ABSTRACT

The main objective of the study examined farming households‟ risk attitudes and their management strategies toward risk. While the specific objectives identified the major sources of risks to agricultural production in the study area, determined household‟s perceived magnitude of these risks and risk attitude of rural households, determined the relationship between risk attitudes of the household and their social-economic characteristics and identified risk management strategies available and used by rural households in the study area. Primary data on what the farm households identified as source of risks to their agricultural production, perceived magnitude of these risks, socio-economic characteristics, risk attitudes, management strategies of the rural households etc were collected with the aid of well structured questionnaire using interview method. And analytical tools employed in achieving the study objectives were descriptive statistics such as pie chart to describe risks to agricultural production among the households and the magnitude of the perceived risks; Attitudinal Scale Approach (ASA) model addressed the rural farming households‟ risk attitudes and multiple regression analysis was used to estimate the relationship between risk attitudes of the farming households heads and their social-economics characteristics. The study revealed that the major threats and risks that posed threat to agricultural production within the last five years were inadequate farming land, high interest rate, ill health of the farmers and lack of animal vaccination. These were reported by 60.00%, 53.78%, 48.06% and 38.73% of the sample households, respectively. The R2 values of 0.410 and 0.424 showed that about 41% and 42% of the risk attitudes of the rural farm households were explained by the socio-economic characteristics and management strategies employed by the households respectively. The ratio of risk aversion to preference attitudes was about 1:2 implying that in every three farming households, one could be categorized as having risk averse attitude and would adopt management strategies. Risk neutral was not common among the farmers. The farmer‟s age, year of farming experience, farm size, off-farm income and gross farm income were significantly related to the risk attitudes of the respondents at between 5 and 10 percent levels, respectively. The results further showed that involvement in livestock production to complements household income, Off-farm activities, household members‟ interest in farming were the most effective management strategies used by households, respectively. The study recommended that with the government‟ Agricultural Transformation Agenda (ATA), the youth, whose age brackets are prone to risk taking in farming enterprises should be mobilized into agricultural ventures to serve as platform for job creation for youths. Secondly, the government should ensure that the farm risk-sharing facility window of Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) should network with Microfinance Institutions (MFIs), Microfinance (MFBs), and Commercial banks etc, to mitigate high interest rate in their credit facilities to farming households