Risk and agricultural systems in northern Côte d'Ivoire

Abstract

In the Savannah region of West Africa, the highly variable rainfall and poor soils have been shown to differentially affect the yield potential of various crops. The paper applies a simple risk programming model to assess the effects of price and yield risk on the incomes of smallholder farmers in northern region of Côte d'Ivoire. The analysis showed that by considering price and yield risks, it would be possible for farmers to improve their incomes. Considerable evidence has been gathered to show that smallholder allocative inefficiency is a common place in Côte d'Ivoire. This study also found that farmers were operating at sub-optimal levels. This could be due to several factors, including multiple market failures, lack of information on prices, price and yield risks, labor market search costs or high transaction costs. The results from this paper suggests that when such price series information on the risks of different crops are considered, farmers would be better off re-allocating their cropping to a more optimal cropping plan. In evaluating cropping systems in the Savanna zone it is important to consider not only the yield of alternative crops, but also the yield risk, price risk, and income risk that farmers face in adjusting their cropping patterns. Second, to reduce production risks faced by farmers, emphasis should be placed on yield-stability of technology interventions intended for farmers in this zone. Lastly, policy makers should focus efforts on achieving farm income stabilization for farmers in this zone by: (1) developing effective market price information transmission system; (2) providing low-cost but high-resolution climatic information; and (3) developing risk-management institutions. Unless policy makers improve the availability of information that allows farmers to improve their managerial capacity for making more risk-efficient cropping decisions, it is unlikely that farmers in the zone will be able to cope with the pervasive risks that affect their welfare and livelihoods.