ABSTRACT
Investment decision, farm productivity and poverty status of farmers in Nigeria have continued to be of great concern to stakeholders in the agricultural sector. This study examined the effects of risk behaviour on investment, productivity and poverty status of rice entrepreneurs in Ebonyi State, Nigeria. Specifically, the study examined the socioeconomic characteristics of rice entrepreneurs and identified their sources of risk and risk management strategies and classified them according to their risk behaviour. Also, the study estimated the determinants of their risk behaviours and compared investment, productivity and poverty status of the respondents. The study identified the factors that influenced their productivity, investment and poverty status along risk behaviour and examined the problems they faced along risk behaviours. A multistage sampling technique was used to select 240 rice entrepreneurs for the study. Data were collected from the respondents using a validated questionnaire. Data collected were analysed using frequency distribution, percentages, means, total factor productivity (TFP) index, Foster Greer and Thorbeck (FGT) models, Analysis of Variance (ANOVA), ordered probit regression model, Ordinary Least Square regression model, Logit regression model, Tobit regression model and factor analysis. The results showed that the average age, farming experience, household size, farm size, savings, non-farm income, annual farm income and the mean quantity harvested of rice of the respondents were 48.2 years, 21.4 years, 6.68 persons, 2.37 hectares, N94,741.94.00, N127,484.85.00, N447,244.64.00 and 609.99Kg respectively. The rice entrepreneurs were mostly married while 47.9% had up to secondary level of education. Production risks (
= 3.14), marketing risks ( = 2.84), institutional risks ( = 3.33) and personal risks ( = 2.79) were the various sources of risks faced by the rice entrepreneurs. Age, education, farming experience, farm size, cooperative membership, non-farm income, extension visit, amount of credit obtained, and market price of product significantly determined the risk behaviour of the rice entrepreneurs. Risk-taking entrepreneurs significantly invested more in rice production than risk averse and risk neutral entrepreneurs. Age, education, value of farm output, household size, credit obtained, and cooperative membership significantly influenced the poverty status of the rice entrepreneurs based on their risk behaviours. Risk behaviour significantly influenced the productivity, investment and poverty status of rice entrepreneurs. Financial and social factors constrained the rice entrepreneurs in the study area. There is need for extension services, provision of credit, strengthening agricultural insurance industry to be made available by government and non-governmental organizations to provide support to risk averse farmer, guide them to the path of risk taking and address the identified socio-economic characteristics, social, financial and other factors that influenced their investment, productivity and poverty status in the study area.
TABLE
OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of
contents vii
List of
Tables x
List of
figures xi
Abstract xii
CHAPTER 1: INTRODUCTION
1.1 Background Information 1
1.2 Problem
Statement 7
1.3 Objectives of the Study 12
1.4 Hypotheses of the Study 13
1.5 Justification for the Study 15
CHAPTER 2: LITERATURE REVIEW
2.1 Concepts and
Definitions 17
2.1.1 Concept of
risk 17
2.1.2
Classification of risk 23
2.1.3
Risk management 28
2.1.3.1 Risk management strategies 29
2.1.4 Classifications of
risk attitude of smallholder arable crop entrepreneurs 32
2.1.4.1 Risk averse 32
2.1.4.2 Risk seeking arable
crop entrepreneurs 33
2.1.4.3 Risk- neutral
agro-entrepreneurs 34
2.1.6
Risk management process 35
2.1.7
Farmers’ attitude towards risk and decision making 39
2.1.8 Concepts of poverty 40
2.1.8.1 Poverty and poverty profile 40
2.1.8.2 Poverty line 43
2.1.8.3 Measurement of poverty 45
2.1.9 Concept of investment and off- farm
investment 48
2.1.9.1 Concept of
investment 48
2.1.9.2 Off-farm investment 49
2.1.10 Effect of risk on welfare of producers 50
2.1.11 Multifactor productivity, partial productivity and total factor
