|
|
|
|
|
| Maize production under risk: The simultaneous adoption of off-farm income diversification and agricultural credit to manage risk |
Shoaib Akhtar1, LI Gu-cheng1, Adnan Nazir1, Amar Razzaq1, Raza Ullah2, Muhammad Faisal1, Muhammad Asad Ur Rehman Naseer2, Muhammad Haseeb Raza1 |
1 College of Economics & Management, Huazhong Agricultural University, Wuhan 430070, P.R.China
2 Institute of Agricultural and Resource Economics, University of Agriculture Faisalabad, Faisalabad 38000, Pakistan |
|
|
|
|
Abstract Farmers in Pakistan continue to produce maize under various types of risks and adopt several strategies to manage those risks. This study is the first attempt to investigate the factors affecting the concurrent adoption of off-farm income diversification and agricultural credit which the farmers use to manage the risk to maize production. We apply bivariate and multinomial probit approaches to the primary data collected from four districts of Punjab Province in Pakistan. The results show that strong correlations exist between the off-farm diversification and agricultural credit which indicates that the use of one risk management strategy leads to another. The findings demonstrate that education, livestock number, maize farming experience, perceptions of biological risks and risk-averse nature of the growers significantly encourage the adoption of diversification as a risk management tool while farm size inversely affects the adoption of diversification. Similarly, in the adoption equation of credit, maize farming experience, farm size, perceptions of price and biological risks and risk attitude of farmers significantly enhance the chances of adopting agricultural credit to manage farm risks. These findings are important for the relevant stakeholders who seek to offer carefully designed risk minimizing options to the maize farmers.
|
|
Received: 21 December 2017
Accepted:
|
| Fund: This research work is financially supported by the National Natural Sciences Foundation of China (71473100 and 71461010701). |
|
Corresponding Authors:
Correspondence LI Gu-cheng, Mobile: +86-18986231362, E-mail: lgcabc@mail.hzau.edu.cn
|
| About author:
|
Cite this article:
Shoaib Akhtar, LI Gu-cheng, Adnan Nazir, Amar Razzaq, Raza Ullah, Muhammad Faisal, Muhammad Asad Ur Rehman Naseer, Muhammad Haseeb Raza.
2019.
Maize production under risk: The simultaneous adoption of off-farm income diversification and agricultural credit to manage risk. Journal of Integrative Agriculture, 18(2): 460-470.
|
Abdullah D Z, Khan S A, Jebran K, Ali A. 2015. Agricultural credit in Pakistan: Past trends and future prospects. Journal of Applied Environmental and Biological Sciences, 5, 178–188.
Abedullah N, Khalid M, Kouser S. 2009. The role of agricultural credit in the growth of livestock sector: A case study of Faisalabad. Pakistan Veterenary Journal, 29, 81–84.
Abid M, Scheffran J, Schneider U A, Ashfaq M. 2015. Farmers’ perceptions of and adaptation strategies to climate change and their determinants: The case of Punjab Province, Pakistan. Earth System Dynamics, 6, 225–243.
Abid M, Schilling J, Scheffran J, Zulfqar F. 2016. Climate change vulnerability, adaptation and risk perceptions at farm level in Punjab, Pakistan. Science of the Total Environment, 547, 447–460.
Adebusuyi B S. 2004. Stabilization of commodity market of interest to Africa. Paper Presented at the Workshop on Constraints to Growth in Sub-Saharan Africa. Pretoria, South Africa.
Adnan N, Gucheng L, Saima I, Amjed M, Asim I, Akhtar H S. 2018. Determinants for income diversification by farm households in Pakistan. The Journal of Animal and Plant Sciences, 28, 134–146.
Ahmed H, Khan M R, Panadero-Fontan R, Sandez C L, Farooq M, Naqvi S M S, Qayyum M. 2012. Geographical distribution of hypodermosis (Hypoderma sp.) in Northern Punjab, Pakistan. Kafkas Universitesi Veteriner Fakultesi Dergisi, 18, A215-A219.
Akcaoz H, Ozkan B. 2005. Determining risk sources and strategies among farmers of contrasting risk awareness: A case study for Cukurova region of Turkey. Journal of Arid Environments, 62, 661–675.
Akhtar S, Gu-cheng L I, Ullah R, Nazir A, Iqbal M A, Raza H, Iqbal N, Faisal M. 2018. Factors influencing hybrid maize farmers’ risk attitudes and their perceptions
in Punjab Province, Pakistan. Journal of Integrative Agriculture, 17, 1454–1462.
Akram W, Hussain Z. 2008. Agricultural credit constraints and borrowing behavior of farmers in rural Punjab. European Journal of Scientific Research, 23, 294–304.
Alderman H. 2008. Managing risk to increase effciency and reduce poverty. World Bank Report. World Bank.
Amjad S, Hasnu S. 2007. Smallholders’ access to rural credit: Evidence from Pakistan. The Lahore Journal of Economics, 12, 1–25.
