Does A Farmer's Choice of Products Affect Adoption of New Technologies?

Focusing research and agricultural extension services on farms of a particular size or type is unlikely to yield greater returns than treating all farms alike, according to "Role of Farm-Level Diversification in the Adoption of Modern Technology in Brazil," IFPRI Research Report 104, by Marc Nerlove, Stephen Vosti, and Wesley Basel. The report finds that a 1 percent increase in total output will generate a 1 percent increase in use of modern inputs no matter what combination of products is produced or how stable the mix. Supply constraints, particularly lack of credit, may largely determine whether a technology is adopted, and supply constraints affect almost all farms equally.

This report looks at how farmers' decisions about what crops or livestock to produce and in what proportions are linked to technology adoption. Since technologies are usually developed with certain crops in mind, a farmer's decision to grow that crop may mean that he will adopt new technologies as well.

Conducted in the poor but agriculturally diverse Zona da Mata region of Minas Gerais, Brazil, the study uses statistical cluster analysis to identify farms by their product mix. Farms, assigned to groups according to the share of farm output devoted to a particular product, are divided into five categories: farms that produce coffee, corn products, dairy products, and rice; off-farm labor is the fifth category. These categories serve as a basis for examining the factors that influence adoption of new technologies such as the size and scale of operation of a farm, its expenditure on modern inputs, its degree of specialization (the diversity of its agricultural products), and the quality of its land. Despite varying agroecological conditions, farmers can readily change their product mix among coffee, corn, and dairy products, and off-farm labor, but rice requires flat, irrigated land.

The study finds that farmers' decisions about changing product mix are influenced by price policies and the agricultural extension services available, which vary from product to product. Many farmers in the Zona da Mata grew coffee because input and output prices were subsidized and preferential credit terms were available. The size and timing of investments and returns for different products also influenced farmers' choices.

The study also looks at the long-term stability of product mix. Thirty-five percent of the farms were stable, staying in the same cluster for six years; 31 percent were marginally stable, changing clusters only once in a single year; and 29 percent were "jumpers," switching from one cluster to another during the period. Farmers who maintained a stable product mix or jumped to coffee production tended to be better off than the other farmers. But even the poorest farmers showed a willingness to make changes in response to economic and other incentives.

International Food Policy Research Institute (IFPRI)

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