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Small farmers cope with risk and scientists

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Title:
Small farmers cope with risk and scientists
Series Title:
Staff paper 79
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Andrew, Chris O
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Gainesville
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Food and Resource Economics Dept., Institute of Food and Agricultural Sciences, University of Florida
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English
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[17] p. : ; 28 cm.

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Subjects / Keywords:
Farmers -- Job stress ( lcsh )
Farms, Small ( lcsh )
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non-fiction ( marcgt )

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Bibliography:
Includes bibliographical references (p. [16]-[17]).
General Note:
"April 1978."
Funding:
Staff paper (University of Florida. Food and Resource Economics Dept.) ;
Statement of Responsibility:
by Chris O. Andrew.

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"SMALL" FARMERS
COPE WITH RISK AND SCIENTISTS
by
CHRIS 0. ANDREW
Staff Paper 79 April 1978
Staff Papers are circulated without formal review by the Food and Resource Economics
Department. Content is the sole responsibility of the author.
Food and Resource Economics Department
Institute of Food and Agricultural Sciences
University of Florida
Gainesville, Florida 32611




"SMALL" FARMERS
COPE WITH RISK AND
SCIENTISTS
by
Chris 0. Andrew
Technology, Plannlng and-Change
A concern for the role of technology in the development process, how to
plan for creation) and utilization of appropriate technology, and how to implement
directed change are crucial concerns of our time. The 1979 U.N. Conference on Science and Technology for Development will assemble some of our best thoughts
concerning how to approach technology, planning and change in the immediate years to come. The Humphrey Bill shelved recently by the United States Senate entitled,
"The International Cooperation and Development Act", promised to bring new life
to technical assistance. If such quests are to be successful, agricultural and
social sciences must address global, national, local and family problems from an integrated stance. For the small farmer, the issue is not who gains credit
for making a major contribution to his ability to survive and to supply food to
others of the world, the issue is that a significant contribution will be made by
someone. It is time for all scientists to join hands and understand the contribution that each can make so that a critical mass of unified intelligence can be
focused on the complex problems challenging smalfarmers, rural sectors, and the
* international agricultural community.
Chris 0. Andrew is Associate Professor of Food and Resource Economics-and Assistant
Director of International Programs, Institute of Food and Agricultural Sciences,
University of Florida,




-2
Centralization: A Stress
Change imposed through science and technology implies that stress is inevitable. As development occurs, there is an implied tendency toward centralizing many of the political, social and economic activities of a society. As noted recently by Carey, industrialization implies a movement toward centralized social, political and economic systems as opposed to the more heterogenous or decentralized village based societies. The planning activity, assumes that all peoples must move toward varied but specific forms of industrialization, thus creating stress for those societies structured around village systems and rural based societies.
Yet scientists of development and change, have not learned to manage technology to benefit rural based societies. Possibly we resort to centralized planning In frustration without full knowledge of the necessary inputs to effective planning.
In the centralization camp, are many economists and government planners. Representing decentralization are anthropologists and others who work more closely with the village based society. Coordination between the polarized protagonists is strained because each enters the encounter from a very distinct position. Economists contend that they address a wholelistic set of issues but these issues are indeed quite macro or global while anthropologists counter with a micro wholelistic approach. Both "might" agree that the other is important but modes of interaction become an uncertainty. A major need is to neutralize the centralization and decentralization dilemma by uniting the two points of view such that village based societies can be accommodated within the broader framework of a sustained technological change'appropriate to the needs of industrial progress.




-3
Directing Change
Satisfactory change often assumes that the information provided by the change agent represents a "unified good". When this is not true the small farmer must cope with both natural risk situations and a patch work of conflicting scientific views. Quality in the information to be transmitted depends entirely upon the degree to which the problem area is fully understood in all of its complexities and addressed as a whole. An isolated mono-disciplinary approach to muli-disciplinary problems creates major distortions and abortions in social and economic systems. The role of the change agent In this unfortunate circumstance becomes negative by creating unnecessary and detrimental problems to challenge future programs because the problems are further aggravated. A review of the literature concerned reveals confusion surrounding the role played by agricultural, economic and social criteria in the diffusion of innovations and suggests that the diffusion package has not always contained a "unified good".
The following paper is a focus on this "blind side" of professional pride In addressing the directed change and innovation question. The basic grains commodity area is discussed relative to the U. S. hybrid seed experience In the 1930's and a more recent experience in Guatemala.
Professional Pride,_Problems and Performance: Understanding a U.S. Green Revolution
The diffusion casualty debate of-the late 1950's between the agricultural economists and sociologists in the U.S. ended in a draw. But recent, research activity In the less developed countries and the need for improved agricultural and rural conditions suggests that we need to return to the basic elements of that debate and move forward with new programs.




