Traditional versus improved varieties of seed : Is there a trade-off between productivity and risk?

This paper presents an empirical analysis of how the choice of seed technology impacts farm productivity and management in a setting characterized by high risks. The findings reveal that risk aversion and climate are important driving forces for crop technology choice. Risk averse farmers can hedge against the risks they face by skewing their choices towards traditional varieties. A comparison of the relative importance of traditional versus improved varieties shows that the latter lead to gains in crop income. We also found notable differences from adopting a singular versus a combination of the varieties, with the combination having lower impact on income, compared to improved-varieties-only and higher income compared to traditional-varieties only. The exact opposite holds for the impact of alternative varieties on the cost of risk. The implication is that the risk prone nature of Ethiopian agriculture leads to marked tradeoffs in terms of productivity and risk between the two sets of varieties