IDEAS home Printed from https://ideas.repec.org/p/ags/iaae18/277257.html
   My bibliography  Save this paper

Heterogeneous return from Agricultural Innovation Adoption: The Role of the price effect

Author

Listed:
  • Bonjean, I.

Abstract

In conditions of poor soil fertility and increasing importance of global value chain, agricultural extension projects have been one of the main channel to increase farmer's production and income. In this literature, prices received by farmers for agricultural goods are usually assumed to be homogeneous. We dispute this over-simplification: prices and production levels in developing countries are often jointly determined. The analysis relies on a successful extension program in the Peruvian highlands, where the main income source is the dairy sector characterized by a highly segmented market. We propose a simple theoretical model to explore how the discontinuity in price induces non-linear return to investment and diverging incentives. The econometric analysis confirms the model's propositions: producers that were not included in the formal market at baseline, but close to it, have more intensively innovated. This investment leads to a higher price increase than other producers. The effects are shown to resist to falsification tests, mechanisms are discussed and positive externalities are found within communities. Hence we show that innovation in the context of a segmented market leads to heterogeneous impacts and non-trivial income effects. Contrarily to the expected disequalizing effects of innovation adoption, it induces scope for unexpected social mobility. Acknowledgement : We thank Jean-Philippe Platteau, Catherine Guirkinger, Jean-Marie Baland, Franc{c}ois Bourguignon, Michael Grimm, Jo Swinnen, James Fenske and Douglas Gollin for very helpful comments and suggestions

Suggested Citation

  • Bonjean, I., 2018. "Heterogeneous return from Agricultural Innovation Adoption: The Role of the price effect," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277257, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae18:277257
    as

    Download full text from publisher

    File URL: http://ageconsearch.umn.edu/record/277257/files/1487.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Gine, Xavier & Klonner, Stefan, 2005. "Credit constraints as a barrier to technology adoption by the poor : lessons from South Indian small-scale fishery," Policy Research Working Paper Series 3665, The World Bank.
    2. Bart Minten & Jean‐Claude Randrianarisoa & Christopher B. Barrett, 2007. "Productivity in Malagasy rice systems: wealth‐differentiated constraints and priorities," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 225-237, December.
    3. Christopher B. Barrett & Christine M. Moser & Oloro V. McHugh & Joeli Barison, 2004. "Better Technology, Better Plots, or Better Farmers? Identifying Changes in Productivity and Risk among Malagasy Rice Farmers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 869-888.
    4. Oriana Bandiera & Imran Rasul, 2006. "Social Networks and Technology Adoption in Northern Mozambique," Economic Journal, Royal Economic Society, vol. 116(514), pages 869-902, October.
    5. Marcel Fafchamps & Ruth Vargas Hill, 2005. "Selling at the Farmgate or Traveling to Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 717-734.
    6. Andrew D. Foster & Mark R. Rosenzweig, 2010. "Microeconomics of Technology Adoption," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 395-424, September.
    7. 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.
    8. Gin, Xavier & Yang, Dean, 2009. "Insurance, credit, and technology adoption: Field experimental evidencefrom Malawi," Journal of Development Economics, Elsevier, vol. 89(1), pages 1-11, May.
    9. Tavneet Suri, 2011. "Selection and Comparative Advantage in Technology Adoption," Econometrica, Econometric Society, vol. 79(1), pages 159-209, January.
    10. Maertens, Miet & Swinnen, Johan F.M., 2009. "Trade, Standards, and Poverty: Evidence from Senegal," World Development, Elsevier, vol. 37(1), pages 161-178, January.
    11. Munshi, Kaivan, 2004. "Social learning in a heterogeneous population: technology diffusion in the Indian Green Revolution," Journal of Development Economics, Elsevier, vol. 73(1), pages 185-213, February.
    12. Sharada Weir & John Knight, 2000. "Adoption and diffusion of agricultural innovations in Ethiopia: the role of Education," CSAE Working Paper Series 2000-05, Centre for the Study of African Economies, University of Oxford.
    13. Dimara, Efthalia & Skuras, Dimitris, 2003. "Adoption of agricultural innovations as a two-stage partial observability process," Agricultural Economics, Blackwell, vol. 28(3), pages 187-196, May.
    14. Minten, Bart & Randrianarison, Lalaina & Swinnen, Johan F.M., 2009. "Global Retail Chains and Poor Farmers: Evidence from Madagascar," World Development, Elsevier, vol. 37(11), pages 1728-1741, November.
    15. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769, December.
    16. Andre Croppenstedt & Mulat Demeke & Meloria M. Meschi, 2003. "Technology Adoption in the Presence of Constraints: the Case of Fertilizer Demand in Ethiopia," Review of Development Economics, Wiley Blackwell, vol. 7(1), pages 58-70, February.
    17. Key, Nigel & Runsten, David, 1999. "Contract Farming, Smallholders, and Rural Development in Latin America: The Organization of Agroprocessing Firms and the Scale of Outgrower Production," World Development, Elsevier, vol. 27(2), pages 381-401, February.
    18. H. Holly Wang & Yanbing Wang & Michael S. Delgado, 2014. "The Transition to Modern Agriculture: Contract Farming in Developing Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1257-1271.
    19. Evenson, Robert E. & Westphal, Larry E., 1995. "Technological change and technology strategy," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 37, pages 2209-2299 Elsevier.
    20. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    21. repec:fth:oxesaf:2000-5 is not listed on IDEAS
    22. Okello, Julius Juma & Swinton, Scott M., 2006. "Do International Food-Safety Standards Marginalize Poor Farmers? Evidence from Kenyan Family Green Bean Farms," Journal of Food Distribution Research, Food Distribution Research Society, vol. 37(1), pages 1-1, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Marketing;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:iaae18:277257. 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: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/iaaeeea.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.