Fertilizer and organic manure use under uncertainty: Policy comparisons for irrigated and dryland farming systems in South India

Abstract

Fertilizer use decisions of farmers under uncertainty for various fertilizer policies are compared in terms of changes in cropping pattern, input use, sustainability and attitude towards risk for irrigated and dryland farming systems. Farm survey data collected from South Indian villages have been used with a mean variance framework to identify the risk aversion levels of farmers. The results of policy experiments show that organic manure is a marginally risk reducing input in both farming systems. Chemical fertilizers and organic manure are substituted for each other more in irrigated farming than in dryland farming. Organic manure is found to be a stochastic substitute for irrigation in irrigated farming. Relaxing the constraints on chemical fertilizers through subsidization policies enables farmers to invest in risky cash crops. It is argued that fertilizer policy recommendations should consider differences in farming systems and risk attitudes of farmers towards their input demand and output supply decisions and that such considerations would largely enhance the success of agricultural and price policies.