-4L
Pride
The debate centered on the diffusion of hybrid seed corn and sorghum in the Midwest of the U.S. following major research breakthroughs in the 1920's. The unique setting for the diffusion of hybrid seed corn included the years from 1928 through 1941. International and national economic depression, drought throughout the North American Midwest an~d the war in Europe, changed the effective supply and demand of agricultural commodities. Most critics assume that such conditions bear on the diffusion of agricultural innovations but Ryan and Gross remarked that even with these, the rapid spread of hybrid seed was remarkable given the slowness with which many sound economic practices are excepted. These gentlemen observed that the Inter-active effect of the individual within the social system was the major contributing factor to Innovation and adoption. More recently, Havens and Rogers attributed adoption of innovations to the interaction effect and social congruence. But even with interaction and social congruence conditions, most farmers insisted on personal experimentation before full use of hybrid seed.
Griliches in the late 1950's stimulated a rather interesting debate when he suggested that in the long run, and cross sectionally, it was not the sociological variables that determined whether a new innovation such as hybrid seed corn would be adopted but that it was the economic variables related to profitability and income. He went on to say that the sociological variables would determine the initial order and degree of farmer adoption. Griliches' research explained about 60 percent of the variation in the rate of adoption of hybrid corn by the profit motive and, thereby, released a storm of congruence versus profitability controversies that extended into the 1960's.
Conflicting concepts and interpretations by the sociologists and agricultural economists extended into the adoption of hybrid sorghum. Bradner and Straus argued




-5
that the likllhood of technological innovations being accepted is enhanced when these innovations are related to an existing cultural pattern. Concerning Grilches earlier statement on the importance of profitibility in the adoption rate of hybrid corn and sorghum, Bradner and Straus wrote: "in such a conceptualization of the change process, factors such as socio-economic status, economic resources and group and Individual values tend to be seen merely as auxiliary Inhibitors or facilitators of the change process" (p. 381). Bradner and Straus continued by saying that contrary to the concept of economic needs, It was the issues of familiarity and congruity of the new practice with the recently accepted practice of planting hybrid corn that accounts for the rapid acceptance of hybrid sorghum. The economists' reply to this was that hybrid corn had been very profitable and that the congruence factor was related to a profitibility expectation.
Havens and Rogers went on to clarify the position of the sociologists by
concluding that perception of profitability and not objective profitability of an innovation determine adoption rates. Perception of profitability is highly influenced by group interaction and various socio-cultural phenomena.
While the debate reached a point of general agreement and one of differences In semantics, the reciprocals of either objective or perceived profitability were overlooked. The roles of economic loss, risk perception and risk aversion appear to be major concerns as small farmers consider technological change, innovation and adoption.
Further reflection by Andrew and Alverez on the debate suggests that both
interaction effects and profitability contributed to the diffusion of hybrid corn and played varied and integral roles depending upon the stage in the diffusion process and the economic situation encountered by a particular adopter. To conclude that either interaction or perceived profitability caused adoption of hybrid corn seems inaccurate. Both were important but other variables such as economic status,




-6
and weather and price uncertainty influenced decisions about adoption. Thus, one might conclude from the literature, that farmers consider the impact of innovation on their combined socio-economic positions. For example, relative advantage, comparability, complexity and divisability of an innovation are important sociological considerations with parallel economic concerns including comparative advantage, scale and biological feasibilities, coordination of input and product markets with complex production systems, and the opportunity to diversify or-spread risk associated with changing from known to relatively unknown technologies. Along with socio-cultural phenomenon economic losses and windfall profits are important in the decision making process as agricultural producers consider technological change.
Problems and Performance
The early debate and expression of professional pride stimulated needed thought concerning the diffusion process but prohibited establishment of an integrated approach to agricultural innovation and change. Professional pride was over-riding, and perpectuated a problem identified earlier by pursuing greater centralization by economists and decentralization by the sociologists and anthropologists. This problem in turn has affected the performance of the scientific community in achieving an integrated approach to agricultural innovation and change.
Thus, without strong leadership from the social scientists, the agricultural scientists were forced to proceed with their charge to develop high yielding agricultural technologies. While agriculturalists have been soundly criticized for not considering the major social implications of their work, many of the social scientists have pursued unique and interesting disciplinary goals without specific regard to the total agricultural development problem. Even some social scientists find it inappropriate to criticize agricultural scientists for this




