Agriculture Reference
In-Depth Information
fertilizer subsidy programs, and “informal networks” refers to nonmarket relations
often based on kinship and/or social capital. On the one hand, behavioral economists
suggest that the reason farmers often fail to use fertilizer is that they wait too long to
purchase the fertilizer, and when they seek out fertilizer for purchase in the follow-
ing spring, prices have risen too high for profitability. On the other, informal markets
place social pressure on farmers to spend the income they earn from agricultural
production activities on customary events such as weddings. These informal network
pressures limit the ability of farmers to purchase fertilizer shortly after the growing
season when prices are low.
Duflo et al. (2009) contrast these findings with surveys in which small farmers
report on their intent to utilize more fertilizer in the following growing season, only
to continue in the same cycle of insufficient and often late application. Interestingly,
Duflo et al. (2009) attempt to step back from traditional structural approaches (that
focus on either the structure of economic relations or characteristics of the adop-
tion environment) by creatively applying behavioral economic theories to provide an
alternative voice that may be more empowering for farmers. The analysis concludes
that the extension service and the farmers themselves are to blame for their inability
to adhere to a logic that aligns with the conventional agricultural production frame
of reference. In theorizing about farmer ability to save, Duflo et al. (2009) assume the
voice of the farmers without taking their values and priorities into account.
Farmers must choose their investments carefully to sustain such precarious liveli-
hoods. In an article reviewing literature on the adoption of innovations, Feder and
Umali (1993) suggest that decision making is based on a trade-off between risks
and payoffs, with the number of adopters increasing over time. Adoption occurs
when the additional benefits from investment outweighs the cost. Small farmers base
their decision on the option that offers the highest net returns, whether it is in terms
of capital generation or reduced risk. Investments in sustainable soil management
rarely pay off in the short term. Within the framework of the farmer, foregoing soil
conservation practices may be the highest (but short-term) net return, where the costs
of adoption and implementation outweigh the potential long-term benefits. Thus, on
face value, investing in soil management is unlikely to be among the choices that a
small farmer considers (Shiferaw et al. 2009).
Feder and Umali's (1993) study demonstrates how adoption studies and diffusion
models formulate this choice framework. Despite their recognition of the household
nature of the decision-making unit, the adoption and diffusion models they describe
apply the parameters of a farm business. Their analysis shows that such models are
truncated and that below a certain farm size, superior technologies are not appli-
cable. This conclusion led to further improvements in adoption diffusion model
design. A model by Traxler and Byerlee (1992) includes the notion of farmer-inspired
choices through the introduction of a fodder/grain economic trade-off. However,
none of the models incorporate a combined consumption/production function that
includes choices beyond agricultural production. Indeed, Feder and Umali (1993)
note that these models are based on two underlying assumptions: that markets are
perfectly competitive, and that production and consumption decisions are separable.
Furthermore, they note that the household has no other production functions or role
in determining socially optimal farmer behavior.
