The Impact of Technology Adoption on Agricultural Productivity and Production Risk in Ethiopia: Evidence from Rural Amhara Household Survey

Abstract

The paper investigates the effects of modern farm technology adoption such as improved seed, fertilizer, pesticide and herbicide on both crop yield and downside risk exposure in Ethiopia. This study employed a two-stage approach to estimate a production function, and computed the mean and the production risk factors (both variance and skewness) from a production function using Antle’s moment-based approach. The empirical results indicated that adoption of improved seed, family labor, agriculture capital and manure had a positive and significant effect on crop yield. On another hand, parcel size and chemical inputs (pesticide and herbicide) have negative and significant effect on crop yield. All these factors of production affect the crop yield variation and downside risk exposures (skewness of output) in differently ways: for instance, improved seed and chemical inputs positively and significantly affect the downside risk exposure (risk increasing), and fertilizer and parcel size significantly affect downside risk exposure but negatively (risk decreasing).