Low productivity in agriculture is a major cause of poverty and food insecurity in Africa. One explanation for low productivity is the widespread presence of low-quality inputs on local markets (“lemon technologies”), which causes uncertainty among farmers and erodes incentives for adoption. We report results from a field experiment in Tanzania to study the impact of improved maize seeds in a context where we exogenously vary uncertainty about seed type. While improved seed positively affects harvests and reduces the probability of crop failure among fully-informed farmers, these benefits are attenuated significantly when farmers are uncertain about the seed type they receive. The main channel linking uncertainty to lower harvest levels is the re-allocation of labor—a complementary input. The presence of lemon inputs on the market for modern inputs complicates learning about the profitability of these inputs, and increases the yield gap.
(co-authored with Salvatore di Falco)