Farmers' risk attitude, agricultural technology adoption and impacts in Eastern India.

Abstract

Background: Agricultural production is inherently risky, as farmers are exposed to multiple stresses. The adoption of improved agricultural practices could become a key coping strategy to sustain production in such a risky environment. As several technologies are being developed and disseminated along this line, it is important to examine the factors influencing farmers' adoption of these strategies and their impact on productivity. Using survey data of rice growing farmers from eastern states of India, we tested how farmers' risk attitudes influence their decisions to adopt improved agricultural practices and whether the adoption has any influence on rice productivity.

Results: Risk-seeking farmers are more likely to adopt mechanization, whereas risk-averse farmers are more likely to adopt stress-tolerant rice varieties (STRVs), which represent a low-/no-capital-cost improved technology. Adoption of these improved technologies has resulted in productivity gains. Yet, their overall adoption is (s)low in India and other developing countries, presenting a broader challenge of suboptimal productivity and requiring deeper policy engagement.

Conclusions: Adoption of STRVs and mechanization has been found to have positive impact on rice productivity. These two agricultural technologies, as our results reveal, are adopted by two distinct categories of farmers depending on their risk attitude. However, both technologies could play a complementary role increasing and stabilizing rice production of farmers, and that is where scope for policy lies to bridge this gap. Targeted policy measures such as subsidizing the purchase of machineries for establishment of custom hiring centers, implementing effective extension mechanisms, and integrating STRVs in the seed systems to enhance physical and economic access to these technologies, could significantly increase their adoption and consequently improve productivity and income of farmers.