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Resource Allocation and Risk: A Case Study of Smallholder Agriculture in Kenya

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  • Jerome M. Wolgin

Abstract

A model of economic behavior under conditions of uncertainty demonstrates that the traditional tests of economic efficiency in agriculture are generally misspecified. A data set from Kenya is used in testing a risk-aversion model; the results permit the following conclusions. Risk plays an important role in farmer decision making; farmers are efficient in their allocation of resources; and lack of credit availability is a major bottleneck in obtaining increased agricultural productivity for the regions studied in Kenya.

Suggested Citation

  • Jerome M. Wolgin, 1975. "Resource Allocation and Risk: A Case Study of Smallholder Agriculture in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(4), pages 622-630.
    • Handle: RePEc:oup:ajagec:v:57:y:1975:i:4:p:622-630.
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    File URL: http://hdl.handle.net/10.2307/1238880
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    Cited by:

    1. Mertens, Kewan & Vranken, Liesbet, 2018. "Investing in land to change your risk exposure? Land transactions and inequality in a landslide prone region," World Development, Elsevier, vol. 110(C), pages 437-452.
    2. Gafsi, Salem & Roe, Terry, 1979. "Adoption of Unlike High-yielding Wheat Varieties in Tunisia," Economic Development and Cultural Change, University of Chicago Press, vol. 28(1), pages 119-133, October.
    3. Nelson, Carl, 1986. "A Parametric Model of Stochastic Production," 1986 Annual Meeting, July 27-30, Reno, Nevada 278108, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Young, Douglas & Lin, William & Pope, Rulon & Robison, Lindon & Selley, Roger, 1979. "Risk Preferences Of Agricultual Producers:Their Measurement And Use," Risk Management in Agriculture: Behavioral, Managerial, and Policy Issues, January 25-26, 1979, San Francisco, California 271459, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.
    5. Hardaker, J. B., 1982. "Fundamental Aspects Of Risk And Uncertainty In Agriculture," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 21(2), October.
    6. Pingpoh, David Puewoh & Mbanya, Justin & Ntam, Fidelis & Malaa, Dorothy K., 2007. "Some Risk Management Practices Among The Beef Cattle Farmers Of The North West Province Of Cameroon: Effect On Technology Dissemination," 106th Seminar, October 25-27, 2007, Montpellier, France 7912, European Association of Agricultural Economists.
    7. Mertens, Kewan & Vranken, Liesbet, 2017. "Investing in land to change your risk exposure? Land transactions in a landslide prone region," Working Papers 265432, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    8. Lahno, Amrei M. & Serra-Garcia, Marta & D’Exelle, Ben & Verschoor, Arjan, 2015. "Conflicting risk attitudes," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 136-149.
    9. Wozniak, Gregory Dean, 1980. "The adoption decision: a human capital approach," ISU General Staff Papers 198001010800008144, Iowa State University, Department of Economics.
    10. Joseph Henrich & Richard McElreath, 2002. "Are peasants risk-averse decision makers?," Artefactual Field Experiments 00066, The Field Experiments Website.
    11. Burger, C.P.J., 1988. "Risk aversion and the family farm," Serie Research Memoranda 0022, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    12. Rui He & Jianjun Jin & Foyuan Kuang & Chenyang Zhang & Tong Guan, 2019. "Farmers’ Risk Cognition, Risk Preferences and Climate Change Adaptive Behavior: A Structural Equation Modeling Approach," IJERPH, MDPI, vol. 17(1), pages 1-13, December.
    13. Lins, David A. & Gabriel, Stephen C. & Sonka, Steven T., 1981. "An Analysis Of The Risk Aversion Of Farm Operators: An Asset Portfolio Approach," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 6(1), pages 1-16, July.
    14. Staal, Steven J. & Davis, Carlton George, 1992. "Effects of Resource Constraints on the Production Systems and Earnings Potential of Small Farm Households in the West Province of Cameroon," Farm and Business - The Journal of the Caribbean Agro-Economic Society, Caribbean Agro-Economic Society, vol. 1(2), pages 1-32, September.
    15. Fredrick Ajwang & Saurabh Arora & Joanes Atela & Joel Onyango & Mohammad Kyari, 2023. "Enabling modernisation, marginalising alternatives? Kenya's agricultural policy and smallholders," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(1), pages 3-20, January.
    16. Gomez-Limon, Jose A. & Arriaza, Manuel & Riesgo, Laura, 2003. "An MCDM analysis of agricultural risk aversion," European Journal of Operational Research, Elsevier, vol. 151(3), pages 569-585, December.
    17. Young, Douglas L., 1980. "Evaluating Procedures For Computing Objective Risk From Historical Time Series," Risk Analysis in Agriculture: Research and Educational Developments, January 16-18, 1980, Tucson, Arizona 271471, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.
    18. Mertens, K. & Vranken, L., 2018. "Investing in land to change your risk exposure? Land transactions in a landslide prone region," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277235, International Association of Agricultural Economists.
    19. Mendoza, Meyra S. & Rosegrant, Mark W. & Brorsen, Wade, 1992. "Aggregate Corn Area Response Under Risk: Some Implications for Price Stabilization Programs," Philippine Journal of Development JPD 1992 Vol. XIX No. 2-d, Philippine Institute for Development Studies.

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