Profitability is the principal determinant in the long term of adoption of new technologies in agriculture and elsewhere—technologies that are more profitable will be used. However, adoption of any farming technology is unlikely to be universal because agriculture is characterized by a high degree of heterogeneity. Farming conditions vary markedly among regions and crops because of differences in climate, soils, topography, water availability, government programs, and other factors. As a result, the profitability of any given agricultural technology may differ greatly across regions and crops, so that producers in one region find unprofitable what producers in another find extremely profitable.
Differences in climate are arguably the major source of heterogeneity in agriculture. They lead to differences in crop productivity and thus in the long-term profitability of adopting new agricultural technologies. In his classic study, Griliches (1957) found that ceiling rates of hybrid corn adoption varied across states. Ceiling rates in the Corn Belt approached 100 percent but were much lower in states with lower corn productivity. Differences in climate also result in differences in pest pressure that affect ceiling rates of IPM adoption. For example, the use of scouting services for cotton crops is more prevalent in the Delta states than in Texas or California (Economic Research Service, 1995b), which are drier and are thus less subject to pest pressure.
Differences in land quality (i.e., soils and topography) are a second major reason for heterogeneity in agriculture and for differences in ceiling rates of adoption of agricultural technologies. For example, low-volume irrigation technologies (drip and center-pivot) increase the efficiency of water use more on land with sandy soils and greater slopes and thus are more likely to be adopted by producers operating those types of land (Caswell and Zilberman, 1986; Dinar et al., 1992; Lichtenberg, 1989; Negri and Brooks, 1990; Shrestha and Gopalokrishnan, 1993). Adoption of conservation tillage has similarly been more widespread among producers operating more erodible land (Economic Research Service, 1995a; Ervin and Ervin, 1982; Gould et al., 1989; Lynne et al., 1988).
Differences in cost structure are frequently another source of differences in ceiling adoption rates. For example, use of low-volume irrigation technologies is more widespread in areas where water prices are higher, so that savings in water costs are more likely to outweigh initial investment costs for drip systems (Caswell and Zilberman, 1985; Dinar and Yaron, 1990; Dinar et al., 1992; Negri and Brooks, 1990; Shrestha and Gopalokrishnan, 1993). The use of computer services is more widespread among dairy operators than other kinds of producers because computerization reduces the management time and cost involved in herd improvement (Huffman and Mercier, 1991; Putler and Zilberman, 1988).
Information-intensive technologies such as low-volume irrigation or chemigation frequently increase yield. These yield increases are worth more for higher-value crops, suggesting that ceiling adoption rates of information-intensive technologies