ABSTRACT
The place to begin is to note that for economic policy to create a favorable environment for extension it has to make the adoption of new production technology profitable. Consider an example from Brazil. An important issue some ten years ago was why farmers were not using fertilizer on maize, but were using it on other crops. The extension service at that time believed that the use of fertilizer was rational for all crops for which there was a physical response. The point is that there are more cost-effective ways of doing it than by changing price relatives. A frequent argument is that farmers have to be subsidized to promote the adoption of new technology. The logic of the argument is that the adoption of technology has a high payoff to society and that a farmer should be compensated for the risk he or she incurs in using the new or improved input.
