(1977) made the justification that due to measurement problems and unavailability
of data on specific variables, a simple time tend is used to capture effects of technological changes on output production overtime. Furthermore, Townsend and Thirtle (1997) justified the inclusion of a quadratic time trend stating that due
to asset fixity in agriculture,
adoption of technology cause13
output to increase at a decreasing rate. Leaver (2004) also used the variables and found positive and negative signs for simple time trend and quadratic time trend. The same findings are also expected in this study.
Price of maize (lnMPt-1)The price of maize is the nominal producer price of maize per each tonne sold. According
to the theory of supply, quantity supplied fora product is inversely related to the relative price or expected price of its substitutes on the market. Maize and tobacco are the most competing cash crops since they compete for the
same resources such as land, farm equipment and labour (ZTA,
2001). If farmers expect price of maize to be relatively
higher than that of tobacco, they are likely to substitute tobacco in favour of maize production.
The producer price of maize, lagged by one period has also been used as a proxy for expected market price of maize by Townsend and Thirtle (1997) and found a negative relationship. Hence, it is also expected to be negatively related to quantity supplied of tobacco output.
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