-7
development.
Let us hope that we are on the frontiers of a new era in integrated science and technology rather than specialization through unswerving professional pride. It is appropriate to note that research beyond agricultural adoption has identified the Importance of a combination of cultural, social and economic factors. Acheson, in reviewing the reaction of the Cuanajo, Mexico community to mechanized carpentry, concluded that the presence of superior economic opportunities is the single most important factor Involved in developmental change.
Translocating a Green Revolution
From the Midwest U.S. experience in grains production came a desire to share that experience throughout the world. As early as 1940, Norman Borlaug began in Mexico the scientific trek which was to produce a new wheat and contribute a methodology for rice varieties that increased world production potentials significantly under appropriate production technologies (Paarlberg). The stage was set for an International green revolution In basic grains similar to that experienced in the U.S. Recent conclusions by Rutan concerning the new wheat and rice varieties In the developing countries of Asia are 1) that adoption has occurred at exceptionally rapid rates in areas where the varieties are technically and economically superior to local varieties, 2) that adoption has not been seriously constrained by farm size and tenure, 3) but that income differentials among regions have become more skewed while 4) the rate of increase in food grain prices to consumers has dampened.
Risk Perception in Guatemala
A review of the Guatemala experience with basic grains can provide further
insights concerning the adoption process and the importance of integrated research and development programs. Small farmers in Guatemala have experienced fewer income distribution problems due to the introduction of high yielding basic grain varieties




than some other developing countries. While productivity has increased, internal adjustments in farm management have resulted in relatively stable total production of the grains most basic to diets in Guatemala.
The subsistance, land use and crop mix environment on small farms producing basic grains in Guatemala is characterized by risk aversion as farm size and relative incomes change (Alverez and Andrew). These farmers primarily grow traditional crops in association (multiple crop or sequential interplant) on their few, small and divided plots of land. They may also produce some commercial crops where risk inminimal relative to that of other mono crops. As opposed to low risk traditional crops grown primarily for subsistance, low risk commercial crops are a source of income where adversity does not extend beyond normal weather fluctuations. Low risk commercial crops may also include crops whose prices are supported by the government such as wheat in Guatemala.
The small farmer's behavior within his basic economic system is one of carefully balancing risk aversion, income maintenance and risk taking at low income levels. The farmer grows basic grains in association for subsistance though he may also sell part of his production if income should rise due to either productivity or price. In that case the farmer may divert some of his land to other commercial crops while maintaining self sufficiency production on less land. This response pattern will continue as income rises to the point where it is feasible to introduce another slightly higher risk but more commercial crop or until no more land is available. Thus, as incomes rise, small farmers with their self sufficiency guaranteed tend to diversify production by growing high value crops, until their land constraint is reached.
The results of this research suggests that there is a built in supply control mechanism for basic grains and low risk crops in the small farm system. This mechanism explains why productivity increases while production remains stagnant




-9
in Guatemala. From the farmer's viewpoint, this behavior is a natural reaction to basic subsistance needs and when all farmers react in this way, it avoids some of the second (marketing) and third (income distribution) generation problems of the green revolution (Falcon). SinceAproduction does not result, prices do not decline sharply to create income disparities and the market system Itself is not so forcefully challenged.
If these findings are accurate, research and development programs should
carefully consider the total small farm system. Simply identifying and ranking production systems based on economic phenomena does not describe the reasons for the subsistance management patterns followed by small farmers in Guatemala. To delve more deeply into these patterns will require careful attention by economists and anthropologists to economic conditions and socio-cultural systems that circumscribe the crop associations in the multiple cropping systems and influence risk for small farmers. Agronomic research on the basic grains alone will not entirely serve the small farmers need as he moves through the production system into higher value higher risk crops. Meeting the risk element squarely by sociologists, anthropologists, agronomists and economists through an integrated research program is necessary and could be very productive.
This research further highlights the issue of stress caused by centralization through national economic planning versus decentralization resulting from the village small farm system. A primary objective of the Guatemala government is to achieve major increases in basic grain production on small farms such that import necessities are reduced. Small farmers are interested in basic grain production as a basis for subsistance but once this subsistance position is well established and maintained on a stable basis, the resulting advances in Income will generate Investments in commercial production of somewhat higher risk crops because the income potential is also higher with these crops. Thus, these farmers




