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Production risk and farm technology adoption in the rain-fed semi-arid lands of Kenya

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  • Ogada, Maurice Juma
  • Nyangena, Wilfred
  • Yesuf, Mahmud
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    Abstract

    This study provides empirical evidence on the effects of production risk on smallholder farmers’ adoption of farm technology, using plot-level data collected from two semi-arid districts in Kenya, Machakos and Taita Taveta. Using Mundlak’s approach (1978), the study found that factors such as yield variability and the risk of crop failures indeed affect technology adoption decisions in low-income, rainfed agriculture. However, the direction and magnitude of effects depend on the farm technology under consideration. The results explain why poor farm households in rainfed and risky production environments are reluctant to adopt new farm technologies that could improve production: it is because the technologies involve enormous downside risks. This result underscores the fact that productivity gain is a necessary, but not sufficient, condition to attract farmers to adopt new technologies and agricultural innovations.

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    File URL: http://purl.umn.edu/93865
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    Bibliographic Info

    Article provided by NCERA-210 in its journal Journal of Cooperatives.

    Volume (Year): 04 (2010)
    Issue (Month): 2 (June)
    Pages:

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    Handle: RePEc:ags:jlcoop:93865

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    Web page: http://www.agecon.ksu.edu/accc/ncera210/JournalofCooperatives.htm
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    Related research

    Keywords: farm productivity; production risk; farm technology adoption; Kenya; Farm Management; International Development; Research and Development/Tech Change/Emerging Technologies; D81; Q12; Q18;

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    1. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-98, January.
    2. Stefan Dercon, 2003. "Growth and Shocks: evidence from rural Ethiopia," Economics Series Working Papers WPS/2003-12, University of Oxford, Department of Economics.
    3. Doss, Cheryl R., 2003. "Understanding Farm-Level Technology Adoption: Lessons Learned From Cimmyt'S Micro Surveys In Eastern Africa," Economics Working Papers 46552, CIMMYT: International Maize and Wheat Improvement Center.
    4. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    5. Shively, Gerald E., 1997. "Consumption risk, farm characteristics, and soil conservation adoption among low-income farmers in the Philippines," Agricultural Economics, Blackwell, vol. 17(2-3), pages 165-177, December.
    6. Phoebe Koundouri & Céline Nauges & Vangelis Tzouvelekas, 2006. "Technology Adoption under Production Uncertainty: Theory and Application to Irrigation Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 657-670.
    7. Shively, Gerald E., 2001. "Poverty, consumption risk, and soil conservation," Journal of Development Economics, Elsevier, vol. 65(2), pages 267-290, August.
    8. Ben Groom & Phoebe Koundouri & Celine Nauges & Alban Thomas, 2008. "The story of the moment: risk averse cypriot farmers respond to drought management," Applied Economics, Taylor & Francis Journals, vol. 40(3), pages 315-326.
    9. Kim, Kwansoo & Chavas, Jean-Paul, 2003. "Technological change and risk management: an application to the economics of corn production," Agricultural Economics, Blackwell, vol. 29(2), pages 125-142, October.
    10. Kassie, Menale & Yesuf, Mahmud & Köhlin, Gunnar, 2009. "The Role of Production Risk in Sustainable Land-Management Technology Adoption in the Ethiopian Highlands," Working Papers in Economics 407, University of Gothenburg, Department of Economics.
    11. R. M. Hassan & A. Hallam, 1990. "Stochastic Technology In A Programming Framework: A Generalised Mean-Variance Farm Model," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(2), pages 196-206.
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