Productivity 51
2.1.11.1
Partial productivity 51
2.1.11.2
Multifactor productivity 51
2.1.11.3Total
Factor productivity 52
2.1.12
Concept of efficiency 52
2.1.13
Determinants of risk behavior 56
2.2 Theoretical Review 57
2.2.1 Investment theory 58
2.2.2 Investor behavior theory 58
2.2.3 Behavioral portfolio theory 59
2.2.4 New investment theory 59
2.2.5 Risk theories 61
2.2.5.1 Modigliani and Miller’s capital structure theory of risk 61
2.2.5.2 Credit, economic and political risks theory 61
2.2.5.3 The economic
utility theory of risk 62
2.2.6 Risk behaviour theory 63
2.2.6.1 Expected utility model 63
2.2.8
Theoretical review on binary response 69
2.3 Empirical Review 70
2.3.1
Socioeconomics and farm characteristics of rice farmers 70
2.3.2
Empirical literature on sources of risk and risk management 77
2.3.3
Risk behaviour and its determinants 79
2.3.4
Factors influencing productivity, investment and poverty of farmers 81
2.3.4.1 Empirical literature on determinant of productivity 81
2.3.5
Factors affecting investment patterns 91
2.3.6 Empirical studies on poverty 93
2.3.7 Effect of risk behaviour on
productivity, investment and poverty
status 102
2.3.8 Problem faced by rice
entrepreneurs 105
CHAPTER
3: METHODOLOGY
3.1 The Study Area 110
3.2 Sampling Technique 113
3.3. Methods of Data Collection 113
3.4 Analytical Technique 114
CHAPTER 4: RESULTS AD DISCUSSION
4.1 Socioeconomic Characteristics of
Rice Entrepreneurs 127
4.2 Sources of Risk and Risk
Management Strategies Employed by Rice
Entrepreneurs 144
4.2.1 Sources of risk among rice
entrepreneurs 144
4.2.2 Risk management strategies
employed by rice entrepreneurs 150
4.3 Classification and Determinants
of Risk Behaviours 158
4.3.1 Classification of risk
behaviours of rice entrepreneurs 158
4.3.2 Determinants of risk behaviour
of rice entrepreneurs 159
4.4 Estimation of Productivity,
Investment and Poverty Status of Rice
Entrepreneurs by risk behaviours 167
4.4.1 Estimation of the productivity
of rice entrepreneurs 167
4.4.2 Estimation of the investment
level of rice entrepreneurs 170
4.4.3 Estimation of the poverty
status of rice entrepreneurs 174
4.5 Comparison of the Investment,
Productivity and Poverty Status of
the Rice Entrepreneurs based on their
Risk Behaviours 178
4.5.1 Comparison of the level of
investment of rice entrepreneurs based
on their risk behaviours 178
4.5.2 Comparison of the level of
productivity of rice entrepreneurs based
their risk behaviours 180
4.5.3 Comparison of the level of the
poverty status of rice entrepreneurs
based on their risk behaviours 181
4.6 Factors Influencing Productivity,
Investment and Poverty Status of
Rice Entrepreneurs based on their
Risk Behaviours 184
4.6.1 Factors influencing
productivity of rice entrepreneurs based on
their risk behaviours 184
4.7 Effect of Risk Behaviour on
Productivity, Investment and Poverty
Status 191
4.7.1 Effect of risk behaviours on
the productivity of rice entrepreneurs 191
4.7.2 Effect of risk behaviours on
the level of investment of rice
entrepreneurs 193
4.7.3 Effect of risk behaviours on
the poverty status of rice entrepreneurs
Problems faced by rice entrepreneurs 195
4.8 Problem Faced by Rice
Entrepreneurs 198
CHAPTER
5: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 204
5.2 Conclusion 212
5.3 Recommendations 216
5.4 Contribution to Knowledge 218
Reference
LIST
OF TABLES
4.1: Socioeconomic characteristics of rice
entrepreneurs 127
Sources of risk and risk management
strategies Employed by rice Entrepreneurs
4.2: Sources of risk among rice entrepreneurs 144
4.3: Risk management strategies of rice
entrepreneurs 150
4.4: Classification of risk behaviours of rice
entrepreneurs 158
4.5: Ordered probit estimation results for the
determinants of risk behaviour among rice
entrepreneurs 160
4.6: Estimation of the Level of productivity of rice entrepreneurs by their risk behavior 167
4.7: Estimation of the level of investment of rice
entrepreneurs by their risk behavior 170
4.8: Frequency distribution of the poverty status of rice entrepreneurs by their risk behavior 175
4.9: Test of significant difference in the mean level of
investment of rice entrepreneurs based on their risk behavior 178
4.10: Test of significance difference in the level of productivity among rice entrepreneurs by their risk behavior
