Determining Risk Attitudes of Paddy Farmers in KETARA Granary, Malaysia

Abstract

Paddy and rice industry has been an important agricultural sub-sector to the economy even prior to the independence. Despite heavy government investments in the forms of infrastructure development, provision of input and price subsidies, to enhance the growth of paddy and rice industry, paddy production faces numerous risks. This study examines paddy farmers' attitudes towards risk. Data were collected via personal interview in North Terengganu Integrated Agriculture Development (Ketara) Terengganu Malaysia, as the study area. The purpose of the study is to develop a scale for assessing risk attitudes of paddy farmers. The study used a standard questionnaire to elucidate information pertaining to demographic and risk attitudes. Respondents were asked to respond to 47 statements about managing risk, using Likert scales as the measurement. A total of 235 farmers were surveyed. The set of 47 statements on how farmers manage risks were included to develop the final refined scale of risk attitude statements. Reliability analysis indicates which statements contribute in explaining the risk attitudes and by deleting the statements will affect the reflection of risk attitudes. Cronbach's coefficient alpha was employed to evaluate the degree of communal variation of risk attitudinal scale. From 47 statements, the analysis established a refined 24 items scale which can be applied to measure the risk attitude of paddy farmers in the study area. The refined 24 item scale has the levels of communal variation of 73% caused by risk attitude, which is in an acceptable alpha Cronbach range. The further study on the 24-items refined scale of paddy farmer's risk attitudes revealed that farmers in Ketara are slightly to risk seeking than a risk neutral person.