-10
will take advantage for productivity. increases to further solidify their subsistance needs and absorb the benefits through. greater land availability by producing crops other than basic grains. The agricultural economists and anthropologists must illustrate to the national planners that diverging objectives at the central government level versus those at the village level tend to create stress situations and unrealized objectives at each level. The price policy, to improve income for basic grain producers as a goal for stimulating production or investments in agricultural research and thereb create higher yielding varieties, may be beneficial results desired by the national government.
The Call-for Integration
A Return to Basics
It is time to return to the basics of molding our sciences in such a manner that we can join together to attack world agricultural problems. For example, we might begin by defining that part of economics that is culture and that part of culture that is economics to provide for understanding between anthropologists and economists. In a recent article, Hartman presents the proposition that economics, as both science and culture, recognizes that economics as a discipline, must embody societies' traditional sense of historical purpose and values and that it do so in the name of science. Agricultural economics is an applied social science. But he indicates that one could conclude that agricultural economics in attempting to fulfill this role as it is now practiced is both bad science and uninformed culture. Agricultural economics may be neither fish nor fowl. This could be viewed as a strong point of the discipline because it tends to reduce excessive specialization.
Concerning culture, Bell has specified that culture is used conceptually to designate societies common sense of purpose and meaning. Thus, culture serves as a basis for tradition and the embodiment of experiential knowledge accrued over




a long history of events. Cassier goes qn to explain that experiential knowledge is the basis of human meaning and purpose, And, In that sense, it is prior to and should take precedence over scientific knowledge as the ground for action and choice, It is between these two elements that agricultural economists fall.
Understanding Farmers
The above separation may help in better understanding how it is that confusion results concerning why farmers adopt given practices. Numerous authors have concluded that small farmers perform rationally and efficiently under their particular resource constraints. For example, Hopper (p. 624) states:
It seems likely that in a technologically stagnant agriculture,
farmers are intuitively aware of the resource substitution
possibilities and the production responses of their-agriculture
enterprises. These are embodied in the lore of the culture transmitted from generation to generation and are derived from refinements.of techniques that arise from the observations and-experiments made by past and present farmers. it is, therefore, not surprizing to find relatively few allocation errors anda high
level of production efficiency within the framework of the
traditional state of the arts.
Further evidence in Kenya suggests that small scale farmers under conditions of uncertainties behave as efficient, risk-averse entrepreneurs (Wolgin).
With reference to specific work on risk, Benito concludes that among peasants differences in the endowment of human and physical capital and organizational power determine the differences In opportunity cost of human time, transaction costs, and behavior In the face of risky events. The observed distribution of adoption rates among the peasants households is a combination of factors resulting from these differences. Contrary to the recent work by Alverez and Andrew and common findings, one theory suggests that adoption of innovations may be inversely related to the wealth position of the adopter (Cancian).




-12
To specifically measure and quantify relationships in the risk area is quite difficult. Moscardi and de Janvry (p. 710) have developed models that relate socio-economic phenomena and in turn predict risk behavior. They state that:
Assuming that the safety-first model holds. the degree of
risk aversion manifested by individual peasants can be derived
from observed behavior. Given a production technology, the
risk associated with production and market conditions,the observed level of factor use reveals the underlying degree of
risk aversion. Beyond random discrepancies, it is possible to
establish a systematic relationship between risk aversion and a number of soclo economic variables; (age, schooling, family
ties, off farm income, land under control, solidarity group)
that characterized peasants households, their access to income generating opportunities, and their relation to public institutions.
If farmers are performing consonant with their given environment, It seems unlikely that developing major input packages to change a small farm production system could be effective without broad consideration of numerous factors. For example, one might ask, what are the relationships between risk taking and adoption vis-a-vis prestige, income, family size, asset position, education, age, skill level, previous adoption behavior, cooperation, group behavior, price expectations, political stability, social stability, land tenure, economic stability, level of social overhead development including roads, power lines, dams, transportation systems, and other considerations. To understand limiting factors within this total spectrum of activities that affect a farmer's willingness to take risk and produce to meet national desires, will require a joint effort by various scientists and non-scientists from a wide array of disciplines and backgrounds.