180
4.11: Test of
significance difference in the poverty
status of rice entrepreneurs by their risk behavior 181
4.12: Ordinary Least Square (OLS) multiple regression result of estimatedfactors influencing productivity of rice entrepreneurs based on their risk behaviours 186
4.15: Cobb-Douglass simple regression result of the
effect of risk Behavior on the
productivity of rice entrepreneurs
191
4.16: Cobb-Douglass simple regression result of the
effect of risk Behavior on the
level of investment of rice entrepreneurs 193
4.17: Tobit regression result of the effect of risk
behaviour on the poverty status
of rice entrepreneurs 196
4.18: Factor analysis of the problems
faced by rice entrepreneurs based on their risk behaviours 198
LIST OF FIGURES
2.1 Risks in agriculture 35
2.2 the risk management process 38
2.3 Agricultural risk management strategies 39
3.1 Map of Ebonyi State, Nigeria 112
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND INFORMATION
Risk
plays important role in farmers’ decision making and therefore affects
agricultural productivity, investment and poverty status of rice entrepreneurs.
Agriculture is the most weather dependent of all human activities and drought
presents the greatest risk, given that it occurs with the greatest frequency,
affects the greatest area, and causes the greatest losses to production
(Adeyinka, 2015). Risk is regarded as a central issue that influences the
distinctive aspect of farmer’s livelihoods in underdeveloped countries. Risk
influences assets generation, how these assets are used up in the farm to
generate incomes and how these incomes and earnings enhance economic
development. In rural areas, risk influences all farm management decisions
owing to price, yield and resource uncertainty. The presence of such risks has
been found to influence farmer’s behaviour in ways that at first glance seem
suboptimal and highly vulnerable to low outputs. Indeed, farmers make their
production decisions in an environment surrounded by risk such that the outcome
of these production decisions cannot be predicted with certainty until the
outcome occurs. More so, the result of such production decisions may be better
or worse than expected (Ibeagwa et al.,
2019).
Risk
situation in agriculture is also overwhelming and may be broadly grouped as;
systemic risks and idiosyncratic independent risks. Systemic risks include
production risks (farming practice, weather, pests, etc.), price risks, and
political risks (export bans, price caps, debt write offs, etc.).
Non-agricultural risks known as idiosyncratic risk are made up of personal
risks which affect the entrepreneur, proprietor and or manager of the farm
business (Oparinde, 2018).
Agricultural risks are
prevalent throughout the world and they are particularly burdensome to
small-scale farmers in developing countries. Production activities of these
farmers are characterized by scattered small land holdings (Osuji, Mejeha,
Nwaru, Nwankwo, and Nwaiwu, 2017). Agricultural risks are very imperative if
they result in income and consumption fluctuations. Fluctuations in consumption
usually imply relatively high levels of transient poverty. High income risk may
also be a cause of persistent poverty. This is likely when insurance and credit
companies are not available or functional as it is the case for developing
countries. The inability to manage income risk does not only give rise to
fluctuation in household consumption pattern but influences nutrition, health
and education and as well give rise to inefficiency and skewed intra-household
allocations (Nasiru, 2015).
Rice entrepreneurs are
exposed to the possibilities of losses in production and uncertainty of return
on their investment. Risk plays an important role in rice entrepreneurs
(farmers) production decisions related to choices and levels of inputs and
outputs. Empirically, farmer’s decisions
under risky conditions are evaluated by monitoring their risk perceptions and
risk attitudes or preferences (i.e., risk-averse, risk-taking, or
risk-neutral). Farmers whose survival hinges on production may be more
sensitive to income variability than to average income and often exhibit high
aversion to risk (Onyemauwa et al.,
(2018).
