Various indications that research and development efforts are escalating in developing countries indicate the slight shift of such countries from just being end markets to being developers. The aggregate adoption of biotech crops in developing countries is clearly approaching that in developed countries. The next generation biotech crops with superior traits, with improved properties and quality traits will likely be created and deployed in developing countries, particularly in Asia, where half of the world’s population dwells.

Recent studies in the literature examining impact of government seed price intervention on adoption of Bt cotton get different results depending on the specifics of the situation analyzed. According to one study, reduction in seed prices enables farmers to buy seeds at lower prices and this can result in surge of area sown under Bt cotton. The other view holds that seed price interventions have little impact on the adoption rates rather these interventions may adversely affect firms’ incentives to innovate. Which of the two views characterize adoption of Bt cotton in India?

Much has been written on the determinants of technology adoption in agriculture, with issues such as input availability, knowledge and education, risk preferences, profitability, and credit constraints receiving much attention. This paper focuses on a factor that has been less well documented: the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests. Building on an explicit model, this is explored in panel data from Ethiopia. Historical rainfall distributions are used to identify consumption risk.