Agricultural liming in Zambia : potential effects on welfare

Soil acidity is crucial for crop yields. Acidic soils decrease the availability of important nutrients to plants, causing lower yields. This applies to both naturally occurring nutrients and fertilizer. A well-known remedy is to provide soils with alkaline materials, like ground limestone. This raises their pH levels, increasing the availability of nutrients to the plant and eventually crop yields. So far, this practice is not widespread in Zambia, a country with largely acidic soils in agricultural areas. The agriculture of Zambia is dominated by smallholder farmers, growing predominantly maize. This paper seeks to quantify the effects on welfare that the introduction of liming would have in the Zambian smallholder maize market. For this purpose, I develop a dynamic, deterministic, open market, spatial partial equilibrium model. Solving the model requires bounded, monotonic, non-convex mixed-integer optimizations with equilibrium constraints. Model results indicate that liming in this market would reduce prices by 22.8% and increase welfare by 3.4% without international trade. With exports at 350 USD/t, the local price would drop by 16.1% and welfare would increase by 5.6% due to liming.