According to Ibeagwa, Nnamdi, Ehirim, Ukoha, Osuji,
Maduike, Okwara, Mohamed, Aal and Chen (2019), risk management can generally be
considered as the ability to find the combination of activities most preferred
by an individual farmer to achieve the desired level of return and acceptable
risk boundaries. Risk management approaches minimizes farm business risk (e.g.
diversification or vertical integration), spread the risk beyond the farm (e.g.
production contracting or hedging), or enhance the capacity of the farm to bear
risk (e.g., maintaining cash reserves or evening out cash flow). The use of
risk management approaches does not necessarily avoid risk altogether, but
instead balances risk and returns consistent with a farm operator’s capacity to
withstand a wide range of outcomes. In spite of the fact farms vary broadly with regards to enterprise
mix, financial status, and other farm business and household characteristics, a
number of risks are peculiar to all
farmers. They include; price and yield risk to personal injury or poor
health. But even when confronting the same risks, farms vary when it has to do
with risks like weather shocks. For example, in an area where drought reduces
the yields, falling prices could have devastating consequences for local farm
incomes (Raffaello and Michael, 2016).
Productivity is the
relationship between the yield produced and one or more of related inputs used
up in the production process (Ezeano et
al., 2017). The divergence in opinion among researchers centres on the
choice of concept for a specific measurement purpose, and how to measure output
and inputs. In essence, the section of an appropriate concept of productivity
depends on the objective of measurement, availability of data and preference of
research (Yakubu, 2016). Productivity is basically an index used in measuring
output (goods and services) in relation to the inputs (land, labour, materials,
etc,) used up in producing the output. It is a measure of effectiveness (Ebe et al., 2016). As such productivity can
be presented as output/Input ratio, (Eze et
al., 2016).). Farmer’s productivity can be increased in two ways; either by
increasing the output or decreasing the input.
The measurement of
productivity analysis of one firm relative to other firm or to the “best practice”
in an industry has long been of interest to agricultural economists.
Productivity can be measured in terms of level and rates of change. Generally,
productivity can be studied at four levels: site/project, firm/organization,
industry and entire economy. Because productivity measures exist largely to be
compared, people are more interested in productivity change. Hence, it is more
meaningful to use productivity measures as indices of performance (Giang,
2019). Productivity is often presented in the following forms: partial factor
productivity, multi factor productivity and total factor productivity (Young
and Norman, 2019).
Investment can be
expressed as returns or profit earned from the money that is used up in the
purchase of an asset. It is imperative to know that the inclusion of risk is
what makes farm investment profitable. When understanding what investment is,
one ought to know that there is a direct associated between returns and risk
involved. This suggest that the more the risk the higher the returns
(Nwibo,2013).
The level of poverty Nigeria is quite worrisome.
Both the quantitative and subjective estimations validate to the rising
incidence and profundity of poverty in the country (Ajewole et al., 2016). This circumstance
however, reveals a paradox considering the tremendous human and physical assets
that are readily available in the country. It is indeed more exasperating that
in spite of the colossal human and material assets that has been accrued to
poverty alleviation by successive governments, no noticeable result has been
accomplished from such investments. In spite of the fact that, predicted
poverty alleviation scenarios vary enormously as the result of the rate and
nature of poverty related policies, real evidence recommends that the
profundity and severity of poverty is
awful in Nigeria, Sub-Saharan Africa and South Asia (NBS,2019). Within these
regions, poverty is largely a rural phenomenon and about 62% to 75% of the
population of rural households in the regions earn less than one dollar a day
(Ehirim et al., 2019). Rural poverty
also tends to be deeper than urban poverty in these regions (Ferrone et al., 2019). More so, it has become
obvious that within the African countries the poverty is heterogeneous and that
some element of variations does exist with a clear distinction between chronic
and transitory poverty (World Bank, 2019). Chronic poverty has been resolved to
be that component of total poverty, that is, static and transitory poverty
component, that is attributable to the inter-temporal variability (Zuhumnan,
2018). The isolation of the process underlying chronic and transitory poverty
is considered essential in understanding the extent to which each poverty type
may obscure the other or even distort the effects of government anti-poverty
programmes.
