Browsing by Author "Yesuf, Mahmud"

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Are Agricultural Extension Packages What Ethiopian Farmers Want? A Stated Preference Analysis
(2005) Yesuf, Mahmud; Mekonnen, Alemu; Köhlin, Gunnar; Carlsson, Fredrik; Department of Economics
There is an evident dichotomy in many rural development policies in the world between extension driven adoption of modern inputs and community driven local public goods. However, the target populations of these policies seldom have the possibility to express their preference between these two policies. In this paper we report the results of a stated preference survey in the highlands of Ethiopia where the farmers are given a choice between an agricultural extension package and a local public good - health care or protected spring. The study finds that a majority of people prefers the public good. However, when the extension package is combined with insurance in terms of no payback of the credit in case of crop loss, then we find a significant increase in the choice of the extension package. The study thus sheds light on why Ethiopia’s major development strategy has had limited success and gives evidence of how stated preference methodologies can be utilized for development policy design.
Farmers' Preferences for Crop Variety Traits: Lessons for On-Farm Conservation and Technology Adoption
(2009-04-20T13:30:12Z) Asrat, Sinafikeh; Yesuf, Mahmud; Carlsson, Fredrik; Wale, Edilegnaw
Although in-situ conservation is increasingly considered an efficient way of conserving plant genetic resources, little is known about the incentives and constraints that govern conservation decisions among small farm holders in developing countries. Using a choice experiment approach, we investigate Ethiopian farmers’ crop variety preferences, estimate the mean willingness to pay for each crop variety attribute, and identify household specific and institutional factors that govern the preferences. We find that environmental adaptability and yield stability are important attributes for farmers’ choice of crop varieties. Farmers are willing to forgo some income or output in order to obtain a more stable and environmentally adaptable crop variety. Among other things, household resource endowments (particularly land holdings and livestock assets), years of farming experience, and contact with extension services are the major factors causing household heterogeneity of crop variety preferences. Based on our experimental results, we derive important policy implications for on-farm conservation, breeding priority setting, and improved variety adoption in Ethiopia.
Market Imperfections and Farm Technology Adoption Decisions - A Case Study from the Highlands of Ethiopia
(2009-11-30T12:10:49Z) Yesuf, Mahmud; Köhlin, Gunnar
This paper investigates the impacts of market and institutional imperfections on technology adoption in a model that considers fertilizer use and soil conservation to be joint decisions. Controlling for plot characteristics and other factors, we found that a household’s decision to adopt fertilizer significantly and negatively depends on whether the same household adopts soil conservation. The reverse causality, however, was insignificant. We also found that outcomes of market imperfections, such as limited access to credit, plot size, risk considerations, and rates-of-time preference, were significant factors in explaining variations in farm technology adoption decisions. Relieving the existing market imperfections will most likely increase the adoption rate of farm technologies.
Risk Implications of Farm Technology Adoption in the Ethiopian Highlands
(2009-11-30T12:41:52Z) Yesuf, Mahmud; Kassie, Menale; Köhlin, Gunnar
In countries where insurance and credit markets are thin or missing, production and consumption risks play a critical role in the choice and use of production inputs and adoption of new farm technologies. In this paper, we investigated impacts of chemical fertilizer and soil and water conservation technologies adoption on production risks, using a moment-based approach and two years of cross-sectional data. A pseudo-fixed-effect model was estimated to generate first, second, and third moments of farm production. Our results revealed that fertilizer adoption reduces yield variability, but increases the risk of crop failure. However, adopting soil and water conservation technology has no impact on yield variability, but reduces the downside risk of crop failure. The results underscore that the risk implications of farm technology adoption vary by technology type. Furthermore, policies that promote adoption of fertilizers should be complemented by desirable instruments that hedge against downside risk. In that respect, if properly implemented, the safety net program and the weather insurance programs currently piloted in some parts of Ethiopia are actions in the right direction.
