Does risk management affect productivity of organic rice farmers in India? Evidence from a semiparametric production model

Gudbrand Lien, Subal Kumbhakar, Ashok K. Mishra and J. Brian Hardaker

European Journal of Operational Research, 2022, vol. 303, issue 3, 1392-1402

Abstract: This study analyzes the effects of farmers’ risk on productivity where the production function is generalized to be specific to risk variables. This resulted in a semiparametric smooth-coefficient (SPSC) production function. The novelty of the SPSC approach is that it can explain the direct and indirect channels through which risk can affect productivity. The study uses several measures of risk, including attitudes toward risk, perceptions of risk, and risk management skills of farmers. It then shows how these risk-related variables affect productivity both directly and indirectly via the inputs. Using 2015 farm-level data from organic basmati rice (OBR) smallholders in India, the study finds that OBR farmers with high degrees of risk aversion had lower productivity than less risk-averse or risk-neutral OBR farmers. Additionally, OBR farmers who were most concerned about production risks (i.e., weather and pest risks) had higher productivity than their counterparts. Finally, the study reveals that OBR farmers can reduce production costs by increasing farm size.

Keywords: OR in agriculture; Productivity; Production risk; Semiparametric model; Organic rice (search for similar items in EconPapers)
JEL-codes: D22 D24 L24 Q12 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:303:y:2022:i:3:p:1392-1402

DOI: 10.1016/j.ejor.2022.03.051

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