Determinants and Demand Elasticities of Improved Maize Seed Utilization in Halaba Zone, Central Ethiopia: An Almost Ideal Demand System (AIDS) Approach

Abstract

Maize is one of the most important staple crops in Ethiopia, with greater production potential. Thus, its improved seed is critical for enhancing productivity and food security. However, a persistent gap remains between its demand and supply of seed, due to several factors. These issues often result in untimely availability and unaffordable prices, underscoring the need for a systematic demand analysis to inform holistic policy interventions. Based on data collected from 180 randomly selected households, this study examined farmers’ demand for improved maize seed using the Almost Ideal Demand System (AIDS) model. A multiple linear regression model was employed to identify factors affecting households’ budget share of improved maize seed, and we found that seed price, social status, seed availability, land size, pests and diseases, and household income were found to be significantly influencing. The estimated own-price elasticities were -1.392 (Marshallian), -0.596 (Hicksian), and 1.209 (expenditure elasticity), indicating that demand for improved maize seed is price-elastic in both the Marshallian and expenditure frameworks, though inelastic under Hicksian demand. This implies that a significant price increase reduces demand for improved maize seed. Furthermore, the analysis revealed positive cross-price elasticities with teff and finger millet seed, suggesting that these crops are substitutes for maize. Therefore, to reduce substitution and meet food demand, policymakers and development programs should scale up the multiplication and timely distribution of improved maize seed, which ultimately closes its seed demand gap and prevents maize production losses associated with crop switching.