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The adoption of innovative cropping systems under price and production risks: a dynamic model of crop rotation choice

  • Aude Ridier
  • Karim Chaib
  • Caroline Roussy

We investigate the role played by both production and market risks on farmers’ decision to adopt long rotations considered as innovative cropping systems. We build a multi-period dynamic farm model which arbitrates each year between conventional and innovative rotations. With discrete stochastic programming, the production risk is accounted for as an intra-year risk, yearly farming operations being declined according to a decision tree where probabilities are assigned. The simulations for a sample of 13 farmers who are currently experimenting this innovation in south-western France, show that substantive sunk costs act as incentives to remain in the long rotation when the farmer is supported for his engagement. They also show that both a high risk aversion and a highly positive market trend tend to slow down the conversion towards innovative systems.

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File URL: http://www6.rennes.inra.fr/smart/Media/Working-papers/WP12-07
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Paper provided by INRA UMR SMART in its series Working Papers SMART - LERECO with number 12-07.

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Length: 26 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:rae:wpaper:201207
Contact details of provider: Web page: http://www.rennes.inra.fr/smart_eng/Working-Papers-SMART-LERECO
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  1. Kenneth A. Baerenklau & Keith C. Knapp, 2007. "Dynamics of Agricultural Technology Adoption: Age Structure, Reversibility, and Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 190-201.
  2. Acs, Szvetlana & Berentsen, Paul B.M. & Huirne, Ruud & van Asseldonk, Marcel, 2009. "Effect of yield and price risk on conversion from conventional to organic farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(3), September.
  3. Abadi Ghadim, Amir K. & Pannell, David J., 1999. "A conceptual framework of adoption of an agricultural innovation," Agricultural Economics, Blackwell, vol. 21(2), pages 145-154, October.
  4. Trebeck, David B. & Hardaker, J. Brian, 1972. "The Integrated Use Of Simulation And Stochastic Programming For Whole Farm Planning Under Risk," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 16(02), August.
  5. Hennessy, David A., 2004. "On Monoculture and the Structure of Crop Rotations," Staff General Research Papers 12004, Iowa State University, Department of Economics.
  6. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  7. Szvetlana Acs & Paul Berentsen & Ruud Huirne & Marcel van Asseldonk, 2009. "Effect of yield and price risk on conversion from conventional to organic farming ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(3), pages 393-411, 07.
  8. Blazy, Jean-Marc & Tixier, Philippe & Thomas, Alban & Ozier-Lafontaine, Harry & Salmon, Frédéric & Wery, Jacques, 2010. "BANAD: A farm model for ex ante assessment of agro-ecological innovations and its application to banana farms in Guadeloupe," Agricultural Systems, Elsevier, vol. 103(4), pages 221-232, May.
  9. Bocqueho, Geraldine & Jacquet, Florence & Reynaud, Arnaud, 2011. "Expected Utility or Prospect Theory Maximizers? Results from a Structural Model based on Field-experiment Data," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114257, European Association of Agricultural Economists.
  10. Isik, Murat & Khanna, Madhu & Winter-Nelson, Alex, 2001. "Sequential Investment In Site-Specific Crop Management Under Output Price Uncertainty," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(01), July.
  11. David B. Trebeck & J. Brian Hardaker, 1972. "The Integrated Use Of Simulation And Stochastic Programming For Whole Farm Planning Under Risk," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 16(2), pages 115-126, 08.
  12. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-71, March.
  13. Graeme J. Doole & David J. Pannell, 2008. "Optimisation of a Large, Constrained Simulation Model using Compressed Annealing," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 188-206, 02.
  14. Apland, Jeffrey & Hauer, Grant, 1993. "Discrete Stochastic Programming: Concepts, Examples And A Review Of Empirical Applications," Staff Papers 13793, University of Minnesota, Department of Applied Economics.
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