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The Financial Express

On laggards and leaders

Published: November 15, 2016 20:34:42 | Updated: October 20, 2017 00:55:54


On laggards and leaders

There is a large body of literature dealing with modern technology adoption. Quite obviously, the advent of modern technology, say in agriculture, tends to attract large and medium farms first and the smaller ones at a later stage. Even it may so happen that a few farms do not adopt modern technology at all. We, therefore, have to explore the reasons behind non-adoption or adoption to draw its policy implications. In broad classification, the reasons could be attributed to risk aversion, shortage of capital, information flows, demographic characteristics etc. These factors are detailed below:
One of the important determinants of adoption of Modern Variety (MV) is risk aversion among farmers. Available studies refer to two types of risks: first, objective risks where returns from investment in MVs become uncertain in the face of climatic change or attacks from pests and diseases. And second, there is psychological risk of suspicion about optimum outcome from a new technology. Quite obviously, the greater the perceived risks, the lower would be the proportions of land under these crops. Again, in case certain eagerness shows up at a certain stage, farmers would try to minimise the risks by devoting less land on MVs. The level of risk-aversion is also related to the income level of farmers. A poverty- stricken farmer may not want to see that income goes down the subsistence level. But solvent farmers could play around the luck. It is, thus, quite obvious that small and marginal farmers should be the most risk-averse farmers and, hence, the low adopters. However, over time they have gained sufficient knowledge on this new technology to reduce their subjective risks to an extent. Therefore, risk aversion factor may not be able to fully explain the issue of adoption in Bangladesh. 
It is now crystal clear that technology like MVs requires more working capital than the counterpart traditional ones (TVs). Besides, the amount of investment on fixed capital required is no less once the costs of inputs such as STWs, LLPs, fertilisers etc. are taken into due consideration. Therefore, in the absence of subsidised irrigation, the adoption of MV is determined by accumulated savings and access to financial institutions. In many countries, including Bangladesh, small farmers are constrained by non-availability of capital due to lack of collateral. But once adoption occurs somehow, the accumulated savings could pave the way for further adoption.
If two farmers display differential rates of adoption, we should think that the high adopter-farmer would have more information about the technology, sources of inputs and market prices than the low-adopter farmer (Pears 1980). In this case, education level of farmers could serve as a proxy for information. Since poverty increases the opportunity costs of sending children to schools, the positive relation between farm size and education becomes statistically significant. In many cases, only large farmers can have access to bureaucracy and extension officials to steal the march in adoption through information generation.
According to the Chyanovian theoretical construct on agricultural economics, the relationship between production unit (land and worker) and consumption unit of households could emerge as an important variable in explaining the adoption rate. As per this construct, the association of a household with agriculture is strongly influenced by its consumption needs that grow with expansion of the household size. A farmer responds to these needs sometimes through controlling more lands, sometimes through working hard or sacrificing leisure. In a country where land is very scarce, the only door open to farmers is to increase the yield on the meagre quantity of land. And this target pushes farmers towards adoption of new technology.
There are theoretical debates around this topic. Referring to the examples of eastern part of India, Amit Bhadury argued that the income of a landlord comprises the rent and the interest from tenant. Therefore, the tendency of a landlord would be to put his tenant under severe credit net. Under this circumstances, it would be in the interest of the landlord to disdain his tenant from adopting new technology so that his (landlord's) income from rent and interest rate is protected.
However, this hypothesis has been rejected on the plea that if a landlord could pressurise his tenant not to adopt technology, then there is no reason why he should not be able to exert monopsonistic pressure on the tenant to pay more rent and interest rate. Other economists reckon that in some product and factor markets, tenant farmers could be interested in growing modern paddy. But Bardhan thinks that technical changes to increase land supply and high labour-intensity could raise the incidence of tenancy. Again, considering the risk aversion, it can be argued that incidence of tenancy might rise as both tenant and landlord would like to share the risks in risky technological development. And, following Chyanovian hypothesis, it would become easier to adopt MVs more in rented lands.
In Bangladesh, at the initial stage, small farmers were lagging behind larger ones in terms of adoption. But with the passage of time, the laggards have turned out to be the leaders through devoting more lands under MVs than those by the larger ones. Especially in wet season, the negative relationship between ownership of paddy lands and the rate of adoption appear to hold good. Again, the same trend holds in dry season when MVs are widely grown. By and large, small farmers who were once the laggards in adoption of modern technology are now leading in use of technology. It might have so happened that the power of Chyanovian hypothesis of subsistence pressure defeated the power of credit and information related hypothesis.
The writer is a former Professor of Economics at Jahangirnagar University, and now Acting Chair, Economics and Social Sciences (ESS), BRAC University. 
abdulbayes@yahoo.com
 

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