Effect of risk perspective on fertilizer choice by sharecroppers
Peanut and corn are two major crops in the tri-state area of the Southeast US, an area encompassing North Florida, Southwest Georgia, and Southeast Alabama. Sharecroppers in this region apply higher amount of input in crop production than the average farmers. We analyzed the behavior of sharecroppers in this region with regard to their fertilizer application decisions. Two hypotheses were formulated and tested based on sharecroppers' fertilizer application decisions: one assuming that sharecroppers are risk averse farmers and the other assuming that sharecroppers are regret minimizers. Our results show that a sharecropper uses different fertilizer treatments when minimizing risk depending on risk perspective and desired income. Sharecroppers who apply more fertilizer to obtain a desired level of income are regret minimizers where as sharecroppers who apply relatively low fertilizer are risk minimizer. At the same desired level of income, a regret minimizer farmer would apply a higher amount of fertilizer than the risk averse farmers. Our analysis revealed that sharecroppers in the Southeast US are regret minimizers as they apply a higher amount of fertilizer than an average farmer on the major crops grown in the region. The result of this study also confirms the result of a previous study in the region which reported that sharecroppers in the region are over capitalized and apply more fertilizer than average farmers.
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