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November 15th, 2018

Money matters: The role of yields and profits in agricultural technology adoption

Published by American Journal of Agricultural Economics,

This paper (PDF) by the American Journal of Agricultural Economics contributes to the understanding of agricultural technology adoption by showing that a focus on yield gains may, in some contexts, be misguided. 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. Here a technology is studied in Ethiopia to improve chickpea production, where a chickpea improvement program bred new varieties and established seed grower associations for production and distribution. This technology does not have an impact on yield, but has nonetheless been widely adopted. The study shows that adoption of the technology results in reduction of total farm production costs and a significant increase in profits. Adopters are able to sell more of their chickpea crop, gain more income from the increased sales, and reallocate cropland to specialize in improved chickpea production. The results imply that the divergent adoption rates across contexts may be explained by the quality of the markets for the output. Without complementary economic gains, which require markets for surpluses, increased physical gains will likely be unattractive to potential adopters. So the results suggest that economic measures of returns may be more relevant than increases in yields in explaining technology adoption decisions. This suggests that focusing policy solely on the yield aspect of genetic gains may be misguided.  Policy and future research should reorient in a direction that considers both the physical and economic returns as factors that influence the adoption of agricultural technologies.

Curated from academic.oup.com