An econometric examination of the adoption and use of microcomputers by Iowa farmers

Given the increasing complexity of U.S. farming over the last several decades, farmers have become acutely aware of the need for information as an input in the farm decision-making process. The utilization of a microcomputer or outside paid computer services for managing the flow of data and the conversion of that data into useful information has the potential to enhance the profitability of any farming operation;The primary objectives of this study are to model both the separate and joint decisions of farmers on the adoption and utilization of personal computers and paid computer services. A profit-maximizing conceptual model is developed, assuming that these innovations fulfill the role of a managerial input. A system of normalized indirect profit functions is derived from this framework, under the presumption that if the farmer perceives that the innovation will increase his profit, he will decide to adopt it. These profit functions are believed to be functions of input and output prices and other fixed factors, such as education level and farm size;The qualitative response model is fitted to data from surveys of Iowa farmers over the period 1982-84, utilizing both probit and logit estimation techniques. The results are consistent with theoretical expectations across both methods, and support the major hypotheses that economies of scale and human capital contribute to increased probability of adoption. These innovations have not been available long enough or used by enough farmers (approximately 6% owned microcomputers in 1984) to pinpoint all potential benefits that such technology can yield. Sufficient information is known to be able to say that the proportion of adopters is increasing becasue those farmers perceive it will be a profitable acquisition.