, for transfer costs, markets in the Southern Africa region will likely perform in accordance with economic theory; a long-run price equilibrium will exist, arbitrage will apparently be carried out competitively, and price transmission is going to be fairly rapid.
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