Anderson J R. 2003. Risk in rural development: Challenges for managers and policy makers. Agricultural Systems, 75, 161–197.
Arrow K J. 1964. The role of securities in the optimal allocation of risk-bearing. The Review of Economic Studies, 31, 91–96.
Ashfaq M, Hassan S, Naseer M Z, Baig I A, Asma J, 2008. Factors affecting farm diversification in rice-wheat. Pakistan Journal of Agricultural Sciences, 45, 91–94.
Ayaz S, Anwar S, Sial M H, Hussain Z. 2011. Role of agricultural credit on production efficiency of farming sector in Pakistan - A data envelopment analysis. Pakistan Journal of Life & Social Sciences, 9, 38–44.
Barrett C B, Reardon T, Webb P. 2001. Nonfarm income diversification and household livelihood strategies in rural Africa: Concepts, dynamics, and policy implications. Food Policy, 26, 315–331.
Binici T, Koc A R, Zulauf C R, Bayaner A. 2003. Risk attitudes of farmers in terms of risk aversion: A case study of Lower Seyhan Plain farmers in Adana Province, Turkey. Turkey Journal of Agriculture and Forestry, 27, 305–312.
Burki A A, Khan M A. 2008. Milk supply chain and efficiency of smallholder dairy producers in Pakistan. Working paper No. 08–62. Lahore University of Management Sciences.
Cooper D F. 2005. Project Risk Management Guidelines: Managing Risk in Large Projects and Complex Procurements. John Wiley & Sons, England.
Dadzie S K N, Acquah H D. 2012. Attitudes toward risk and coping responses: The case of food crop farmers at Agona Duakwa in Agona East District of Ghana. International Journal of Agriculture and Forestry, 2, 29–37.
Deressa T T, Ringler C, Hassan R M. 2010. Factors affecting the choices of coping strategies for climate extremes. The case of farmers in the Nile Basin of Ethiopia. IFPRI discussion paper, No.1032.
Ellis F. 2000. The determinants of rural livelihood diversification in developing countries. Journal of Agricultural Economics, 51, 289–302.
Fayaz M, Jan D, Jan A U, Hussain B. 2006. Effects of short term credit advanced by ZTBL for enhancement of crop productivity and income of growers. Journal of Agricultural and Biological Science, 1, 15–18.
Garrett K A, Dobson A, Kroschel J, Natarajan B, Orlandini S, Tonnang H E, Valdivia C. 2013. The effects of climate variability and the color of weather time series on agricultural diseases and pests, and on decisions for their management. Agricultural and Forest Meteorology, 170, 216–227.
GOP (Government of Punjab). 2016. Punjab Development Statisitics. Bureau of Statistics, Government of Punjab, Lahore.
Himanshu H, Lanjouw P, Mukhopadhyay A, Murgai R. 2011. Non-farm diversification and rural poverty decline. A Perspective From Indian Sample Survey and Village Study Data. London School of Economics, Asia Research Centre Working Paper No. 44.
Hussain A, Thapa G B. 2012. Smallholders’ access to agricultural credit in Pakistan. Food Security, 4, 73–85.
Hussein, K, Nelson J. 2016. Sustainable livelihoods and livelihood diversification. Working Paper No. 69. Institute of Development Studies and the Poverty Research Unit, the University of Sussex.
Iqbal M A, Ping Q, Abid M, Muhammad Muslim Kazmi S, Rizwan M. 2016. Assessing risk perceptions and attitude among cotton farmers: A case of Punjab Province, Pakistan. International Journal of Disaster Risk Reduction, 16, 68–74.
Jensen F E, Pope R D. 2004. Agricultural precautionary wealth. Journal of Agricultural and Resource Economics, 29, 17–30.
Jodha N. 1981. Role of credit in farmers’ adjustment against risk in arid and semi-arid tropical areas of India. Economic and Political Weekly, 16, 1696–1709.
Jones H P, Hole D G, Zavaleta E S. 2012. Harnessing nature to help people adapt to climate change. Nature Climate Change, 2, 504–509.
Kouamé E B H. 2011. Risk, risk aversion and choice of risk management Strategies by cocoa farmers in western Cote D’ivoire. Ph D thesis, University of Cocody-AERC Collaborative, Côte d’Ivoire.
Kurukulasuriya P, Rosenthal S. 2003. Climate change and agriculture. A review of impacts and adaptations. Paper 91. The World Bank Environment Department.
Lu W, Latif A, Ullah R. 2017. Simultaneous adoption of contract farming and off-farm diversifcation for managing agricultural risks: The case of ?ue-cured Virginia tobacco in Pakistan. Natural Hazards, 86, 1347–1361.
Lu, Y, Wu K, Jiang Y, Guo Y, Desneux N. 2012. Widespread adoption of Bt cotton and insecticide decrease promotes biocontrol services. Nature, 487, 362–365.
Mesfin W, Fufa B, Haji J. 2011. Pattern, trend and determinants of crop diversification: Empirical evidence from smallholders in eastern Ethiopia. Journal of Economics and Sustainable Development, 2, 78–89.
