Advanced Search
MyIDEAS: Login

Production Risk and Farm Technology Adoption in Rain-Fed, Semi-Arid Lands of Kenya

Contents:

Author Info

  • Juma, Maurice
  • Nyangena, Wilfred
  • Yesuf, Mahmud
Registered author(s):

    Abstract

    This study provides empirical evidence on the effects of production risk on farm technology adoption among small holder farmers using plot-level data collected from two semi-arid districts in Kenya, Machakos, and Taita Taveta. We employed a two-stage approach to estimate a production function, and computed the mean and the production risk factors (both variance and skewness) from a production function using Antle’s (1983, 1987) moment-based approach. We then used these moment estimates, together with other household and plot-level characteristics in a pseudo-fixed effect probit model to determine the effects of production risk and farm and household-level variables on households’ decisions to adopt different kinds of farm technologies. In our estimations, by means of Mundlak’s approach (1978), we controlled for unobserved heterogeneities that could potentially be correlated to some of the observed explanatory variables and otherwise bias our estimates. We also addressed the potential endogeneity issues in our estimation using a two-stage IV estimation procedure. Our results showed that, among others, yield variability and the risk of crop failures indeed affect technology adoption decisions in low-income, rain-fed agriculture. But, the direction and magnitude of effects depend on the farm technology under consideration. The results explain why poor farm households in rain-fed and risky production environments are reluctant to adopt new farm technologies with potential production gain because, at the same time, they involve enormous down-side risks. This result underscores the fact that productivity gains are necessary, but not sufficient, conditions to attract farmers to adopt new technologies and agricultural innovations. Risk implications matter. Technology- and location-specific production-risk coping strategies need to be designed to successfully upscale profitable farm technologies across poor farm households in low income countries.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.rff.org/RFF/documents/EfD-DP-09-22.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Resources For the Future in its series Discussion Papers with number dp-09-22-efd.

    as in new window
    Length:
    Date of creation: 15 Oct 2090
    Date of revision:
    Handle: RePEc:rff:dpaper:dp-09-22-efd

    Contact details of provider:
    Web page: http://www.rff.org
    More information through EDIRC

    Related research

    Keywords: farm productivity; Kenya; production risk; farm technology adoption;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Stefan Dercon & Luc Christiaensen, 2008. "Consumption risk, technology adoption and poverty traps: evidence from Ethiopia," WEF Working Papers 0035, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    2. 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.
    3. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
    4. Kim, Kwansoo & Chavas, Jean-Paul, 2001. "Technological Change And Risk Management: An Application To The Economics Of Corn Production," 2001 Annual meeting, August 5-8, Chicago, IL 20605, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Jackson, Matthew O., 1998. "The Evolution of Social and Economic Networks," Working Papers 1044, California Institute of Technology, Division of the Humanities and Social Sciences.
    6. Eswaran, Mukesh & Kotwal, Ashok, 1990. "Implications of Credit Constraints for Risk Behaviour in Less Developed Economies," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 473-82, April.
    7. 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.
    8. Stefan Dercon, 2004. "Growth and Shocks: evidence from rural Ethiopia," Development and Comp Systems 0409036, EconWPA.
    9. 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.
    10. Mahmud Yesuf & Randall A. Bluffstone, 2009. "Poverty, Risk Aversion, and Path Dependence in Low-Income Countries: Experimental Evidence from Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1022-1037.
    11. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
    12. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    13. 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.
    14. Shively, Gerald E., 2001. "Poverty, consumption risk, and soil conservation," Journal of Development Economics, Elsevier, vol. 65(2), pages 267-290, August.
    15. 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.
    16. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:rff:dpaper:dp-09-22-efd. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Webmaster).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.