Sales quota (SQ
t-1
) Sales (production) quotas refers to a limit on the amount of a product a producer is expected to produce or sell with the aim of avoiding overproduction so as to reduce variations in market prices and incomes (Colman, 1983). Sales quotas are typically set by the government or by a parastatal organisation. Since the supply of most agricultural products is influenced by institutional factors, a dummy variable was included to capture to capture the effect of sales quotas which were once imposed on Zimbabwean tobacco farmers. It takes the value of 1 for the years in which the sales quota applies and 0, otherwise. The dummy variable is lagged one period since institutional settings are normally announced before the start of the production season. The dummy variable was also incorporated by Leaver (2004) and found a negative sign hence in this study a negative relationship is also expected.
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