Modern Agricultural Input Adoption Under Production Risk The Case Of Fertilizer Application In Saesi Tsaeda-emba Woreda Eastern Zone Of Tigray Ethiopia

Empirical studies give evidence that farming is a risky activity, especially underrnrain fed agriculture characterized by erratic rainfall. In such conditions, productionrnrisks (crop fai/ure) arise mainly from uncertainties in climate, which isrnuncontrollable by farmers. Moreover, retum on modem inputs such as fertilizer isrnunpredictable, because of exogenous variables such as weather, pests, and croprndiseases. Consequently, production risk is one of the major constraints in the rainrnfed agriculture that can delay or avoid technology adoption. It has been arguedrnthat risk aversion makes farmers to avoid or hesitate to use modem agriculturalrninputs like fertilizer. However, empirical evidence on farmers risk aversion andrnfertilizer use is limited in Ethiopia. Most adoption studies have not explicitlyrnaddressed the issue in the country. The intention of the study was to examine ifrnrisk aversion has an adverse effect on fertilizer adoption and if risk aversion isrnassociated with household's wealth status. To this end an empirical analysis wasrndone using descriptive and econometric analysis in comparative fashion betweenrnadopters and non- adopters of fertilizer. Using the moments based approach itrnwas tried empirically examine the relative risk premium related to fertilizer usernamong farmers. The findings showed that the farmers' exhibit absolute ArrowPrattrnrisk aversion towards the use of fertilizer, i.e., risk aversion and fertilizer usernwas negatively related. The implication is that when considering promotingrnmodem agricultural inputs such as fertilizer, it is important to assess the variancernof income and its implications on risk preferences. Another notable finding wasrnthat credit access and extension service significantly influenced the likelihood ofrn. fertilizer adoption in the area. However, the problem was not a mere availabilityrnof fertilizer credit, but lack of fina-ncial capacity to purchase inputs as a key 'rn_constraint to adoption and. fear of repayirieni of. credit if crop damage OCCU(§,rnwhich is common feature ofthe:·study arfFa. -Thus, the input supply policyshoiild ' .rnbe revised in the context of farmers' constraints

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