Dynamic Acreage Response: An Error Correlation Model for Maize and Tobacco in Zimbabwe

The paper presents an empirical investigation of the supply of maize and tobacco for commercial agriculture in Zimbabwe. The error correction model, which employs the concept of cointegration to avoid spurious regressions, is used in the analysis. The factors affecting percentage area planted to maize were shown to be expected real maize price, real price of tobacco, real price of fertilizer and government intervention. The factors affecting percentage area planted to tobacco were shown to be real price of tobacco, expected real price of maize and institutional factors. The own price elasticity for maize was 1.44 and 1.76 in the short and the long run, respectively, for tobacco these were 0.28 and 1.36 in the short and long run respectively.