The Adoption of Reduced Tillage: The Role of Human Capital and Other Variables: Comment

Abstract

Rahm and Huffman have shown a weak but statistically significant relationship between human capital investments and the efficiency with which reduced tillage technology is adopted by farmers. Their methodology is novel and the findings are plausible. However, their conceptual approach has limited usefulness for future research to explain conservation adoption decisions. The fundamental deficiency in the Rahm and Huffman article is the implicit conception of the adoption process. Buried in footnote 5 (p. 407) of the paper is the following key point . .. decision makers are assumed to behave as if they know with certainty the parameters [p] of the utility function. Although some decision makers are actually misinformed, the bulk of decision makers are assumed to be informed about the p's after the adoption phase. Thus, on average, they make correct optimizing decisions by adopting new technology when [the utility associated with the new technology exceeds the utility associated with the old technology].1 The implication is that farmers are making decisions about a static technology and that the considerations that motivate or retard adoption are unchanging once the parameters of the utility function are known. This conception of the adoption process is at odds with much theory and with the realities of reduced tillage technologies. Most adoption theory (e.g., Feder, Just, and Zilberman; Jensen) recognizes timing as an important element of adoption decisions. A new technology typically evolves through a period of rapid development. As this is occurring, potential adopters are accumulating information. In the meantime, existing production capital is being depreciated or renewed. Each decision maker possesses different information and a unique bundle of existing technology (in terms of its remaining usefulness) at any point in time. Subjective factors will further compound the differences among farmers. This conception of the problem yields what Jensen refers to as an optimal stopping problem, that is, a decision about when the perceived advantages of the new technology outweigh the benefits of waiting for more information, additional technical development, and further depreciation of existing equipment. Walker has applied this approach deterministically to the adoption of a reduced tillage technology. Rahm and Huffman imply that reduced tillage technology was well established by 1977, the year of their survey data, and that its potential was well known. By then, more than half the farmers surveyed were using some form of the technology and just over one-third of Iowa's cropland was being treated with reduced tillage. These numbers mask some important facts. First, they rest on an extraordinarily broad definition of reduced tillage as essentially any practice that does not entail a moldboard plow. It is quite common to till lightly in fields being shifted from soybeans to corn because plowing simply is not needed, yet even this longstanding and widespread practice on any acreage in a farm enterprise is interpreted as having adopted reduced tillage. Rotations involving shifts from soybeans to corn are common in the Corn Belt, so it is not surprising that considerable acreage and a high percentage of farmers would be viewed as adopters because of this fact alone. Second, since 1977, much more of Iowa's cropland has been categorized as being treated with reduced tillage, nearly 60% in 1983 according to the Soil Conservation Service in Iowa.2 This near doubling in acreage under reduced tillage is consistent with Rahm and Huffman's static model insofar as conventional tillage costs have risen relative to reduced tillage costs since 1977. However, several other forces probably have influenced the recent trend: public information about reduced tillage benefits has greatly increased; tillage equipment purchased during the agricultural boom of the 1970s has been further depreciated; Iowa's conservation ost-sharing program has gained momentum; and reduced tillage technology has evolved very substantially since 1977, with a great increase in inputs formulated for use in reduced tillage systems. These factors indicate that the early adoption phase was probably not over by 1977 and that objective considerations not examined by Rahm and Huffman have had much to do with adoption decisions. John B. Braden is an associate professor, and James S. Eales is an assistant professor, both in the Department of Agricultural Economics, University of Illinois. Review was coordinated by Peter Berck, associate editor. SQuotation is altered slightly to define variables used in the original. 2 Data contained in a letter to the authors from J. M. Nethery, Iowa State Conservationist, U.S. Soil Conservation Service, 11 Dec. 1984.