Proceedings of the 18th International Academic Conference, London

RISK MANAGEMENT STRATEGIES ADOPTION OF FARMING HOUSEHOLDS IN KWARA STATE OF NIGERIA: A PRAGMATIC APPROACH

OLAWUYI SEYI, OLAWUYI TOSIN

Abstract:

Risk is an unavoidable element in the business of agriculture especially with the prevalent issue of climate change which hitherto affects production. Production can vary widely from year to year due to unforeseen weather and market conditions, causing wide swings in commodity prices. But risk, while inevitable, is often manageable. Risk management involves choosing among alternatives for reducing risks that threaten the economic success of production process and well-being of the households; hence, determinants of risk management strategies adoption among farming households in Kwara State of Nigeria was investigated. Multistage sampling technique was used to select 122 farming households used for the study. Data collected through a well-structured questionnaire was analyzed through descriptive statistics such as frequency counts, percentages and mean values while inferential statistics such as Tobit regression was used to test the formulated hypothesis. The result revealed a mean age of 49.25 years while the average household size was estimated at approximately 12 persons; also, the average years of formal education was estimated at 6.31 years. 92.62% of the respondents engaged primarily in farming while majority are faced with production risks. The prevalent risk management strategies adopted are: obtaining credit facilities from social organizations, irrigation practices, borrowing from friends, use of family labour and distress sales of assets. And, determinants of risk management strategies adoption are: years of formal education (p<0.1), household size (p<0.1), social organization membership (p<0.01) and outcomes (p<0.05). This study concludes that human capital (proxied by years of formal education) and social capital endowment (proxied by social organization membership) have a strong influence on the adoption of risk management strategies.

Keywords: Risk Management Strategies, Adoption, Farming Households, Tobit, Nigeria

DOI: 10.20472/IAC.2015.018.111

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