Risk, Time and Land Management under Market Imperfections: Applications to Ethiopia
(2004) Yesuf, Mahmud; Department of Economics
This Ph.D. thesis addresses both theoretical and empirical issues pertaining to land management decisions of farm households in developing countries working under an imperfect market and institutional setting (with case studies from Ethiopia). Using techniques in experimental economics, efforts are also made to assign some quantitative measures to the most important parameters (such as risk and time preferences) in the same decision making process. Paper I: A Dynamic Economic Model of Soil Conservation with Imperfect Markets and Institutions In this paper, we develop a dynamic soil conservation model that explicitly incorporates labor, capital and land market imperfections and their interactions to suit the problems of smallholders in many developing countries. We use the model to analyze the impact of these institutional and market imperfections on the optimal levels of labor allocations into cultivation and conservation efforts. Increased transaction cost in factor markets is found to have a direct impact on soil conservation effort by increasing its shadow prices and curtailing its demand. It also has an indirect impact on soil conservation by affecting the shadow price of the soil stock and hence enhancing or curtailing its demand depending on the initial factor endowments of farm households, the relative strength of conservation and cultivation inputs on the soil dynamics, the profit share of cultivation input, and the degree of interaction across the factor markets. The overall impact is thus inconclusive. Various possible scenarios are explored in the model. Paper II: Risk Preferences of Farm Households in Ethiopia This study measures farmers’ attitudes towards risk using an experimental approach for a sample of 262 farm households in the Ethiopian highlands. We find more than 50 percent of the households in the severe to extreme risk aversion category, with a constant partial risk aversion coefficient of more than 2.00. With careful construction of the experiment, the natures of absolute and partial risk aversion are examined, and our data supports the presence of Decreasing Absolute Risk Aversion (DARA) and Increasing Partial Risk Aversion (IPRA) behavior. The validity of some of the expected utility theory predictions is tested, and the predictions of risk neutrality for smaller stakes and predictions of similar preferences for gains and losses, which stem from the major tents of the theory (concavity and asset integration), are not supported by our experiment. Paper III: Time Preferences of Farm Households in Ethiopia This study measures farmers’ time preferences (subjective discount rates) using an experimental approach with monetary incentives for a sample of 262 farm households in the Ethiopian highlands. The median discount rates are found to be more than 43 percent, which are more than double the interest rate on the outstanding debt. Given imperfect credit markets, household wealth (physical asset) levels are found to be highly correlated to this attitude measure. Time frame and magnitude effects, and delay/speed up asymmetries are anomalies found in the experiment. Paper IV: Market Imperfections and Farm Technology Adoption Decisions: An Empirical Analysis In this paper, we investigate the impacts of market and institutional imperfections on farm technology adoptions in a model that considers fertilizer and soil conservation adoptions as related decisions. Controlling for plot characteristics and other factors, we find that a household’s decision to adopt fertilizers does significantly and negatively depend on whether the same household adopts soil conservation. The reverse causality, however, is insignificant. We also find outcomes of market imperfections such as limited access to credit, plot size, risk considerations, and rates of time preference to be significant factors explaining variations in farm technology adoption decisions. Relieving the existing market imperfections will more likely increase the adoption rate of farm technologies.
The Role of Production Risk in Sustainable Land-Management Technology Adoption in the Ethiopian Highlands
(2009-11-30T14:06:40Z) Kassie, Menale; Yesuf, Mahmud; Köhlin, Gunnar
This paper provides empirical evidence of production risk impact on sustainable land- management technology adoption, using two years of cross-sectional plot-level data collected in the Ethiopian highlands. We used a moment-based approach, which allowed a flexible representation of the production risk (Antle 1983, 1987). Mundlak’s approach was used to capture the unobserved heterogeneity along with other regressors in the estimation of fertilizer and conservation adoption. The empirical results revealed that impact of production risk varied by technology type. Production risks (variance and crop failure as measured by second and third central moments, respectively) had significant impact on fertilizer adoption and extent of adoption. However, this impact was not observed in adoption of conservation technology. On the other hand, expected return (as measured by the first central moment) had a positive significant impact on both fertilizer (adoption and intensity) and conservation adoption. Economic instruments that hedge against risk exposure, including downside risk and increase productivity, are important to promote adoption of improved technology and reduce poverty in Ethiopia.
The Role of Soil Conservation on Mean Crop Yield and Variance of Yield - Evidence from the Ethiopian Highlands
(2009-11-30T14:20:02Z) Kassie, Menale; Pender, John; Yesuf, Mahmud; Köhlin, Gunnar; Mulugeta, Elias
Land degradation has been one of the major areas of concern in Ethiopia. Governments and development agencies have invested substantial resources to promote land management technologies and reduce land degradation. However, there is little understanding of the impacts that land management technologies have on yield and yield variability. This paper investigates the impact of stone bunds on mean yield and variance of yield, using multiple plot observations per household in low- and highrainfall areas of the Ethiopian highlands. Our analysis incorporated the propensity score matching method, stochastic dominance analysis, and exogenous and endogenous switching regression methods. We found statistically significant and positive impact of stone bunds on yield in low-rainfall areas. This did not hold in high-rainfall areas. We did not find a statistically significant stone-bund impact on production risk in either high- or low-rainfall areas. The results were robust to both parametric and nonparametric analysis. The overall conclusion from the analysis is that the performance of stone bunds varies by agro-ecology type. This implies the need for designing and implementing appropriate technologies that enhance productivity and are better adapted to local conditions.