Self‐protection from weather risk using improved maize varieties or off‐farm income and the propensity for insurance

We investigate how self‐protection from the adoption of Improved Maize Varieties (IMV) and off‐farm income affects risk premiums for smallholder maize producers in Uganda. To unbundle these effects, we specify the cost of risk to explicitly capture four risk components—mean, variance, skewness, and kurtosis. Using unique plot‐level panel data for Uganda, we estimate and test moments of a flexible production function based on an expanded form of the Johnson S_U family distribution and proceed to simulate the degree of responsiveness of risk premiums and welfare estimates to marginal changes in the share of land under IMV and off‐farm income. Scenarios of joint adoption of IMV accompanied with low and high application of inorganic fertilizer, and the effect of off‐farm income when there is high and low supply of farm labor are examined. Results show that the use of IMV and off‐farm income substantially reduces risk premiums and the individual effect is much higher under low fertilizer application and high supply of farm labor, respectively. Thus implying that self‐protection is likely to reduce the propensity for index insurance especially if its design fails to consider the reduction in downside risk.     

Effect of off‐farm income on smallholder commercialization: panel evidence from rural households in Ethiopia

This article investigates how off‐farm income affects crop output market participation decisions and marketed surplus of smallholder farmers in Ethiopia. A double‐hurdle model is estimated using three waves of panel data from the Ethiopian Rural Household Survey. Unobserved heterogeneity is controlled for using a correlated random effect procedure and potential endogeneity of explanatory variables using a control function approach. The results show that off‐farm income has no significant influence on household crop output market participation. However, conditional on market participation, additional off‐farm earnings negatively affect the marketed surplus. This indicates that farmers use off‐farm earnings for consumption rather than for investment in agricultural production. Policy measures that promote rural investment may help increase returns to labor for land‐poor households participating in off‐farm work in the process of agricultural commercialization.     

Assessing the impact of NERICA on income and poverty in central and western Uganda

Persistent food shortage and poverty in sub-Saharan Africa (SSA) are major development issues. New Rice for Africa (NERICA) was developed to boost crop yield and income of rural households in SSA. Although its high-yielding traits have become fairly well known, there is no empirical analysis of its impact on income and poverty. By taking the case of Uganda where a NERICA promoting program was initiated as one of the major poverty eradication measures, this study attempts to compare actual income with the hypothetical income without NERICA. We found that introduction of NERICA decreases poverty to a significant extent without deteriorating income distribution.     

Are small‐scale rice farmers in eastern India really inefficient? Examining the effects of microtopography on technical efficiency estimates

The article analyzes how controlling for differences in land types (defined by position on a low‐scale toposequence) affects estimates of farm technical efficiency for rice farms in eastern India. Contrasting previous research, we find that farms are considerably more technically efficient when efficiency estimates are carried out at the plot level and control for plot characteristics rather than at the farm level without such controls. Estimates show farms cultivating modern varieties are technically efficient and plots planted with traditional varieties on less productive lands (upland and midupland) operate close to the production frontier. Significant technical inefficiency is found on more productive lands (medium and lowland plots) planted with traditional rice varieties. The finding that these smallholder rain‐fed rice farms are efficient cultivators on some plots contrasts with previous findings of farm‐level inefficiency (i.e., rejects overarching explanations linked to farm operator ignorance or lack of motivation) and suggests more complex explanations are required to address the inefficiency that is present.     

Modeling the length and shape of the R&D lag: an application to UK agricultural productivity

This article updates total factor productivity (TFP) growth in UK agriculture from 1953–2005 and shows that public and private research and returns to scale explain TFP. Cointegration and causality tests are used to investigate the validity of attempts to explain UK agricultural productivity with R&D and related technology variables. Then, the length and shape of the lag structures are modeled and compared with the structures that are commonly imposed on the data. The rates of return (ROR) to R&D using the data determined lags differ considerably from those obtained by imposing lag shapes. These comparisons show that the ROR to public R&D are sensitive to the lag shape as well as its length and that the omission of other technology variables, such as mechanical and chemical patents pertaining to agriculture and farm size can bias the ROR.     

