Farmers’ adoption of organic production

Summary

This paper presents a theoretical model of the farmer’s decision to adopt alternative technologies in agriculture. The decision concerns the allocation of lands for old and new technology. We consider the case where organic production requires adoption of a new/alternative technology to be profitable. This paper suggests that an entirely theoretical exercise can illuminate parts of this complex issue which empirical work has not been able to reach. We show the importance of (1) the available quantity of land devoted to agriculture, (2) the productivity of the new/alternative technology, (3) the incentive mechanism and finally, (4) the constraints on output of the new/alternative technology. The results of this article are not confined to the agricultural sector. The insights apply to other technology decisions.