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

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  • Simtowe, Franklin

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.

Suggested Citation

  • Simtowe, Franklin, 2006. "Can Risk-aversion towards fertilizer explain part of the non-adoption puzzle for hybrid maize? Empirical evidence from Malawi," MPRA Paper 1241, University Library of Munich, Germany, revised 20 Dec 2006.
    • Handle: RePEc:pra:mprapa:1241
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    References listed on IDEAS

    as
    1. Zeller, Manfred & Diagne, Aliou & Mataya, Charles, 1997. "Market access by smallholder farmers in Malawi," FCND discussion papers 35, International Food Policy Research Institute (IFPRI).
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    More about this item

    Keywords

    Adoption; hybrid maize; fertilizer; risk-aversion; Malawi;
    All these keywords.

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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