The Determinants of Rice Variety Choice in Indonesia

This paper investigates the determinants of rice seed variety choice inIndonesia with respect to a meta-profit function. Varietal choice ismodeled as depending on the profitability of high yielding varieties of seedrelative to traditional varieties of seed, the schooling of cultivators andfactors associated with yield uncertainty and risk aversion. Carefulattention is paid to the stochastic structure of the estimated simultaneousequations switching regimes model. The maximum likehood method applied toIndonesian farm-level data is complicated by endogenous regressors andheteroskedastic errors. Adoption of high yielding varieties was found to bepositively associated with its relative profitability, the likelihood offlooding, quality of irrigation conditional on its effect on relativeprofit, and the availability of credit, and negatively associated with landowned and the likelihood of drought. Schooling was not found to be asignificant determinant of variety choice. Sources of interregionaldifferences in cultivator behaviors in Indonesia were calculated as anapplication of the estimated model. Interregional differences in employmentin rice cultivation but not HYV adoption were largely due to differences inwages.