Technological and policy options for sustainable agricultural intensification in eastern Uganda

This article presents a bio‐economic household model, which has been developed to assess the potential impacts of agricultural intensification efforts on economic and ecological indicators in eastern Uganda. A study region in the Lake Victoria Crescent was selected with comparative advantages for intensive agricultural production: high agricultural potential, high market access, and high population density. However, current production is characterized by low input–output systems revealing a discrepancy between development opportunities and actual development outcomes. Based on a farmer participatory research approach, production methods were introduced in the study region aimed at fostering sustainable agricultural development. Data from two community surveys, two comprehensive household and plot level surveys, and farm‐trial data were used to develop and calibrate bio‐economic models for four representative household types. Model scenarios reveal that farm households in eastern Uganda would not pursue sustainable intensification under current socio‐economic conditions. The market environment has to be improved substantially, i.e., transaction and transportation costs have to be reduced, innovative credit schemes for smallholders have to be introduced, and alternative forms of labor acquisition have to be promoted, to provide sufficient economic incentives for the adoption of environmentally sound production methods. In addition, agricultural service provision needs to be reformed and more agricultural research is needed for new and better‐targeted technologies.     

The impact of safety nets on technology adoption: a difference‐in‐differences analysis

This article contributes to a growing body of empirical literature relating credit constraints and incomplete insurance to investment decisions. We use panel data from rural Ethiopia to investigate whether participation in a safety net program enhances fertilizer adoption. Using a difference‐in‐differences estimator and inverse propensity score weighting, we find that participation in Ethiopia's food‐for‐work (FFW) program increased fertilizer adoption in the short run, but not in the long run. Results also indicate that the intensity of fertilizer usage increased with livestock holdings for FFW‐participant households, providing some evidence that the intervention helped asset‐rich farm households more than asset‐poor households. We find no significant effects of free distribution on fertilizer adoption or intensification. Our results are consistent with the hypothesis that safety nets can be viewed as mechanisms that allow households to take on more risk to pursue higher profits. The results highlight the importance of safety net programs, their effectiveness in ensuring farmers that they will be protected against uninsured shocks, and how that assurance can translate into productivity‐enhancing behavior.     

The increasing importance of nonfarm income and the changing use of labor and capital in rice farming: the case of Central Luzon, 1979–2003

There have been sharp increases in nonfarm income among farm households in Central Luzon for the last few decades. This study attempts to identify the effects of the increasing nonfarm income on the use of tractors and threshers and on the employment of hired labor as a substitute for family labor. We found that while the increased nonfarm income positively affects the ownership of tractors, it has no significant impact on the use of agricultural machines due presumably to the development of efficient machine rental markets. We also found that the increased nonfarm income leads to the increased use of hired labor, thereby releasing family labor to nonfarm jobs.     

Roundup Ready soybeans in Argentina: farm level and aggregate welfare effects

Although adoption rates of genetically modified crops have been staggering in some countries, there is still comparatively little evidence about biotechnology impacts under diverse agroecological and institutional conditions. These knowledge gaps lead to an overly precautious attitude among policy makers and the public. This article analyzes the effects of Roundup Ready (RR) soybeans in Argentina, the country with the second biggest transgenic area worldwide. Based on recent survey data, it is shown that the technology increases total factor productivity by 10% on average, with cost savings being somewhat more pronounced for smaller than for larger farms. The reduction in use of toxic herbicides and of tillage operations entails positive environmental repercussions. Aggregate welfare effects are computed over the 1996–2001 period with a three-region, partial equilibrium model, comprising Argentina, the United States, and the rest of the world. In 2001, RR soybeans created more than US$1.2 billion of economic surplus at the global level. The largest share went to consumers (53%), followed by seed and biotechnology firms (34%), and agricultural producers (13%). Due to comparatively weak intellectual property protection, and thus only small technology mark-ups in seed prices and widespread adoption, Argentine soybean growers receive 90% of the benefits in that country. This demonstrates that farmers in developing countries can gain considerably when they obtain access to suitable foreign innovations through technology spill-overs.     

