Farm-level Crop Price as a Factor for Increased Maize Production in Ludewa District, Tanzania: Estimation of Koyck Lag Model

Farm-level crop price is an important predictor of production increase, yet, little has been done about how food crop production is responsive to the expected price. Hence, this paper uses primary data to analyze the contribution of expected farm-level prices to the current production of crops. The primary data was collected from 427 sampled household heads through the interview conducted using an interview schedule. The Koyck lag model which is a simple expectation model was employed to estimate the relationship between current crop production and expected price. The main findings indicated that price is significant driver (ρ = 0.069) for increased crop production. From the results, it is concluded that the output market aspect (farm-level price) is equally important for increased crop production. The study findings have important policy implications that output marketing barriers that increase the transaction costs cause low farm-level prices hence low crop production. Therefore, to increase maize production there should be a balance between costs of inputs and output price. Keywords: Farm-level price, Koyck lag model, marketing participation, Transaction costs