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Abstract

This paper focuses on linkage between new rice seed varieties and production risk and also factors affecting adoption of these varieties in Iran. Farm-level data were collected from a sample of 154 rice farms located in two major districts of Fars province in Southern Iran for 2001-02. The risk-premium associated with the use of seed is estimated following by analyzing a moment-based production risk approach. The results show that the risk premium increases with new seed varieties in the lack of appropriate production conditions implying that new seed varieties is a riskincreasing input and involves a higher cost of risk. However, under suitable production conditions, the cultivation of new rice varieties on average ensures greater yield and at the same time involves less risk as measured by the risk premium. Also, results indicate that the farmer-specific relative risk premium proxies for the risk attitudes of each farmer have negative and significant effect on the decision to adopt new seed varieties. Therefore, farmers that are more riskaverse with respect to their use of seed are less likely to adopt new seed varieties and allow them to decrease their production risk arising from seed requirements.

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