In Nigeria, rural poverty is relatively high. A
national poverty survey carried out indicates that the high tropic areas have
moderate poverty while the northern regions have poverty levels that are as
high as 60% (NBS, 2019). The average national poverty incidence indicates that
this situation has not improved during the last 20 years in a majority of
sub-Saharan Africa countries, Nigeria included (Singh andChudasama,, 2020). The
main problem lies in the fact that despite the high incidence rates in Nigeria
little is documented on policy related determinants of rural poverty, making it
very difficult to effectively set and implement sustainable anti-poverty policy
programmes (Singh and Chudasama, 2020). It is therefore necessary to examine
the factors and issues of concern, hovering around investment, productivity and
poverty status of Ebonyi State rice
entrepreneurs. The problems that these set of entrepreneurs face are enormous
and therefore have to be examined.
1.2 PROBLEM
STATEMENT
Farming
is a complex business with uncertainties arising from various sources of risks
and may include several uncontrollable elements. One example is weather that
plays a fundamental role in agricultural production (Obike et al., 2017). Challenges arising from changes in the climate and
the environment have led to an increase in the frequency in the occurrence of
unfavourable weather events in the country (Olagunju et al., 2021). Crop farmers are not protected from many types of
risks they are exposed to. Lack of insurance policies for farmers which could
serve as hedge funds and fallbacks in cases of crop failure is a major setback
for increased productivity and outcome. In cases of price variability in
markets where it is possible to insure crops, crop insurance may play an
important role in farmers’ adaption to climate changes (Food and Agricultural
Organization, 2017). According to FAO
(2021), natural hazards (weather, pests and diseases), market fluctuations (of
output prices), social uncertainty (due to differences over control of
resources) and state actions and wars are the identified four types of risks
that affect agriculture.
Rice
entrepreneurs face many risks in their farming activities. The country has in
the past recorded cases of drought, outbreaks of crop and animal diseases,
pests infestation, as well as fluctuations in prices of both farm produce and
inputs. This has resulted in fluctuations in output and variability in
household income (Tandzi and Mutengwa, 2020). Risk hinders farmers from
pursuing their farming as a business. The risk situation is worsening by the
fact that they operate in an environment with weak markets. They do not have
access to sufficient support institutions that can help them cope with risks.
Risks have negative implications to agricultural productivity and farmers’
income, in that it affects the types of investments which farmers make.
Ultimately, it affects the level of farm output and economic growth. Nigerian
agriculture is commonly known to be in crisis, and the greatest failure is that
food production does not match with population growth. The rate of growth of Nigeria’s food
production is 2.5 percent per annum in recent years, while food demand has been
growing at the rate of more than 3.5
percent per annum due to high rate of population growth of 2.83 percent (FAO,
2021). Understanding risk may be a starting point to assist farmers in making
good investment decisions in a risky environment. There is need to examine the
various dimensions of risks faced by farming households, the risks management
approaches adopted by entrepreneurs, and the determinants of risk management
approaches adoption among entrepreneurs in the study area.
Investment
in agribusiness is rooted on the concept of cost and returns. It is imperative
to know that the existence of risk in agribusiness is what makes agribusiness
investment profitable. When understanding what investment is, you should know
that there exist a direct relationship between returns and risk involved,
implying that the higher the risk the higher the returns from investment.
Nonetheless, agricultural risk is vast and often reduces the efficiency of the
farmers.
