Using Farmers’ Risk Tolerance to Explain Variations in Adoption of Improved Rice Varieties in Nepal

Abstract

Rice is the leading cereal crop in Nepal and an important source of calories and plant protein. Despite the importance of rice, there are reports of widespread cultivation of older varieties with considerably large adoption lags. This warrants further investigation into the factors that influence rice farmers’ adoption decisions. Risk attitude is reported to be an important determinant of farmers’ decisions. However, in Nepal, evidence of the effect of risk attitude on the adoption of improved crop varieties is limited because this important factor is not considered in adoption studies. This article, therefore, connects field experiment, theoretical understanding of farmers’ risk attitudes and empirical models with the aim of investigating determinants of farmers adoption of improved rice varieties in Nepal. The results show that majority of farmers currently grow old varieties. The top four varieties—Sona Mahsuri, Sarju-52, Samba Mahsuri and Radha-4—have an average varietal release age of 27 years. By estimating a binary response regression model, this article shows that risk attitude is a significant determinant of rice farmers’ adoption decision. Specifically, the results show that risk-tolerant farmers have the lowest propensity to adopt new improved rice varieties. This article, therefore, highlights the importance of promoting holistic benefits over making risk-reducing attributes salient when new crop varieties are developed and disseminated to farmers.