Faculty of social studies department of economics supply response of tobacco output to price changes in
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- 5.3 Areas for further studies
| 5.2 Policy recommendations The results discussed earlier have major implications for policy. Firstly, although tobacco supply was found to be significantly influenced by expected price, the estimated elasticities are very low. These estimated elasticities indicate that tobacco supply in Zimbabwe is unresponsive to changes in tobacco prices both in the short-run and long-run. These findings imply that output pricing policy targeting tobacco production may not bean effective instrument for effecting growth in tobacco supply. Hence, pricing policy instruments should be used in conjunction with other price policy supporting instruments such as provision of input subsidies. 23 The study also found that non-price factors are also important means of influencing tobacco supply in Zimbabwe, being indicated by the elasticities of tobacco response with respect to the factors. The positive and significant quadratic time trend coefficient indicates that tobacco supply increases with advances in technology. This has the implication that adoption of modern technology by farmers can potentially increase tobacco output. Therefore, this study advocate for both public and private interventions for extensive investment on research and development so as to stimulate adoption of new farm technologies by tobacco growers in the long-run. In addition, tobacco supply may also be stimulated through farm mechanisation policies rather than output pricing policies. Tobacco supply was found to be significantly increasing with population of tobacco growers. Therefore, there is need for the Tobacco Industry and Marketing Board (TIMB) to put forward favourable policies like subsidised inputs and credit that may attract potential growers and also convince existing active growers to continue practising tobacco farming. 5.3 Areas for further studies This study was done at a macro-level using time series data which can be limiting. It is therefore important for future studies to be conducted on farm level basis so as to capture household dynamics such as technical efficiency and socioeconomic characteristics of tobacco farmers using cross sectional data. The study did not examined the effect of macroeconomic factors such as inflation and monetary policy changes in the agricultural sector, hence further studies may consider them and also test for structural breaks to identify their likely effects on the agricultural sector performance. Advanced methodologies such as the ARDL approach to cointegration may also be used in order to capture short-run and long-run dynamics of tobacco supply in Zimbabwe. 24 |