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Increasing crop productivity is one of the key options of improving food availability in Rwanda. Although, emphasis was put in by the government to promote the use of this modern technology for the last 20 years, farmers are still using low levels of fertilizers and among the reasons .Therefore, the major concern of this paper is to empirically analyse effect of transaction costs on inorganic fertilizer use intensity in Rutsiro district, Rwanda. A multistage population-proportionate random sampling procedure was employed to select 192 respondents using structured questionnaires.Descriptive analysis and multiple regression were employed to estimate the data in stata 13 soft wire. The results of the study found that key transaction cost characteristics identified were asset ownership such as bicycle, radio ownership, transport, communication and negotiation costs.The study also used the ratio of fertilizer applied per unit area to assess the fertilizer use intensity .The results revealed that on average area of 0.889ha, the average NPK applied in 2017 was 178.5±15.5Kg per ha, in this case the fertilizer use intensity was 399.4±115.1kg/ha. Policies that aim to reduce transaction costs through improved transportation and rural infrastructure and better access to information media for smallholder farmers can be the most effective methods of increasing levels of fertilizer use.

Effect of Transaction Costs on Inorganic Fertilizer Use Intensity in Rwanda