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Production Risk and Optimal Fertilizer Rates: A Random Coefficient Model

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  • Joyotee Smith
  • Gloria Umali

Abstract

This paper demonstrates that low levels of fertilizer use on rainfed rice in the Philippines cannot be attributed to production risk. A random coefficient model estimated the objective probability distribution of yield. This was incorporated into a utility-maximization framework to predict that moderately risk-averse farmers would apply only seven to ten kilograms less than the profit-maximizing N-rate. Previous studies have established that risk was not a major impediment to fertilizer use in irrigated areas. This paper extends this conclusion to rainfed rice production in the Philippines.

Suggested Citation

  • Joyotee Smith & Gloria Umali, 1985. "Production Risk and Optimal Fertilizer Rates: A Random Coefficient Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 654-659.
    • Handle: RePEc:oup:ajagec:v:67:y:1985:i:3:p:654-659.
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    File URL: http://hdl.handle.net/10.2307/1241089
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    Citations

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    Cited by:

    1. Fuglie, Keith O., 1988. "Fertilizer Use And The Adoption Of Modern Varieties In An Asian Rainfed Rice Farming System," Staff Papers 13733, University of Minnesota, Department of Applied Economics.
    2. Kim, Kwansoo & Barham, Bradford L. & Coxhead, Ian, 2001. "Measuring soil quality dynamics: A role for economists, and implications for economic analysis," Agricultural Economics, Blackwell, vol. 25(1), pages 13-26, June.
    3. Hailemariam Teklewold & Alemu Mekonnen & Gunnar Kohlin & Salvatore Di Falco, 2017. "Does Adoption Of Multiple Climate-Smart Practices Improve Farmers’ Climate Resilience? Empirical Evidence From The Nile Basin Of Ethiopia," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-30, February.
    4. Antle, John M. & Crissman, Charles C., 1986. "Risk Attitude Estimation By Econometric Methods: Evidence From India And The Philippines," Regional Research Projects > 1986: S-180 Annual Meeting, March 23-26, 1986, Tampa, Florida 271814, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    5. Abedullah & Sushil Pandey, 2007. "The Value of Rainfall Forecasts in the Rainfed Rice Areas of the Philippines," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(2), pages 69-81, Jul-Dec.
    6. Abedullah & Pandey, Sushil, 2004. "Risk and Fertilizer Use in the Rainfed Rice Ecosystem of Tarlac, Philippines," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(1), pages 1-10, April.
    7. Epplin, Francis M. & Berte, Kama & Krenzer, Eugene G., Jr. & Heer, William F., 1988. "Influence of Alternative Planting Dates and Tillage Systems on Winter Wheat Production Response: A Random Coefficients Approach," 1988 Annual Meeting, August 1-3, Knoxville, Tennessee 270307, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Le Cotty, Tristan & Maître d'Hôtel, Elodie & Ndiaye, Moctar & Thoyer, Sophie, 2021. "Input use and output price risks: the case of maize in Burkina Faso," Working Papers MOISA 311226, Institut National de la recherché Agronomique (INRA), UMR MOISA : Marchés, Organisations, Institutions et Stratégies d'Acteurs : CIHEAM-IAMM, CIRAD, INRA, Montpellier SupAgro, Montpellier, France.
    9. Lichtenberg, Erik, 2002. "Agriculture and the environment," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 23, pages 1249-1313, Elsevier.
    10. Kim, Kwansoo & Barham, Bradford L. & Coxhead, Ian, 1997. "The Evolution of Agricultural Soil Quality: A methodology for measurement and some land market implications," Staff Papers 200596, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    11. Hurley, Terrance M., 2010. "A review of agricultural production risk in the developing world," Working Papers 188476, HarvestChoice.
    12. Obwana, M.B. & Kalirajan, K.P. & Shand, R.T., 1997. "On Measuring Farmer-Specific and Input-Specific Allocative Efficiency," 1997 Occasional Paper Series No. 7 198063, International Association of Agricultural Economists.
    13. T. Antoniadou & D. Wallach, 2002. "Evaluating optimal fertilizer rates using plant measurements," Journal of Applied Statistics, Taylor & Francis Journals, vol. 29(7), pages 1083-1099.

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