Therefore,
Richard (2018) stated that it is of paramount importance to identify farmers’
perceptions to risk in order to understand their risk behaviour and adoption of
an effective risk management approaches. Poverty status of rice entrepreneurs
is not unconnected from their risk behaviours. In Nigeria, alarming poverty
situation has been a focus of discussion as reflected in many poverty
alleviation programmes in the country. Despite the measures taken to alleviate
poverty, poverty statistics in Nigeria is still deteriorating. According to the
UN report in 2016, our country was ranked the 152nd in terms of living
standards. In all, 188 countries were studied. The unemployment rate reached
42%. 80 million citizens were forced to live for $1.25 implying that, they were
taken out of poverty. Some of the recent poverty intervention programmes
between 2020 and 2021 under Buhari’s Administration are: N- power, N- tech,
market moni, school feeding to mention but a few. However, despite all these
interventions, many people still live in poverty.
There is an absence of studies that explicitly
investigate rice farmer’s risk perceptions and the ways they deal with in
Ebonyi State. Earlier studies have through a quantitative approach studied the
factors of importance for farmer’s adoption of risk management approaches and their
risk management tools. The empirical knowledge about the underlying factors of
farmers’ risk behaviour in the domain of rice entrepreneurs has not been
investigated enough in Ebonyi State, Nigeria.
Only
few studies have investigated rice entrepreneurs’ perception and attitude to
risk, and how they deal with risks (Dilshad et
al., 2020). Obike (2015) carried
out research on risk management strategies, Ibeagwa et al,(2019) carried out
a study on on risk management strategies among arable crop farmers in Owerri
West , Nmadu,(2012) worked on risk
status of small scale farmers in Niger State while others carried out their
researches on risk perception but much has not been done in the area of risk
behaviour of rice farmers expecially how being
risk averse, risk neutral or risk taking affect productivity, investment and poverty
status of these farmers in Ebonyi State.
In
this study, the researcher categorized the respondents in to three groupr as:
risk averse, risk neutral and risk taking to enable her understand various behaviour rice farmers exhibite in
their farming activities. This is the major focus of this study as the study
looked at how the various behaviours affected their level of investment,
productivity and their poverty status against what other researchers have done
and therefore makes this research perculiar and hence necessary to research on,
in order to close the existing gap. This
study therefore sought to examine the effects of risk behaviour on
productivity, investment and poverty status of the respondents in the study
area.
1.3 OBJECTIVES OF THE STUDY
The broad objective of the
study is to examine the effects of risk behaviour on investment productivity
and poverty status of rice entrepreneurs in Ebonyi State, Nigeria.
The specific objectives were
to:
i.
describe
the socioeconomic and demographic characteristics of rice entrepreneurs in the
study area;
ii.
identify
the sources of risk and risk management strategies employed by rice
entrepreneurs;
iii.
Classify
and analyze the determinants of risk behaviour of the rice farmers.
iv.
estimate
the productivity, investment and poverty status of rice entrepreneurs in the
study area based on their risk behaviours;
v.
compare
investment, productivity and poverty status of the respondents based on their
risk behaviours;
vi.
identify the factors that influence
productivity, investment and poverty status of the respondents based on their
risk behaviours;
vii.
analyze
the effect of risk behaviours on investment, productiviy and poverty status of
rice entrepreneurs in the study area and
viii.
describe
the problems faced by rice entrepreneurs (risk averse, risk neutral and risk
takers) in the study area.
1.4 HYPOTHESES OF THE STUDY
The following hypotheses were tested:
H1: Marital
status, educational status, farming experience, farm size, cooperative
membership, non-farm income, number of extension agents visit, amount of credit
obtained, market price of product, and availability of storage facilities have
no significant positive influence on the risk behaviour of rice entrepreneurs
in Ebonyi State, Nigeria while age of respondents, household size and value of
farm inputs have no significant influence on the risk behaviour of rice
entrepreneurs in Ebonyi State, Nigeria.
H2: There is no
significant difference in the level of investment or productivity or poverty
status among risk taker, risk neutral and risk averse
rice entrepreneurs in Ebonyi State, Nigeria.
