Year to year variability in nitrogen response is widely believed to be responsible for low levels of fertilizer application by risk averse farmers. Certain authors have claimed that production risk is not responsible for sub-optimal applications of fertilizer. Since these studies estimated fertilizer response in irrigated areas or in simulated rainfed areas in experiment stations they may have underestimated the degree of risk faced by the majority of farmers.
This study seeks to address this issue of risk under farmers' conditions by using data from rainfed farmers fields in a risky rice growing area of the Philippines.
Long term distributions of factors responsible for temporal variability in N-response, such as moisture stress and typhoons, are derived by using a rainfall simulator and a water balance model. These distributions are combined with a hetereoscedastic nitrogen response function to simulate long term yield distributions at different N-rates. The application of risk averse and risk neutral decision making models shows that risk aversion reduces fertilizer application by only 7–9%. These results occur because as N-rates increase, the benefits from increased average profits outweigh the disadvantages of increased variability in profits. These findings provide additional evidence to support the emerging consensus that the impact of risk aversion on fertilizer use is much smaller than previously believed.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Price includes VAT (USA)
Tax calculation will be finalised during checkout.
Alcantara J M, Garcia F V, De Datta S K, Mandac A M and Flinn J C (1984) Constraints to high yields of rainfed lowland rice in Camarines Sur, Philippines, Paper presented at workshop to review selected research to increase rice production in the Bicol River Basin Area. Pili, Camarines Sur, June 1984
Anderson J R, Dillon J L and Hardaker J B (1977) Agricultural Decision Analysis, Ames: Iowa State University Press
Anderson J R and Griffiths W E (1981) Production risk and input use: pastoral zone of Eastern Australia. Austr J Agr Econ 25: 149–159
Anderson J R and Griffiths W E (1982) Production risk and efficient allocation of resources. Austr J Agr Econ 26: 226–232
Antle J M (1983) Testing the stochastic structure of production: a flexible moment based approach. J Bus and Econ Stud 1: 192–201
Aragon E L and De Datta S K (1982) Drought response of rice at different nitrogen levels using line source sprinkler system. Irrigation Sci 3: 63–73
Barker R, De Datta S K, Gomez K A and Herdt R W (1977) Rice in Philippine agriculture. In: Constraints to high yields on Asian rice farms: an interim report, pp 121–156, Los Banos, Laguna, Philippines: The International Rice Research Institute
Bingswanger H P (1981) Attitudes toward risk: theoretical implications of an experiment in Rural India. Econ J 91: 867: 890
Binswanger H P and Sillers D A (1984) Risk aversion and credit constraints in farmer's decision making: a reinterpretation. J Develop Stud 20: 5–21
Chang T T, Loresto G C, O'Toole J C and Armenta-Soto, J L (1982) Strategy and Methodology of Breeding rice for drought prone areas. In: Drought resistance in crops with emphasis on rice, pp. 217–244, Los Banos, Laguna Philippines: The International Rice Reserch Institute
de Janvry A (1972) Optimal levels of fertilization under risk. Amer J Agr Econ 54: 1–10
Flinn J C, De Datta S K and Labadan E (1982) An analysis of long term rice yields in a wetland soil. Field Crops Res 5: 201–216
Herath H M G, Hardaker J B and Anderson J R (1982) Choice of varieties by Sri Lanka rice farmers: comparing alternative decision models. Amer J Agr Econ 64: 87–94
Herdt R W (1979) An overview of the constraints projects results. In: Farm Level Constraints to High Rice Yields in Asia, pp 395–411, Los Banos, Laguna, Philippines: International Rice Research Institute
International Rice Research Institute (1982) A Plan for IIRI's Third Decade, Los Banos, Laguna, Philippines: International Rice Research Institute
Judge G, Grififith W E, Carter Hill R, Leo T C (1980) The Theory and Practice of Econometrics, New York: John Wiley and Sons
Just R E and Pope R D (1979) On the relationship of onput decisions and risk. In: Roumasset J A, Boussard J M and Singh I (eds) Risk, Uncertainty and Agricultural Development, pp 177–198, College, Laguna, Philippines and New York: South East Asian Regional Centre for Graduate Study and Research in Agriculture and Agricultural Development Council
Larsen G A and Pense R B (1981) Stochastic simulation of daily climate data, Statistical Reporting Service Staff Report No. AGE810831: U.S. Department of Agriculture
Mandac A M and Flinn J C (1983) Farm level management and nitrogen response of rainfed rice in Bicol, Philippines. Philippine J of Crop Sci 8: 65–74
Rosegrant M W and Roumasset J A (1985) The effrect of fertilizer on risk: a heteroscedastic productin function with measurable stochastic inputs. Austr J Agr Econ 29: 107–112
Rosegrant M W and Herdt R W (1981) Simulating the impacts of credit policy and fertilizer subsidy on Central Luzon rice farms, the Philippines. Amer J Agr Econ 63: 655–665
Roumasset J A (1976) Rice and Risk, Amsterdam: North Holland
Sillers D A (1980) Measuring risk preferences of rice farmers in Nueva Ecija, the Philippines: an experimental approach. Ph.D. dissertation, Yale University, unpublished
Smith J and Umali G (1985) Production risk and optimal fertilizer rates: a random coefficient model. Amer J Agr Econ 67: 654–659
Wickham T H (1971) Water management in the humid tropics: a farm level analysis. Ph.D dissertation, Cornell University, unpublished
Zandstra H G, Samarita D E and Pontipedra A N (1982) Growing season analyses for rainfed wetland fields. IRRI Res Paper Series No 73, Los Banos Languna Philippines: International Rice Research Institute
About this article
Cite this article
Smith, J., Umali, G., Rosegrant, M.W. et al. Risk and nitrogen use on rainfed rice: Bicol, Philippines. Fertilizer Research 21, 113–123 (1989). https://doi.org/10.1007/BF01080536
- Nitrogen use
- farmer risk aversion