Money Matters: The Role of Yields and Profits in Agricultural Technology Adoption

Michler, J D and Tjernström, E and Verkaart, S and Mausch, K (2018) Money Matters: The Role of Yields and Profits in Agricultural Technology Adoption. American Journal of Agricultural Economics (TSI). pp. 1-22. ISSN 0002-9092

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Abstract

Despite the growing attention to technology adoption in the economics literature, knowledge gaps remain regarding why some valuable technologies are rapidly adopted, while others are not. This paper contributes to our understanding of agricultural technology adoption by showing that a focus on yield gains may, in some contexts, be misguided. We study a technology in Ethiopia that has no impact on yields, but that has nonetheless been widely adopted. Using three waves of panel data, we estimate a correlated random coefficient model and calculate the returns to improved chickpea in terms of yields, costs, and profits. We find that farmers’ comparative advantage does not play a significant role in their adoption decisions and hypothesize that this is due to the overall high economic returns to adoption, despite the limited yield impacts of the technology. Our results suggest economic measures of returns may be more relevant than increases in yields in explaining technology adoption decisions.

Item Type: Article
Divisions: Research Program : East & Southern Africa
CRP: CGIAR Research Program on Grain Legumes and Dryland Cereals (GLDC)
Uncontrolled Keywords: Technology adoption, heterogeneity, correlated random coefficients, agricultural technology, Ethiopia
Subjects: Others > Agriculture-Farming, Production, Technology, Economics
Depositing User: Mr Ramesh K
Date Deposited: 24 Jul 2018 04:32
Last Modified: 25 Jul 2018 08:52
URI: http://oar.icrisat.org/id/eprint/10806
Official URL: http://dx.doi.org/10.1093/ajae/aay050
Projects: Tropical Legumes III (TL III)
Funders: Bill and Melinda Gates foundation
Acknowledgement: The authors are grateful to two anonymous referees for extremely helpful suggestions. The authors also wish to thank Anna Josephson, Jeremy Foltz, and Laura Schechter, as well as participants at the University of Wisconsin development workshop, the CSAE conference in Oxford, and the Midwest International Economic Development Conference in Minneapolis for comments on earlier versions of the manuscript. The authors are indebted to Travis Lybbert, Oscar Barriga Cabanillas, and Aleksandr Michuda for their support towards implementing the empirical models. Further, the authors gratefully acknowledge the assistance of Bernard Munyua, the ICRISAT-Ethiopia staff, and the Debre Zeit Agricultural Research Center (DZARC) of the Ethiopian Institute of Agricultural Research (EIAR) for implementing the household surveys. Financial support for this research comes from the Bill and Melinda Gates Foundation OPP1114827 and the Netherlands Junior Professional Officer (JPO) program. This work was undertaken as part of, and funded by the CGIAR Research Program on Grain Legumes and Dryland Cereals (GLDC).
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