H3: Educational
level, farming experience, farm size, household size, extension contact, value
of seeds/seedlings, expenditure on fertilizer, labour inputs, amount of credit
obtained, and capital have no significant influence on the productivity of rice
entrepreneurs (risk-taker, risk neutral and risk averse) in Ebonyi State,
Nigeria while age of respondents have no significant influence on the
productivity of rice entrepreneurs (risk-taker, risk neutral and risk averse)
in Ebonyi State, Nigeria
H4: Farming
experience, primary occupation, amount of farm and non-farm income, farm size,
educational level, amount of savings, and membership of farmer’s association
have no significant positive influence on the level of investment of rice
entrepreneurs (risk-taker, risk neutral and risk averse) in Ebonyi State,
Nigeria while household size has no significant negative influence on the level
of investment of rice entrepreneurs (risk-taker, risk neutral and risk averse)
in Ebonyi State, Nigeria
H5: Age
of respondents, marital status, household size, and main occupation are
positively related to poverty status of rice entrepreneurs (risk-taker, risk
neutral and risk averse) in Ebonyi State, Nigeria while level of education,
value of farm output, amount of credit obtained, and cooperative membership are
negatively related to poverty status of
rice entrepreneurs (risk-taker, risk neutral and risk averse) in Ebonyi State,
Nigeria.
H6: Risk
behaviours have no significant influence on the productivity, investment and poverty
status of rice entrepreneurs in Ebonyi State, Nigeria.
1.5 JUSTIFICATION FOR THE STUDY
Risk reduces agricultural output and therefore affects
investment, output and poverty status of rice entrepreneurs in developing
countries like Nigeria. Agribusiness risks are imperative if they result to
income and consumption fluctuations. Fluctuations in consumption usually imply
relatively high levels of transient poverty. High income risk may also be a
cause of persistent poverty. This is likely, when there is absence or
availability of limited number of insurance and credit markets as it is the
case for developing countries. Inability to effectively manage income risk is
reflected in farmer’s household consumption fluctuations as well as nutrition
imbalance.
Risk has
important implications on agriculture in that it affects the types of
investments that farmers make. Ultimately, it affects the level of farm output
and economic growth precisely.
Information on the risk behaviour of agro entrepreneurs in south eastern
Nigeria is vital in that farmers in this part of the country battle with many
risks like production risk, financial risk, market risk , institutional
risk and also human risk that affect investment,
productivity and poverty status of rice
producing farmers. Pieces of information
on risk behaviour and poverty
status of rice producing farmers in this study will be an addition to
the body of existing knowledge in agriculture because it will provide sets
of farmers that prefer certain risk behaviour in farm investments to
enable them ascertain the risk management strategies required and hence the
investments they should embark on. This
is imperative because it will serve as a guide to the government when assisting
farmers with coping strategies on risks.
Similarly, understanding
the relationship between farm characteristics, farmers’ risk demeanor and risk
perception and adoption of risk management approaches is important for two
reasons. First, the literature reveals that most farmers are averse to risk
when confronted with risky outcomes (Sulewski and Sosulski, 2020). Someone who
is risk averse is willing to accept a lower average return for lower
uncertainty. This means that strategies cannot be evaluated solely in terms of
average or expected return, but that risk must also be considered. Secondly,
knowledge of small-scale farmer’s attitudes to risk and their risk management
strategies is imperative in developing an effective strategies and formulating
policies for agricultural development (Raza et
al., 2016).
Therefore empirical knowledge of the relationship
among farmers’ risk behaviour, productivity, investment and poverty status in
the domain of rice production has to be verified enough in Ebonyi State,
Nigeria. Thus, carrying out a research
on rice farmers risk behaviour as it affects their productivity, investment and
poverty status in EbonyiState is of paramount importance.
This
research hoped to provide pieces of information that will serve as reference
document to: Other researchers like
cooperate bodies who will embark on related studies like this.
This
study is also hoped to be useful to scholars like undergraduates and post
graduates students who are interested in behaviourial studies while the
government will find it necessary for policy formulation and implementation in
Agricultural sector. Most often, the government in order to make imparting
grasss root agricultural policies will require important document which this
study has provided. I therefore urge the policy makers to source good research
findings like this for appropriate policy formulation in our country, Nigeria.
That will go a long way to improve on the behaviours of rice farmers expecially
the risk averse farmers who require economicand moral suasion in their farming
decision.
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