Description:
Crop diversification, or growing multiple crops in farmland, has received attention as a risk-reducing strategy for smallholders. This study attempts to show that poor and non-poor farmers adopt different strategies of crop diversification. We first conceptualize farmers’ heterogeneous motivations for crop diversification by introducing a subsistence constraint into a utility maximization problem under uncertainty. Using the Tanzanian National Panel Survey, we then examine whether past experiences of shocks affect the adoption of crop diversification differently between poor and non-poor farmers. We rely on a threshold model to estimate heterogeneous impacts between poor and non-poor farmers. We find that poor farmers adopt crop diversification for robust food securities in response to drought/flood and large increases in food prices for purchase. In contrast, non-poor farmers adopt crop diversification to stabilize market income in response to large increases in input prices and large declines in crop prices for sale