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Can Risk-aversion towards fertilizer explain part of the non-adoption puzzle for hybrid maize? Empirical evidence from Malawi

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  • Simtowe, Franklin

Abstract

This study investigates the linkage between attitudes towards risk and adoption. We empirically examine the relative risk premium related to fertilizer-use among 404 farmers from Malawi and examine the relationship between risk aversion on fertilizer-use and the adoption of hybrid maize. Results show that Malawian farmers exhibit absolute Arrow-Pratt risk aversion towards the use of fertilizer. The findings also reveal that risk aversion towards the use of fertilizer is strongly associated with low intensity of hybrid maize adoption and that other than the safety net programs, human and financial capital variables such as age, household size, land size and off-farm income can be helpful in explaining the non-adoption puzzle. While safety net programs such as the free input distribution increase the likelihood of adoption, they are associated with low adoption intensity for hybrid maize. A key lesson is that when considering promoting a technology, it is important to assess the profit distribution associated with the use of complementary inputs and its implications for risk preference among technology users in order to avoid formulating misguiding policies.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1241.

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Date of creation: 20 Sep 2006
Date of revision: 20 Dec 2006
Handle: RePEc:pra:mprapa:1241

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Keywords: Adoption; hybrid maize; fertilizer; risk-aversion; Malawi;

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References

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  1. Zeller, Manfred & Diagne, Aliou & Mataya, Charles, 1997. "Market access by smallholder farmers in Malawi," FCND discussion papers 35, International Food Policy Research Institute (IFPRI).
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Cited by:
  1. Gine, Xavier & Yang, Dean, 2007. "Insurance, credit, and technology adoption : field experimental evidence from Malawi," Policy Research Working Paper Series 4425, The World Bank.
  2. Vollenweider, Xavier & Di Falco, Salvatore & O'Donoghue, Cathal, 2011. "The Impact Of Risk On The Inequality: Evidences From The Irish Agricultural Sector," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 115553, European Association of Agricultural Economists.
  3. Simtowe, Franklin & Kassie, Menale & Diagne, Aliou & Asfaw, Solomon & Shiferaw, Bekele & Silim, Said & Muange, Elijah, 0. "Determinants of Agricultural Technology Adoption: The Case of Improved Pigeonpea Varieties in Tanzania," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, vol. 50.
  4. World Bank, 2010. "Improving Water Management in Rainfed Agriculture : Issues and Options in Water-Constrained Production Systems," World Bank Other Operational Studies 13028, The World Bank.
  5. Xavier Vollenweider & Salvatore Di Falco & Cathal O’Donoghue, 2011. "Risk preferences and voluntary agrienvironmental schemes: does risk aversion explain the uptake of the Rural Environment Protection Scheme?," Grantham Research Institute on Climate Change and the Environment Working Papers 48, Grantham Research Institute on Climate Change and the Environment.
  6. Ndoye Niane, Aifa Fatimata & Burger, Kees, 2012. "Gender and Experimental Measurement of Producers Risk Attitude Towards Output Market Price and its Effects on Economic Performance," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126928, International Association of Agricultural Economists.
  7. Simtowe, Franklin & Zeller, Manfred, 2006. "The Impact of Access to Credit on the Adoption of hybrid maize in Malawi: An Empirical test of an Agricultural Household Model under credit market failure," MPRA Paper 45, University Library of Munich, Germany.
  8. Ricker-Gilbert, Jacob & Jones, Michael, 2012. "Does Access to Storage Protectant Increase Smallholder Adoption of Improved Maize Seed? Insights from Malawi," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124658, Agricultural and Applied Economics Association.

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