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Fertilizer Use, Risk, And Off-Farm Labor Markets In The Semi-Arid Tropics Of India

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  • Lamb, Russell L.

Abstract

The opportunity to work in the off-farm labor market allows farmers to smooth consumption in the face of a negative weather shock. This allows farmers to make production choices that have higher average returns, and greater risk. I develop a two-period dynamic programming model to explain the relationship between fertilizer demand and off-farm labor markets for a risk-averse farmer. I use a well-known sample of farmers in the semi-arid tropics of India to test the model. I show that fertilizer demand increases with the depth of the off-farm labor market. Controlling for exogenous weather risk, farmers use more fertilizer the lower the unemployment rate and the higher the share of nonagricultural work in total off-farm labor. The results have important policy implications, suggesting that labor markets and farm production are complementary in risky production environments.

Suggested Citation

  • Lamb, Russell L., 2001. "Fertilizer Use, Risk, And Off-Farm Labor Markets In The Semi-Arid Tropics Of India," Reports 57542, North Carolina State University, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:ncsure:57542
    DOI: 10.22004/ag.econ.57542
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    Cited by:

    1. Demeke, Abera Birhanu & Zeller, Manfred, 2012. "Weather Risk and Household Participation in Off-farm Activities in Rural Ethiopia," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 51(1), pages 1-20, February.

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