One of the major constraints facing crop production in developing countries is a lack of low-cost, quality seed. In this paper, Fuglie et al. present a model of the market for seed, in which clean seed is treated as a capital good providing benefits over several seasons. To determine the farm demand for clean seed, they then apply this model to potato seed in Indonesia. The research uses data gathered from a survey of 182 potato farmers in the major potato growing areas of the country. Findings show that Indonesian potato farmers are well aware of the value of quality seed in potato production, but the high cost (three to four times the price of seed purchased through the informal system) remains a major constraint. Nevertheless, marginal returns to disease-free seed appear to significantly exceed marginal costs, indicating that improving supply of quality seed will contribute strongly to productivity growth in potato. The authors discuss several policy options to encourage supply and utilization of quality potato seed, asserting that the potato seed system cannot be isolated from support for potato breeding and crop improvement generally.
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Fuglie K.O., Adiyoga W., Asmunati R., Mahalaya S. and Suherman R.
Agricultural Economics 35(3), 257-266