Optimising seed portfolios to cope ex ante with risks from bad weather: evidence from a recent maize farmer survey in China

Junfei Bai, Zhigang Xu, Huanguang Qiu and Haiyan Liu

Australian Journal of Agricultural and Resource Economics, 2015, vol. 59, issue 2, 242-257

Abstract: type="main" xml:id="ajar12056-abs-0001">

Using 4-year panel data collected from surveying 640 farmers from leading maize producing provinces in China, this study analyses how maize farmers cope with anticipated risks from bad weather by strategically adjusting variety portfolios, with particular interest in farmers' strategies in choosing and combining new and old varieties. While diversification was commonly demonstrated to be an effective means to reduce risk in most previous studies, our empirical results indicate that, in facing anticipated risks from bad weather, Chinese maize farmers tend to use fewer new varieties and allocate more land to old varieties. The lack of knowledge about weather tolerance of new varieties might be the major reason for this practice. As new varieties often have higher yield potential relative to old varieties due to technological progress, this finding suggests that Chinese maize farmers might be trading yield potential against risk reduction from bad weather. Furthermore, this study shows that maize farmers' variety adoption is significantly related to farmers' land conditions as well as their access to credit markets and technique extensions, suggesting that a well-designed policy intervention could offset or partially offset the anticipation of adverse weather impacts on farmers' variety choices and therefore on maize production.

Date: 2015
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