Risk perception and management in smallholder dairy farming in Tigray, Northern Ethiopia

Abstract

Empirical studies on smallholder dairy farmers’ risk perceptions and management strategies have still received little attention in agricultural research of developing countries. This study focuses on farmers’ risk perception and management strategies of smallholder dairy farms in urban and peri-urban areas of Tigray in northern Ethiopia. Based on data collected from a sample of 304 smallholder dairy farm households, we used descriptive statistics for analyzing farmers’ risk attitude and factor analysis for analyzing and classifying risk sources and management strategies. The majority of dairy farmers considered themselves risk takers towards farm decision that may have a positive impact on technology adoption. Factor analysis identified technological, price/market, production, financial, human, and institutional factor as major sources of risks. In addition, factor analysis indicates that disease reduction, diversification, financial management, and market network are perceived as the most effective risk management strategies. Our findings indicate that perceptions of risk and management strategies are farmer-specific; therefore, policy-makers need to consider tailor-made strategies that would address farmers’ individual motives to manage risks and shocks.