Farmers' Subjective Valuation of Subsistence Crops: The Case of Traditional Maize in Mexico

Abstract

Subsistence farmers may not respond to market incentives if their resource allocation decisions are based on shadow prices. This may lead to 'puzzling results from an economic point of view if shadow prices are not taken into account. Subsistence maize farmers in rural Mexico are an example with their non-response to decreasing maize prices after NAFTA. I analyze the true value measure of maize, hence farmers' real incentives to cultivate it, using nationally representative rural household data from Mexico. I develop an agricultural household model with an asymmetric market constraint to conceptualize the non-market values of the subsistence crop. I derive estimable shadow prices and discuss how they affect farmers' resource allocation.

I find that the estimated shadow price of traditional maize is significantly higher than market prices for maize for subsistence farmers. I analyze the key farm- and farmer-specific factors that are correlated with shadow prices of traditional maize. Irrigation and high soil quality are negatively correlated with shadow prices; male-headed and indigenous households have above-average shadow prices. The latter correlation is especially true in southern and southeastern Mexico indicating high \emph{de facto} incentives to maintain traditional maize in these regions. On-farm conservation programs would be more effective if targeted to communities that have high shadow prices. The method I use is flexible enough to be applied to guide conservation programs in other regions and with other crops.

Keywords: On-farm conservation, crop genetic resources, traditional maize, Mexico, farmer valuation, policy targeting

JEL Classification: O13, Q12