Economic Incentives for Aflatoxin Reduction Along the Nigerian Maize Value Chain

Aflatoxin is a potent secondary metabolite of the fungus Aspergillus flavus. It can cause cancer, stunted growth, and (in extreme instances) rapid death in humans and increased mortality and reduced productivity in livestock. As many as 4.5 billion people in the developing world may be exposed to aflatoxin-contaminated food. Aflasafe is a new biological control product that can be applied to maize or groundnut fields to reduce aflatoxin contamination to safe levels. Aflasafe is currently being commercialized in Nigeria and ten other sub-Saharan African countries. This study was divided into two parts. Primary data for both parts were collected through oral surveys in six Nigerian states during October and November of 2016. One part sought to identify factors that drive long-term maize farmer adoption of Aflasafe technology. Data came from 902 surveys of smallholder maize farmers. The other part estimated the level of aflatoxin awareness, level of Aflasafe awareness, current aflatoxin management practices, and willingness to pay (WTP) for aflatoxin-reduced maize of Nigerian poultry producers and feed millers (collectively referred to in this study as “agribusiness enterprises”). No known prior work had estimated how much African agribusinesses using maize for animal feed would pay for verified aflatoxin-reduced maize. Data came from 272 surveys, which included discrete choice experiments. The level of aflatoxin awareness among both maize farmers and agribusiness enterprises varied among states. A binary logit regression revealed that maize farmers in Oyo State (southwest Nigeria) were significantly less likely to persist in using Aflasafe over multiple growing seasons than farmers in Kaduna State (northern Nigeria). Furthermore, maize farmers who purchased Aflasafe bundled with other inputs were more persistent in using Aflasafe over multiple growing seasons. Results from a 2-latent class multinomial regression suggest that Nigerian agribusiness enterprises in both latent classes were willing to pay positive premiums for verified aflatoxin-reduced maize. The premiums were larger in size for lower aflatoxin concentrations. Agribusiness enterprises in Oyo or Kwara States (southwest Nigeria) had a higher probability of being in the latent class with lower estimated mean WTPs than enterprises in Bauchi, Benue, Kaduna, or Nasarawa States. Furthermore, enterprises with prior knowledge of aflatoxin had a higher probability of being of being in the latent class with lower estimated mean WTPs than enterprises without prior knowledge. A possible explanation is that agribusiness managers believe that their current mechanisms for controlling aflatoxin contamination are just as effective as purchasing verified aflatoxin-reduced maize. Only 4% of agribusiness enterprises tested the level of aflatoxin in their maize supply, and only 13% of agribusiness enterprises were aware of Aflasafe. Further exploration of the geographic differences causing lower maize farmer persistence using Aflasafe and higher probability of low WTP among agribusiness enterprises in the southwestern states is an area for further research. Two key policy recommendations emerged from this study. First, more input suppliers could be encouraged to use bundling as a strategy for selling Aflasafe to maize farmers. Second, aflatoxin education efforts targeted at agribusiness managers could emphasize the merits of purchasing verified aflatoxin-reduced maize over managers’ current practices for controlling aflatoxin contamination