Managing farm-centric risks in agricultural production at the flood-prone locations of Khyber Pakhtunkhwa, Pakistan

Abstract

The agriculture sector in Pakistan is confronted with massive floods and other climate-induced disasters. Resultantly, the farmers are compelled to adopt several risk-management activities to cope with these risks. Therefore, the study aims to explore the risk management tools and their association with farmers’ risk perception, risk-averse attitude, and other socio-economic factors. We collected data from 200 respondents from two districts in Khyber Pakhtunkhwa. The study employed a multivariate probit model to investigate the association among dependent variables (risk management tools) and explanatory variables. Findings indicated that floods and heavy rains were not the sources of risk for most of the large farmers. The majority of small farmers were risk-averse. The multivariate probit model results exposed that farmers' age, their risk perception about the heavy rains, and the size of landholding were positively associated with the adoption of assets depletion as a risk management tool. Farmers’ age, education, off-farm income, and farmers’ risk-averse attitude were positive, while the farming experience was negatively associated with consumption reduction. Moreover, farming experience, risk perception about the floods and heavy rains, and risk-averse attitude are positively associated with the adoption of diversification. Farmers in the study area were vulnerable, and they were relying on traditional tools of risk management. Hence, the government is suggested extending agricultural credit and crop insurance facilities to these farmers.