Which Will Overcome? The Productivity or Risk Premium

Abstract

Risk-averse farmers are prudent to use different inputs because every input has a distinct effect on output fluctuations and production risk as well. This paper examines the effect of input using growth on producer welfare of date farmers in Sistan and Baluchestan province which is the second greatest producer and exporter of date in Iran. It is well known that input using growth impresses both productivity and risk premium. These two factors contribute to producer welfare so that increasing the productivity will boost the welfare and an addition to risk premium shall detract the welfare of risk-averse farmers. Results showed that technical change has reduced both productivity and production risk in 2011/2012 and the welfare increased as 912727.21. But, in 2010/2011, productivity and risk premium had a positive growth and finally the producer's welfare experienced a reduction as 1041478.41.

Keywords

• Production risk
• Total Factor Productivity
• Risk Premium