UC Davis Agricultural and Resource Economics

AAEA Presentation by Samual Bird: Agricultural Technology Adoption and Staple Price Risk in Kenya

July 26, 2017

Advisor: Michael Carter
Fields: Development Economics, Econometrics

Time: Tuesday, August 1st, 4:45 pm – 6:15 pm
Location: Streeterville

Governments in Africa increasingly promote rural development by subsidizing inorganic fertilizers and hybrid seeds for staple food production. Subsidy recipients tend to be wealthier households, since governments perceive them as most likely to adopt new agricultural technologies. This targeting strategy excludes land poor households, though they may the most motivated to adopt technologies that help them achieve staple self-sufficiency and decrease exposure to price risk as buyers of staples. This paper shows that price risk motivates technology adoption by the land poor, an overlooked factor in a literature that largely focuses on the role of expected profitability in technology adoption decisions. I identify the effect of technology adoption on exposure to price risk using a randomized control trial in western Kenya. Households were randomly assigned to receive inorganic fertilizer and access to hybrid seeds for maize, the staple food. Control group households produce less maize than they consume and face price risk as buyers of maize on average. Treatment decreases exposure to price risk among land poor households on average. The results suggest that programs may induce more technology adoption if they target land poor households motivated to avoid price risk.

 

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