International Journal of Horticulture 2015, Vol.5, No.10, 1
-
7
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Research Article Open Access
Managing Farm Risk: Issues and Strategies in Plantain Production in Osun
State, Nigeria
Baruwa O. I.
1,
, Masuku M.B.
2
, Alimi T.
1
1. Agricultural Economics Department, Faculty of Agriculture, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria
2. Department of Agricultural Economics and Management, University of Swaziland, Swaziland
Corresponding author email
International Journal of Horticulture, 2015, Vol.5, No.10 doi: 10.5376/ijh.2015.05.0010
Received: 03 Jun., 2015
Accepted: 05 Aug., 2015
Published: 18 Sep., 2015
Copyright
© 2015 Baruwa et al., This is an open access article published under the terms of the Creative Commons Attribution License, which permits
unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Preferred citation for this article
:
Baruwa O.I., Masuku M.B. and Alimi T., 2015, Managing Farm Risk: Issues and Strategies in Plantain Production in Osun State, Nigeria, International Journal
of Horticulture, 2015, Vol.5, No.10 1-11 (doi
Abstract
The study examined various risks and their management strategies in plantain production under tropical condition. A
multi-stage sampling procedure was used to select two hundred plantain farmers in the two ecological zones within Osun State,
Nigeria. Primary data collected were analyzed using descriptive statistics and importance index. A comparison of the results of the
two zones was undertaken. The results of the analyses revealed that shortage of capital, poor transportation system and shortage of
labor (in that order of importance) were the important risks confronting plantain farmers in the study area. Diversification of income
sources, native safeguard and diversification of farm enterprises were the most common strategies employed to manage the risks in
the study area. Research effort should be directed at obtaining effective and efficient storage and processing technology to reduce or
eliminate risk associated with the high perishable nature of plantain.
Keywords
Farm risk; Management strategies; Plantain; Production; Nigeria
Introduction
Risk is an unavoidable element in the business of
agriculture (plantain production inclusive) especially
in developing countries. Plantain is a seasonal crop
with relative short shelf life hence; it is available for a
limited period with high risk of post-harvest losses.
Risk is a situation when all possible outcomes for a
given management decision (action) and the
probability associated with each possible outcome are
known (Kay 1981). 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.
Although farms vary widely with respect to enterprise
mix, financial situation, and other business and
household characteristics, the various sources of risk
that are common to all farmers can be grouped into
two namely, business risks and financial risks
(Hardaker et al., 1997). Business risks include
production risks
, which are related to the unpredictable
nature of the weather and to the uncertain performance
of crops and livestock, and
price risks
, which refer to
uncertainty of prices of farm inputs and outputs.
Business risks also include
social risks
, this come
from human factors such as theft, sudden death,
accidents strikes, wars etc, which can lead to either
unexpected decline in yield or total loss of output, and
institutional risks
, which originate from uncertainty
about the impact of government policies on farm
profits.
Financial risk occurs when enterprise profitability
(rate of return) is less than the cost of capital. It is a
risk related to the way a farm is financed. Barry and
Frazer (1984) noted that the risk sources are as a result
of gestation lag, biological nature of farmer and
farming enterprise. The risk environment of farmers is
changing. This is caused partly by a changing role of
government, i.e., less intervention on one hand and
more regulation on the other (Zulauf et al., 1996;
Ritson & Harvey 1997; Harwood et. al., 1999), and
partly by an increasing industrialization of agriculture
(Boehlje & Lins, 1998). United State Department of
Agriculture’s (USDA) Economic Research Services
has examined the nature of farm business risk and
explored the effectiveness of various management
strategies and concluded that using risk management
does not necessarily avoid risk altogether, but instead
balances risk and return consistent with a farm
operator’s capacity to withstand a wide range of
outcomes. (Meuwissen et al., 2001) in their study on
the pros and cons of risk-sharing strategies, observed
