Capital, Scale, and Risk Constraints to Vegetable Adoption among Smallhold Farmers in Nepal

Abstract

Nepal’s agricultural productivity has stagnated in recent decades, resulting in widespread malnutrition, poverty, and civil conflict. In response, government and donor institutions have promoted high-input, high-return vegetable crops to increase earnings and productivity among smallhold farmers. This study examines the constraints limiting widespread adoption of these crops in the Mid-Western Development Region (MWDR) of Nepal. I first draw upon the technology adoption literature to generate predictions regarding potential capital, scale, and risk constraints to farmers’ vegetable adoption, and then develop Logit, Probit, OLS, and Ordered Probit regression models to measure the effects of these constraints on a sample of farmers from the MWDR. The sample is drawn from a field survey I conducted in Nepal from June to July, 2014. Principal regression results show that farm area, distance to an agricultural supplier, higher caste status, and food insecurity are all significantly negatively associated with vegetable adoption, while farmers’ age, agricultural training, and assets are significantly positively associated with adoption. I conclude that the surprising negative relation between farm size and vegetable adoption is the result of non-functioning labor markets, and that risk aversion is a significant barrier to vegetable adoption. More broadly, I find that vegetables are a relatively equitable instrument for poverty alleviation in Nepal.