-13
Planning
Economists have proceeded in an attenlpt to quantify some of the behavioral
characteristics that parallel economic activity relative to risk. But in doing so, they have not included an historical dimension to culture that might be provided by the anthropologists in specifying why "successful" behavior is as it is. Without this dimension, i.t becomes extremely difficult to predict for planning purposes. This type of activity, however, has not been one where anthropologists have been particularly comfortable in the past. But if their impact is to be fully appreclated and utilized, anthropologists must become bold and extending In their thought. Economists then must appreciate and utilize culture as a basis of proven experience for planning purposes.
In a national planning sense, as directed change is pursued, careful consideration must be given to policies that are designed to minimize short run problems and opportunities that tend to create serious long run difficulties. Such conditions should be considered as they would impact on long run employment, price levels, income transfers and soclo-cultural conditions. Economic planners might learn significantly from working with anthropologists who can view past micro systems and translate these observations into current.potentials for .change. From this synthesis anthropologists could help anticipate the long run Implications of particular actions.
Since planning implies structural modification of various individual rights
relative to resource use, care must be taken. Rights can be viewed in the broadest of senses including human and natural resources and their separate sensitivities and components. In both an economic and socio-cultural sense, rights must reflect economic and social realities. Planning systems that anticipate rule changes within a legal structure or behavioral code based in culture, should balance the cost and benefits In monetary and non-monetary terms of such changes. This




somewhat historical perspective is oversimplified in today's world and does not fully account for the general trend toward more centralized activities in contemporary national and international bodies.
Thus, in a contemporary sense, planning is more complex than most planners! realize in that policy at the macro level does influence the entire environment within which an individuals rights are based. These rights must be considered simultaneously with rule changes at the'. macro level within the code of law whether it be perpetuated by culture or that prescribed by government. It is at this point where national goals encounter significant problems-in meshing with stated or unstated laws that govern the village and rural based agricultural sector. As policy changes are anticipated that affect the distribution of rights, an understanding of the possible results cannot be achieved without integration of the disciplines that share in the social, cultural, economic and legal factors encountered by those who possess those rights. A fundamental conflict in policy making is to determine at what levels policies should be introduced to effect universal change and at the same time, what change is going to be effective relative to the goals and asperations of the target audience -- in our case a world based, low income, limited resource agricultural producer.
Conclusions
A most recent, but not final, word on why limited resource farmers do Pr do
not adopt innovations relates to the total environment within which the farm system is located. Various socio-economic conditions and perceptions influence the degree to which traditional, "small" farmers seek to avert risk in the struggle to augment their income. To successfully understand risk aversion and perception and to develop successful policies and programs will require multidisciplinary concern beyond that presently experienced. The opportunity to diversify or spread risk associated with changing from known to relatively unknown technologies rests on an ability




-15
to deal with numerous socio economic factqrs. These factors set the stage for expectations concerning risk as an important influence on the decision making process when small farm producers consider technological change.
Owing to his subsistance needs, the land constraint and his income level, the traditional farmer's behavior within his basic economic system is one of carefully balanced risk aversion, income maintenance and risk taking. The conceptual model and research results from the work with basic grain producers in Guatemala suggests that there is a built-in supply control mechanism-for basic grains and low value-low risk crops in the small farm system. This mechanism, explaining why productivity increases yet production is stagnant, is a natural reaction to basic subsistance needs and avoids some of the marketing and income distribution problems of the green revolution. Over production may not usually result so prices do not decline sharply to create great income disparities and the usually disoriented market system does not find itself so grossly inadequate in terms of handling major production increases.
Research and development programs must carefully consider the total small farm system from all points of view. Basic research on basic grains alone will not.entirely serve the small Guatamalan farmers needs as he moves into high value-high risk crops. Meeting the risk elements squarely in the agronomic, social, anthropological and economic sciences will be necessary and most productive. The question is can we as scientists ."get it together" and truly help the small farmer address his total need or must he continue to cope with risk and scientists?




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