Strategic Decision-Making: Adoption of Agricultural Technologies and Risk in a Peasant Economy

Mariam, Yohannes and Galaty, John and Coffin, Garth (1993): Strategic Decision-Making: Adoption of Agricultural Technologies and Risk in a Peasant Economy.

Abstract

Descriptive and logit analysis were employed to investigate the impact of social, economic and technical factors on decisions to adopt new agricultural technologies in the Ada and Selale districts of Ethiopia. Peasants follow sequential adoption of technologies. In both study areas, priority is given to adoption of crop production augmenting technologies followed by technologies that complement crop production (Ada) and contribute to increases in milk production (Selale). Producers of both regions require existence of certain pre-conditions prior to the adoption of technologies. Ada farmers require more pre-conditions related to livestock production while Selale farmers require more preconditions related crop production.

The impact of indigenous production knowledge and experience on adoption decisions was found not only positive but greater than most economic and social variables. The influence of most socioeconomic variables is greater on technologies that are proven to have a more certain outcome (e.g., fertilizer and pesticides) than on technologies which are either expensive or risky (e.g., cross-bred cows and improved seed).

Risk-averse behaviour of households reduces the probability of adopting new technologies in both study regions. Households may be willing to take more risks if they receive insurance from social networks, governmental and non-governmental organizations or are rich. The results from the Selale and Ada regions suggest that physical inputs and knowledge exert large and significant positive impacts on production when farmers adopt combinations of fertilizer and pesticides (Ada), or fertilizer and cross-bred cows (Selale).

• Item Type: MPRA Paper
• Language: English
• Keywords: Logit; Ethiopia; adoption of technologies; indigenous knowledge; crop; livestock; risk-averse; social networks; governmental; non-governmental organizations
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q13 - Agricultural Markets and Marketing ; Cooperatives ; Agribusiness; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q16 - R&D ; Agricultural Technology ; Biofuels ; Agricultural Extension Services; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q18 - Agricultural Policy ; Food Policy; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O38 - Government Policy; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives

References

Anderson, J. R., Dillon, J.L. and Hardaker, J.B. Agricultural Decision Analysis. Ames: Iowa State University Press, 1977.

Barlett, P.F. Cost benefit Analysis: A test of Alternative Methodologies, P.F.Barlett (ed), Agricultural Decision-making: Anthropological Contribution to Rural Development. New York:Academic Press, 1980, pp.137-160.

Barlett, P.F., (ed) Agricultural Decision-making: Anthropological Contribution to Rural Development. New York: Academic Press, 1980.

Barry, P. (ed) Risk Management in Agriculture.Ames:Iowa State University Press, Ames,Iowa,1984.

Berry, S. Macro Policy Implications of Research on Rural Households and Farming Systems. In J.L. Moock (ed).Understanding Africa's Rural Households and Farming Systems. Boulder:West View, 1986, pp. 199-216.

Cary, J.W., and Holmes, W.E. Relationships among Farmers' Goals and Farm Adjustment Strategies: Some Empirics of a Multidimensional Approach. Aust. J. of Agr. Econ. 26(1982):114-130.

Coleman, G. The Analysis of memory Bias In Agricultural Labour Data Collection: A Case Study of Small Farmers in Nigeria. J. of Agricultural Economics, 1983, 34:79-86.

Constable, M. Ethiopian Highland Reclamation Study: Summary. Ministry of Agriculture/FAO, Addis Ababa, Ethiopia, 1983.

Dunn, D.W. Applied Decision Analysis. McGraw-Hill Book Company. New York, 1984.

Eisemn, T.O., and Nyamete, A. Schooling and Agricultural Productivity in Western Kenya. J. of East African Research and Development. 18(1988):44-66.

Ellis, F. Peasant Economics: Farm Households and Agrarian Development. Cambridge: Cambridge University Press, 1988.

FINNIDA, Base Line Survey: Selale Dairy Development Pilot Project. Unpublished Report, 1989.

Gladwin, C. A Theory of Real Life Choice: Applications to Agricultural Decisions. P.F.Barlett (ed), Agricultural Decision-making: Anthropological Contribution to Rural Development. New York: Academic Press, 1980. pp.45-84.

Gryseels, G. and Anderson, F.M. Research on Farm and Livestock Productivity in Central Ethiopian Highlands: Initial Results, 1977-1983. ILCA Research Bulletin Report No.4, 1983.

Hyden, G. No Short Cuts To Progress: African Development Management in Perspective. Berkeley: University of California Press, 1983.

Hyden, G. The Invisible Economy of Small Holder Agriculture in Africa. In J.L. Moock (ed). Understanding Africa's Rural Households and Farming Systems. Boulder:West View, 1986. pp.11-35.

Kebede, Y. Household Decision-making: The Case of Adoption of Technologies in Ethiopia. Unpublished Ph.D. Dissertation, Departments of Agricultural Economics and Anthropology, McGill University, 1993.

Kennedy, P. A Guide to Econometrics. Massachusetts: MIT, 1985.

Lutz, M.A. and Lux, K. The Challenge of Humanistic Economics. Menlo Park: Benjamin/Cummings, 1979.

Moock, J.L. Understanding Africa's Rural Households and Farming Systems (ed). Boulder:West View, 1986.

Norman, D.W. Rationalizing Mixed Cropping Under Indigenous Conditions: The Examples of Northern Nigeria. J. of Development Studies. 11(1980):3-21.

Ortiz, S. What is decision analysis about? The Problem of Formal Representation. In S. Ortiz (ed). Economic Anthropology: Topics and Theories. Monograph in Economic Anthropology, No. 1., NY.: University Press of America, 1983, pp.249-300.

Ricket, J. Economic Development in Ethiopia: Agriculture, the market and the Sate, OECD, Paris, 1991.

Tversky, A. Elimination by Aspects: A Theory of Choice. Psychological Review. 79(1972):281-291.