Author: Celso Roberto Crocomo

Publisher:

Published: 1979

Total Pages: 340

ISBN-13:

In agriculture, uncertainty permeates almost all types of decisions, a fact that greatly complicates the process by which choices are made. This study develops a method that combines fertilization-response data with preferences of decision makers, to help research and extension workers improve their fertilizer-application recommendations. To prescribe preferred fertilizer practices tailored to the risk preferences of individual decision makers, this study adopted two objectives: (1) to estimate risk aversion coefficients for corn farmers in the Cerrado region of Brazil and to relate them to socio-economic variables, and (2) to measure how farmers' attitudes toward risk influence their adoption of alternative corn-production techniques. To achieve the first objective, regression and discriminant analyses were employed to relate the measures of absolute risk-aversion coefficients, measured for 114 farmers in the Cerrado region, to selected socioeconomic variables, and to classify the farmers into different groups, based on their attitudes toward risk. The results showed that there seems to be a strong relationship between risk attitudes and socioeconomic variables such as age, educational level, family size, size of farm, income, and sources of information, and that different tenure arrangements may reveal different attitudes toward risk. A significant percentage of the individuals studied displayed risk preferences at least for the situation analyzed. To achieve the second objective, physical relationships, including the corn-response production function and the phosphorus carry-over fuction, were analyzed together with randomly generated weather patterns. A Monte Carlo program then was used to construct a large number of strategies that were evaluated by choice criterion stochastic dominance with respect to a function. This criterion provided sets of efficient choices for each class of decision makers. Model results indicated that the introduction of farmers' preferences in the form of risk-aversion measures has an important influence on decision-making choices. Highly risk-averse farmers, for example, tend to make use of strategies that produce, in general, lower expected returns and lower probability of losses. This indicates that one should recommend strategies efficiently tailored to each class of decision makers.