Effect of uncertainty on farmers decision making: case of animal manure use

Vermeire Bert – Viaene Jacques – Gellynck Xavier

Effect of uncertainty on farmers decision making: case of animal manure use


Ghent University, Department of Agricultural Economics
Coupure Links 653, 9000 Ghent, Belgium

Due to the high levels of manure application and the poor use efficiency of manure, the European agriculture is held responsible for a considerable negative impact on surface water quality (Langeveld et al., 2007). This problem has emerged particularly in Western-European countries such as the UK, Belgium, The Netherlands and Denmark, facing a large expansion and intensification process in the livestock production since the 1960s (Van der Straeten et al., 2008). Policy measures related to the application of manure on the land encompass two major measures: emission rights, understood as the amount of nutrients which can be applied on the land, differentiated by crop and the N spreading calendars, whereby the manure can only be applied when the crop needs nutrients. The fundamental aim of this pillar is to maximising application rate while avoiding overfertilisation. Maximizing the application rate is related to the economic sustainability of the agricultural sector, by altering the manure surplus, while avoiding overfertilisation is imperative in enhancing ecological sustainability, by preventing nitrate leaching to surface and soil waters. For nitrate policy to meet its target, the farmers should not exceed their emission rights, however make optimal use of their emission right for manure. Consequently, the successful implementation of sink-related measures will strongly depend of the absorptive capacity of farmers towards new ways of nutrient management in general and of animal manures in particular.
The concept of absorptive capacity dates back to the seminal work of Cohen and Levinthal in the early 1990s, who defined it as “the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends” (1990). In this paper, this concept is applied to agriculture. This is different from a vast stream of absorptive capacity studies which focus on innovation or overall performance measures as outcome of absorptive capacity (Lane et al., 2006). This is a narrowed focus in compared to the initial work of Cohen & Levinthal, which stressed the general commercial application of knowledge (1990). As a consequence, Lane et al. argue that absorptive capacity should also be explored in non-R&D contexts (2006). Sustainable farming is indeed a case where absorptive capacity is relevant. In fact, the adoption of sustainable farming practices can be considered complex, knowledge intensive and non-prescriptive. This goes beyond the classical notion of knowledge transfer to- and adoption by farmers and moves towards learning based on social interaction (Ingram, 2008). Moreover, it is stated that the adoption of new agricultural practices requires autonomous learning instead of the reliance on standardised external knowledge (Morgan and Murdoch, 2000). This suggests that the challenge for contemporary extension lies in enhancing the realised absorptive capacity and moving beyond pure acquisition of standardized knowledge.
Absorptive capacity and uncertainty are strongly linked. Uncertainty plays a crucial role both in new innovation development and in the adoption of innovations. Recently, many authors have stressed the role of uncertainty in environmental innovations (Meijer et al., 2007; Pannell et al., 2006; Serra et al., 2008; Torkamani, 2005). Some authors argue that the risk involved with environmental innovations is higher as failure does not only have effect on sales but also on future production (environmental degradation) and threatens their licence-to-produce (Vanclay, 2004). Specifically related to the use of animal manures following kinds of uncertainty have been identified in literature:
– Policy uncertainty which manifests itself in a double way: on the one hand changes in the regulatory framework may force changes in the production process, on the other hand the farmer’s choices regards the regulatory framework (e.g. tradable quota) suffer from uncertainty’s in the farm’s production level and in its production environment (Lehtonen et al., 2007; Wossink and Gardebroek, 2006).
– Effect of climate conditions on nitrate leaching (Chambers et al., 2000; Sheriff, 2005)
– Within-parcel and site-to-site variability in nitrification, surface runoff, volatilization and leaching (Sheriff, 2005).
– Uncertainty with respect to the exactness of analytical techniques. This relates to the fact that knowledge about some processes is still limited and that most models rely on the quality of data collection and may suffer from measurement errors (Oenema et al., 2003).
Therefore this paper investigates to what extent the perceived uncertainty about the use of animal manures affects the farmers’ absorptive capacity and how this finally results in higher satisfaction about external knowledge provision. In particular our research will focus on the late-adopters, specified as farmers exhibiting low animal manure use.
The research investigates two research hypotheses:
1. Perceived uncertainty has a negative effect on the absorptive capacity towards animal manure use.
2. Absorptive capacity towards animal manure use has a positive effect on the satisfaction about external knowledge provision.