O‐Ring production on U.S. hog farms: joint choices of farm size,technology, and compensation

We hypothesize that hog production can be characterized by complementarities between new technologies, worker skills, and farms size. Such production processes are consistent with Kremer's O‐ring production theory in which a single mistake in any one of several complementary tasks in a firm's production process can lead to catastrophic failure of the product's value. In hog production, mistakes that introduce disease or pathogens into the production facility can cause a total loss of the herd. Consistent with predictions derived from the O‐ring theory, we provide evidence that the most skilled workers concentrate in the largest and most technologically advanced farms and are paid more than comparable workers on smaller farms. These findings suggest that worker skills, new technologies, and farm size are complements in production. The complementarities create returns to scale to large hog confinements, consistent with the dramatic increase in market share of very large farms over the past 20 years.     

Diffusion and spillover of new technology: a heterogeneous-agent model for cassava in West Africa

Understanding what determines the geographic spread of innovations can help guide the funding and implementation of research and extension programs. Our approach uses household survey data as model parameters, to simulate behavior across the entire surveyed population and avoid the aggregation bias associated with representative‐farm models. Such a “heterogeneous agent” approach allows us to infer the distribution of a technology's impacts across one set of households, and predict the potential for spreading to another set that shares similar characteristics with respect to natural resource endowments and farming systems. We apply the technique to new cassava varieties in West Africa, finding a strongly poverty‐alleviating impact, with substantial spillover potential from Nigeria to neighboring countries.     

Tradeoffs and complementarities in the adoption of improved seeds,fertilizer, and natural resource management technologies in Kenya

There is widespread consensus that agricultural technology has an important role to play for poverty reduction and sustainable development. There is no consensus, however, about the types of technologies that are best suited for smallholder farmers in Africa. While some consider natural resource management (NRM) technologies as most appropriate, others propagate input intensification with a stronger role of the private sector. In the public debate, these two strategies are often perceived as incompatible. Environmental non‐governmental organizations in particular consider low‐external input strategies as the only sustainable form of agriculture, a view that has considerable influence on policymakers and the international donor community. Most existing research studies on smallholder innovation focus on the adoption of individual technologies, so that comparisons between different types of technologies in the same context are not easily possible. We use representative data from maize‐producing households in Kenya and a multivariate probit model to analyze the adoption of different types of technologies simultaneously. Results indicate that NRM technologies and strategies that build on external inputs are not incompatible. Interesting complementarities exist, which are not yet sufficiently exploited because many organizations promote either one type of technology or the other, but rarely a combination of both.     

Farm machinery use,off‐farm employment and farm performance in China

We analyse the joint impacts of farm machinery use and off‐farm employment on maize yields and agrochemical expenses from a household survey of 493 farmers in China. Our findings are obtained from an innovative two‐stage econometric procedure that combines a bivariate ordered probit model with an endogeneity‐corrected ordinary least square regression model. The results show that farmers are jointly making decisions to use farm machines and to work off the farm and that these two household activities affect maize yields and agrochemical expenses in different ways. We show that farm machinery use significantly increases both maize yields and agrochemical expenses, while off‐farm employment significantly decreases agrochemical expenses. Our findings highlight the importance of additional machinery use in increasing farm production; the need to account for possible endogeneity in estimation; and the statistical significance of key household characteristics (gender, education, and household size) on overall farm production.     

Smallholder participation in vegetable exports and age‐disaggregated labor allocation in Northern Tanzania

Modern agricultural supply chains have been playing an increasingly important role in developing countries and have had significant effects on rural labor markets. This article analyses the effects of smallholder farmer participation in export vegetable supply chains in Northern Tanzania on both household hired labor demand and off‐farm labor supply, using an age‐disaggregated approach. In our sample, neither separability nor exogeneity of smallholder farmer participation in export supply chains can be rejected. Hence, we apply lognormal double‐hurdle models and find that participation in export supply chains positively affects households’ decision to hire labor from all age groups. We also find that it increases the unconditional overall level of hired labor demand, while the age‐disaggregated analysis shows that these effects mostly benefit rural youth. However, our sample does not allow us to establish statistically significant evidence of an effect on household off‐farm labor supply although the point estimates point to nonnegligible positive effect sizes.     

