Adoption of improved livestock production practices in the Peruvian Amazonia: an econometric analysis

Alfredo G. Riesco

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: Successive Peruvian Administrations have pursued the development of frontier lands in the Amazonia. There are concerns, however, about the socio-economic and technological path of this process. Settlers opt for a variety of farming systems that are in general multioutput in nature and where cattle is an important component;An econometric model is developed to understand the determinants of choice of main activities and technology. The model is based on expected utility theory, taken into consideration concepts of subjective probabilities and perceptions. The analysis considers a system of choice variables related to the demand for inputs, allowing for corner solutions. The model takes into account the degree of fixity in factors of production, and the interrelation between fixity and simultaneity in farm decisions. Technical jointness of beef and milk production, and non-jointness in inputs of livestock and crop production are analyzed;Cross-sectional data were collected from 128 farmers in Peruvian Central Amazonia. Limited dependent variables maximum likelihood (LDVML) and two-stage LDVML are used for estimation of conditional and simultaneous decision systems, respectively;Human capital variables have a special connotation in economic decisions, because migrants come to the Amazonia with diverse background. Schooling has a positive effect on adoption of improved pastures, crossbred cows and supplements; but, it has a negative direct marginal effect on farm production due to a strong relocation of time to off-farm work. Labor is scarce and has a high marginal productivity in all farm activities. Bias towards certain types of technology is explained in part by farmers' previous experience in other regions. Increases in area of improved pastures and in number of crossbred cows increase labor and management productivity on the farm and reduce the probability of off-farm work. Since milk production is more time demanding than beef production, the marginal effect of crop production on milk is larger in absolute value than the corresponding effect on beef. Higher land values and improvement in terms of trade at the farm gate induce intensification per unit of land.

Date: 1990-01-01
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