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© 1991 Oxford University Press and the Foundation for the European Review of Agricultural Economics

research-article

Acreage response to price and risk: The case of tobacco in Malawi*

DUNCAN M. CHEMBEZI

University of Missouri

Received June 1, 1990;

Summary

This article presents an empirical investigation of the importance of price and its riskiness among Malawi's commercial and smallholder tobacco producers. Employing a simple econometric risk model, the study finds commercial farmers to be both price-responsive and risk-averse. The response is, however, inelastic. Price risk is empirically less important among smallholder farmers. Substantial biases in estimated coefficients and overall model performance are observed when risk variables are omitted from the equation. This underscores the importance of risk consideration in supply response analyses. Key words: acreage response, price risk, tobacco.

Keywords: acreage response, price risk, tobacco


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