By Paul Diederen, Hans van Meijl, and Arjan Wolters, Agricultural Economics Research Institute (LEI)

This paper examines the factors that influence a farmer’s decision to adopt an innovation. The authors differentiate between innovations that are new to the farmer, but already well established in the sector, innovations that are early in their process of diffusion, and innovations that are new to the farm sector.

The authors statistically analyze data from 865 Dutch farms on adoption of innovations. Their results show that innovative activities are positively related to labor resources (which is highly correlated with farm size), market position (indicating whether a farm produces for a market that permits product differentiation), and a farmer’s access to information. Surprisingly, their results show that innovative activities are negatively related to solvency. This may indicate that farms with a high solvency rate are risk averse and not eager to innovate.

Furthermore, the authors find that adoption behavior shows some persistence over time: being an innovator in the past increases the probability of being an innovator in the present. Finally, the authors find that characteristics of the business environment matter. In particular, a high degree of market regulation seems to have a negative impact on adoption behavior.

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