Can Risk-Aversion Towards Fertilizer Explain Part of the Non-Adoption Puzzle for Hybrid Maize? Empirical Evidence from Malawi

Journal of Applied Sciences, Vol. 6, No. 7, pp. 1490-1498, 2006

17 Pages Posted: 24 Oct 2006

See all articles by Franklin Simtowe

Franklin Simtowe

President; African Centre for Social Research and Economic Development (ACSRED)

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 levels of 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.

Keywords: adoption, hybrid maize, fertilizer, risk-aversion, Malawi

Suggested Citation

Simtowe, Franklin Peter, Can Risk-Aversion Towards Fertilizer Explain Part of the Non-Adoption Puzzle for Hybrid Maize? Empirical Evidence from Malawi. Journal of Applied Sciences, Vol. 6, No. 7, pp. 1490-1498, 2006, Available at SSRN: https://ssrn.com/abstract=939398

Franklin Peter Simtowe (Contact Author)

President ( email )

African Centre for Social Research and Economic
and Economic Development (ACSRED)
Lusaka, Central

HOME PAGE: http://www.acsred.org

African Centre for Social Research and Economic Development (ACSRED) ( email )

P.O Box 2713
Village market
Nairobi
Kenya

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