Can Risk-aversion towards fertilizer explain part of the non-adoption puzzle for hybrid maize? Empirical evidence from Malawi

Franklin Simtowe

MPRA Paper from University Library of Munich, Germany

Abstract: This study investigates the linkage between attitudes towards risk and adoption. We empirically examine the relative risk premium related to fertilizer-use among 404 farmers from Malawi and examine the relationship between risk aversion on fertilizer-use and the adoption of hybrid maize. Results show that Malawian farmers exhibit absolute Arrow-Pratt risk aversion towards the use of fertilizer. The findings also reveal that risk aversion towards the use of fertilizer is strongly associated with low intensity of hybrid maize adoption and that other than the safety net programs, human and financial capital variables such as age, household size, land size and off-farm income can be helpful in explaining the non-adoption puzzle. While safety net programs such as the free input distribution increase the likelihood of adoption, they are associated with low adoption intensity for hybrid maize. A key lesson is that when considering promoting a technology, it is important to assess the profit distribution associated with the use of complementary inputs and its implications for risk preference among technology users in order to avoid formulating misguiding policies.

Keywords: Adoption; hybrid maize; fertilizer; risk-aversion; Malawi (search for similar items in EconPapers)
JEL-codes: Q01 (search for similar items in EconPapers)
Date: 2006-09-20, Revised 2006-12-20
New Economics Papers: this item is included in nep-afr, nep-agr, nep-ino and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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