Smallholder Farmers’ Formal Risk Management Services: Evidence from Southeast Nigeria

Augustine Odinakachukwu Ejiogu,Nneka Maris Chidiebere-Mark,Ebenezer Okechukwu Emeribe

doi:10.22158/ijafs.v4n1p46

Augustine Odinakachukwu Ejiogu, Nneka Maris Chidiebere-Mark + Show 1 more

Open Access

https://doi.org/10.22158/ijafs.v4n1p46

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Abstract

Smallholder farmers’ livelihood activities are mainly centred on agricultural investments which are inherently risky. The risky nature of agricultural activities is further complicated by the fact that resource-poor smallholder farmers operate in an environment with weak markets and less than satisfactory financial services. Formal risk management services hold out the expected external intervention for aiding the resource-poor farmers break out of the vicious circle of poverty. Not all formal risk management services are actually tailored to the scope the smallholder farmers. This study therefore set out to examine the formal risk management services employed by the smallholder farmers in southeast Nigeria. A multi-stage sampling technique was adopted in selecting respondents. Out of 504 smallholder farmers selected, data were successfully collected from 494. Functional analysis, descriptive and inferential statistics were used in data analysis. Results showed that 37% of the smallholder farmers employed formal risk management services; 17.68% subscribed to and utilized direct formal risk management services provided by the Nigerian Agricultural Insurance Corporation. There was a sufficiently deficient use of formal risk management services by smallholder farmers in Southeast Nigeria. It is recommended that the Nigerian Agricultural Insurance Corporation should tailor its services to the needs of the smallholder farmers.

Highlights

A characteristic feature of the agricultural production system in Nigeria is that a disproportionately large fraction of the agricultural output is produced by smallholder farmers (Mgbenka et al, 2015)
Against the backdrop of the need for external intervention tailored to the needs of the smallholder farmers, this study provides the empirical evidence of formal risk management services employed by the smallholder farmers in southeast Nigeria
Poor access to insurance cover, and lack of awareness of the existence of formal risk management services as barriers to taking up Formal Risk Management Services (FRMS) were each stated by 56.27% of the smallholder farmers

Summary

Introduction

A characteristic feature of the agricultural production system in Nigeria is that a disproportionately large fraction of the agricultural output is produced by smallholder farmers (Mgbenka et al, 2015). It is established that agriculture, unlike other investment activities, is exposed to a wide variety of risks and uncertainties ranging from input supply and prices, agricultural yield, post-harvest losses, and product prices to the vagaries of weather, pests, and diseases (Anderson et al, 2017). Other natural hazards such as floods and fire outbreaks are important regarding their perilous impact on agricultural enterprises. This study was designed to examine the Formal Risk Management Services (FRMS) employed by the smallholder farmers in southeast Nigeria

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Discussion

Conclusion