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Production under input endogeneity and farm-specific risk aversion: evidence from contract farming and Bayesian method
[Land tenure differences and investment in land improvement measures: theoretical and empirical analyses]

Author

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  • Ashok K Mishra
  • Anthony N Rezitis
  • Mike G Tsionas

Abstract

Contract farming (CF) has been offered as a solution to missing markets in developing economies. However, little is known as to how the presence of CF affects production risk, technical efficiency and risk attitudes of the smallholder. This study investigates production risk, technical efficiency, output price uncertainty and risk attitudes of contract and independent farmers. Using a Bayesian estimation method and farm-level data from Nepal, we find that contract farmers are more risk-averse than the independent farmers. Contract farmers can increase output by reducing the scale more than independent farmers. We find that labour and capital are risk-reducing, while land and other inputs are risk increasing for both contract and independent farmers. Finally, independent growers consistently over-predict output prices.

Suggested Citation

  • Ashok K Mishra & Anthony N Rezitis & Mike G Tsionas, 2020. "Production under input endogeneity and farm-specific risk aversion: evidence from contract farming and Bayesian method [Land tenure differences and investment in land improvement measures: theoreti," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(2), pages 591-618.
    • Handle: RePEc:oup:erevae:v:47:y:2020:i:2:p:591-618.
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    File URL: http://hdl.handle.net/10.1093/erae/jbz027
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    Citations

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    Cited by:

    1. Rezitis, Anthony & Mishra, Ashok & Kumar, Shalander, . "Indians Demanding More Plant-Based Protein but Farmers' Profits Drop: Empirical Evidence to Understand the Dilemma," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 49(1).
    2. S. C. West & A. W. Mugera & R. S. Kingwell, 2022. "The choice of efficiency benchmarking metric in evaluating firm productivity and viability," Journal of Productivity Analysis, Springer, vol. 57(2), pages 193-211, April.
    3. Gouranga Das & Ranajoy Bhattacharyya & Sugata Marjit, 2023. "Contract Farming and Food Insecurity in an Open Competitive Economy: Growth, Distribution, and Government Policy," JRFM, MDPI, vol. 16(4), pages 1-26, April.

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