African Agricultural Markets Program (AAMP)

In this paper we use farmers' actual experiences with changes in rainfall levels and theirresponses to these changes to assess if patterns of fertilizer use are responsive tochanges in rainfall patterns. Using plot and farm level panel data from the centralHighlands of Ethiopia matched with corresponding village level rainfall data; resultsshow that both the current year’s decision to adopt and the intensity of fertilizeradoption is positively associated with higher rainfall levels experienced in the previousyear. Furthermore, we find a concave relationship between previous season rainfalllevels and fertilizer adoption, indicating that too much rainfall discourages adoption.Abundant rainfall in the previous year could depict relaxed liquidity constraints andincreased affordability of fertilizer, which makes rainfall availability critical in severelycredit constrained environments. In light of similar existing literature, the majorcontribution of the study is its use of plot level panel data, which permits us toinvestigate the importance of plot characteristics in fertilizer adoption decisions.