Improving the speed of adoption of agricultural technologies and farm performance through farmer groups: evidence from the Great Lakes region of Africa

The article examines the effect of membership in farmer groups (MFG) on adoption lag of agricultural technologies and farm performance in Burundi, the Democratic Republic of Congo and Rwanda. We use duration and stochastic production frontier models on farm household data. We find that the longer the duration of MFG, the shorter the adoption lag and much more so if combined with extension service delivery. Farmer groups function as an important mechanism for improving farm productivity through reduced technical inefficiency in input use. We discuss policy implications under which farmer groups are a useful channel to reduce adoption lag, and the means through which improved farm performance can be achieved.     

Market imperfections,access to information and technology adoption in Uganda: challenges of overcoming multiple constraints

Limited empirical evidence exists on how multiple binding constraints influence the adoption of improved technologies by smallholder farmers. This article uses the case of groundnut variety adoption in Uganda to investigate the role of information, seed supply, and credit constraints in conditioning technology uptake. New data from a household survey in seven groundnut growing districts (n = 945) indicate that 8% of farmers lack information on new varieties, while 18% and 6% of farmers, respectively, cannot adopt mainly due to seed supply and capital constraints. A tobit‐type specification that considers all nonadopters as being uninterested in the technology (i.e., corner solutions) would lead to inconsistent parameter estimates and incorrect conclusions in this context. We therefore estimate a modified multi‐hurdle specification of demand for new varieties, taking into account how information, seed supply, and capital constraints jointly determine adoption probability and intensity. The study reveals new empirical insights on why agricultural technology adoption in Africa has lagged behind: slow uptake is not mainly due to a lack of economic incentives, but rather a reflection of information, seed supply, and credit constraints that prevent farmers from translating their desired demand into adoption of modern varieties. Policy implications are discussed.     

Agritourism and off‐farm work: survival strategies for small farms

This study considers agritourism and off‐farm work as income diversification choices simultaneously and analyzes factors influencing such choices. Further, the study assesses the impact of agritourism, off‐farm work, and both on gross cash farm income and total farm household income. We utilized large set of nationwide farm survey data and selectivity‐based multinomial choice model. An important finding of our study is that small farms have higher household income if they choose both income diversification strategies rather than a single strategy. Results suggest that education, age of the operator, financial condition, and location of the farm are important factors driving income diversification alternatives. Finally, our study indicates that accounting for selectivity is essential to ensure unbiased and consistent estimates.     

Horticulture exports, agro-industrialization, and farm–nonfarm linkages with the smallholder farm sector: evidence from Senegal

In this article we address the question of farm–nonfarm linkages at the household level in Senegal. We examine whether increasing off-farm employment opportunities for rural households—resulting from increased horticulture exports and associated agro-industrialization—has benefitted the smallholder farm sector through investment linkages. We use data from a household survey in the main horticulture export region in Senegal. We find that access to unskilled employment in the export agro-industry has contributed to the alleviation of farmers' liquidity constraints, resulting in increased smallholder agricultural production.     

Impact of conservation agriculture technology on household welfare in Zambia

This article examines the determinants and impact of conservation agriculture (CA) technology adoption on farm household welfare in Zambia. To account for selection bias from both observable and unobservable factors, an endogenous switching regression model is employed to estimate the impact of the technology on continuous outcomes like farm output, throughput accounting ratio (TAR), poverty gap, and severity of poverty. A recursive bivariate probit model is however used for the estimation of impact of adoption on a binary outcome like poverty headcount. The empirical findings demonstrate that the adoption of CA technology increases maize output, and farm TAR and reduces household poverty. Moreover, the results reveal that farmers’ years of schooling, social networks, access to credit, extension services, and machinery as well as soil quality positively influence adoption of CA technology.