Abstract:
This paper explores farmers’ behavioural response to a positive productivity shock. Using a unique household panel dataset collected in rural Uganda in 2015, 2016 and 2017,
I proxy a positive productivity shock by the birth of a female calf against that of a male calf. The main results obtained with a difference in differences strategy show that farmers react by increasing inputs’ expenditures. They spend more on their cattle’s health, increase
hired labour and are more willing to pay for investments in cattle but not for other activities. These higher investments translate into higher milk production and revenues. These results suggest that policies aiming at boosting agricultural growth through the adoption of improved agricultural practices should incorporate appropriate incentives for promoting adequate behavioural responses.