Mohammad S. 2005. Supply response of major crops in different agro-ecological zones in Punjab. Ph D thesis, University of Agriculture, Faisalabad.
Musser W N, Patrick G F. 2002. How much does risk really matter to farmers? In: Just R E,
Pope R D, eds., A Comprehensive Assessment of the Role of Risk in U.S. Agriculture. Natural Resource Management and Policy, USA. pp. 537–556.
Naqvi S A A, Ashfaq M. 2014. Estimation of technical efficiency and it’s determinants in the hybrid maize production in district Chiniot: A Cobbdouglas model approach. Pakistan Journal of Agricultural Sciences, 51, 181–188.
Olarinde L O, Manyong V M, Akintola J O. 2007. Attitudes towards risk among maize farmer’s in the dry Savanna zone of Nigeria: Some prospective policies for improving food production. African Journal of Agricultural Research, 2, 399–408.
Ping Q, Iqbal M A, Abid M, Ahmed U I, Nazir A, Rehman A. 2016. Adoption of off-farm diversification income sources in managing agricultural risks among cotton farmers in Punjab Pakistan. Journal of Applied Environment & Biological Sciences, 6, 47–53.
Pratt J W. 1964. Risk aversion in the small and in the large. Econometrica: Journal of the Econometric Society, 32, 122–136.
Raskin R, Cochran M J. 1986. Interpretations and transformations of scale for the Pratt-Arrow absolute risk aversion coeffcient: Implications for generalized stochastic dominance. Western Journal of Agricultural Economics, 11, 204–210.
Romney, D, Thorne P, Lukuyu B, Thornton P K. 2003. Maize as food and feed in intensive smallholder systems: management options for improved integration in mixed farming systems of east and southern Africa. Field Crops Research, 84, 159–168.
Rosenberg L, Hammer T, Gallo A. 1999. Continuous risk management at NASA. In: The Applied Software Measurement/Software Management Conference. San Jose, CA, USA.
Santeramo F G, Capitanio F, Adinolfi F. 2014. Integrating agricultural risks management strategies in selected EU partner countries: Syria, Tunisia, Turkey. Romanian Journal of European Affairs, 14, 3.
Saqib S E, Ahmad M M, Panezai S, Ali U. 2016. Factors influencing farmers’ adoption of agricultural credit as a risk management strategy: The case of Pakistan. International Journal of Disaster Risk Reduction, 17, 67–76.
Saqib S E, Ahmad M M, Panezai S, Rana I A. 2016. An empirical assessment of farmers’ risk attitudes in flood-prone areas of Pakistan. International Journal of Disaster Risk Reduction, 18, 107–114.
Singla S, Sagar M. 2012. Integrated risk management in agriculture: An inductive research. The Journal of Risk Finance, 13, 199–214.
Tangermann S. 2011. Risk Management in Agriculture and the Future of the EU’s Common Agricultural Policy.ICTSD Programme on Agricultural Trade and Sustainable Development; Issue Paper No. 34; ICTSD International Centre for Trade and Sustainable Development, Geneva, Switzerland.
Thieken A H, Cammerer H, Dobler C, Lammel J, Schöberl F, 2016. Estimating changes in flood risks and benefits of non-structural adaptation strategies - A case study from Tyrol, Austria. Mitigation and Adaptation Strategies for Global Change, 21, 343–376.
Ullah R, Jourdain D, Shivakoti G P, Dhakal S. 2015. Managing catastrophic risks in agriculture: Simultaneous adoption of diversifcation and precautionary savings. International Journal of Disaster Risk Reduction, 12, 268–277.
Ullah R, Shivakoti G P. 2014. Adoption of on-farm and off-farm diversification to manage agricultural risks: Are these decisions correlated? Outlook on Agriculture, 43, 265–271.
Velandia M, Rejesus R M, Knight T O, Sherrick B J. 2009. Factors affecting farmers’ utilization of agricultural risk management tools: The case of crop insurance, forward contracting, and spreading sales. Journal of Agricultural and Applied Economics, 41, 107–123.
Walker T S, Jodha N S. 1986. How small farm households adapt to risk. In: Hazell P, Pomareda C, Valdes A, eds., Crop Insurancefor Agricultural Development, Baltimore, Johns Hopkins, MD. pp. 17–34.
World Bank. 2011. Weather index insurance for agriculture: guidance for development practitioners. Agriculture and Rural Development Discussion Paper 50.
Yamane T. 1967. Problems to Accompany Statistics: An Introduction Analysis. Harper & Row, New York, USA.
Zulfiqar F, Ullah R, Abid M, Hussain A. 2016. Cotton production under risk: A simultaneous adoption of risk coping tools. Natural Hazards, 84, 959–974.
|
| No Suggested Reading articles found! |
|
|
Viewed |
|
|
|
Full text
|
|
|
|
|
Abstract
|
|
|
|
|
Cited |
|
|
|
|
| |
Shared |
|
|
|
|
| |
Discussed |
|
|
|
|
