Excess demand amid quality misperceptions: the case for low-cost seed quality signalling strategies

Abstract

Abstract Planting quality seed is essential for increasing crop productivity. We study the potato seed market in Kenya and estimate farmers’ willingness to pay for certified, clean and ware potato seeds that use reputation and certification strategies at varying costs to provide quality signal. We find that farmers are prone to quality misperceptions and adjust their bids for high (low) quality seed upward (downward) in response to positive (negative) quality signals. Effective demand for quality seeds exceeds supply 286 per cent after correcting quality misperceptions. We make a strong case for the need of low-cost alternatives to meet this excess demand for quality seeds.