Off-farm Investments Research Articles

Analysis of risk management practices among cassava farmers in Ideato south local government area, Imo State, Nigeria

Risks are pervasive and inescapable in agriculture. There has been great concern about the problems posed by risk in agriculture. This apprehension stems from the harmful effects of risk on the output of farmers in Nigeria. This study examines risk management practices among cassava farmers in Ideato South Local Government Area (LGA) of Imo State, Nigeria. It specifically sought to identify the types of risks encountered, management practices adopted, and socio-demographic factors that influence cassava yields. The study used purposive and multistage sampling techniques to sample 90 cassava farmers from seven autonomous communities in Ideato South LGA. Data were collected using a structured questionnaire. Inferential and descriptive statistics such as multiple regression model, mean, percentage frequency counts were used in data analysis. Findings showed that poor yield due to bad weather conditions and inadequate transportation systems were the most intense risks faced by cassava farmers. The major farmers’ risk management strategies in order of importance were mixed cropping, mixed farming, off-farm investment and Insurance. Insurance was least ranked mainly because the farmers lacked adequate information on the insurance benefits. Off-farm income and farming experience were the socio-demographic variables that positively influenced the output of cassava, implying that increase in these variables would increase the output of cassava. On the other hand, age as a variable was significant but had adverse effects on output. The findings show that risk cannot be eliminated in the agricultural production process because agricultural production has a high dependence on the vagaries of nature. The study recommends that farmers be encouraged to diversify their farming operations through a diversification process where the farmers produce several products rather than cassava, a single product. The use of improved cassava varieties should be encouraged. Additionally, farmers should increase their involvement in more income-generating activities to plummet the risk among cassava producers. Key words: Risk, Management, Cassava, production, farmers, Ideato South LGA, regression model, Nigeria

Livelihood and Income Diversification Assessment in Northern Nigeria: Evidence from Sudano-Sahelian Region

Agriculture and other income-generating activities in the Sudano-Sahelian region face many natural and human constraints that affect households' economic activities and livelihood development over time. Stratified and simple random sampling considered 1,200 households across four (4) Sudano-Sahelian States with 300 respondents each from Kano, Jigawa, Bauchi and Gombe. Primary data were collected using a structured questionnaire to information on livelihood and income generating activities. The findings regarding household demographics indicated active age, moderate farming experience and average income, respectively. The results further show overall access to credit, market, extension contact and cooperative participation of 14.68%%, 73.21%, 56.90% and 63.28%, respectively. Ownership and the capital problem have been the major constraints to land access for crop production. The majority of the household goes into multiple income-generating activities with a shortage of planning and guidance on the value of income diversification. The COVID-19 pandemic has resulted in high income and livelihood deterioration of households' remittances from internal and external sources. The significant variable that affects income diversification includes education, off-farm income, access to credit, and output volume. The development of households and community requires multiple income alternatives for improved livelihood in saving mobilisation and investment opportunities. Households in the Sudano-Sahelian region engaged in agriculture and additional income sources that must be strengthened to support income generation. The study further concluded the existence of potential income diversification alternatives in rural including multiple cropping, off-farm investment, and non-farm income potentials. COVID-19 period posed a serious constraint to households, particularly deterioration in income sources, making livelihood activities more difficult. Access to credit, educational status, off-farm income generation, and output volume are the strongest determinants of income diversification in the Sudano-Sahelian region. The study recommends the need for government and development agencies to improve the quality and availability of rural infrastructural facilities (road, markets, electricity) in the study area to help rural households sustain their investment and engage in sustainable livelihood activities. The development of essential programs on enterprise support and business development service is essential to strengthen livelihood and income diversification opportunities. Strengthening cooperative participation and awareness creation on savings and investment opportunities is essential for sustainable livelihood, implying the need for collective actions, enhancing risk strategies, and influencing government policies for livelihood development.

A Model of Farm Transition Planning for the U.S. Plains

Farm transition planning continues to be a significant challenge for U.S. agricultural owner/producers. Past and ongoing research points to an aging farm population with little or no planning to transition farms to succeeding farming family members, despite documented goals of continued family ownership and operation. This study developed and analyzed alternative farm asset transition strategies using a representative farm for Oklahoma. The simulations considered equity issues, family living requirements, and cash flow pre- and post-transition. Strategies analyzed considered off-farm investments and life insurance tools to even bequests between an on-farm and an off-farm heir, and also modeled splitting inheritance into an operating entity that owns machinery and other operating assets and a landholding entity that leases real estate to the on-farm heir. The simulations assumed a 20-year transition period. Results indicate that early planning is essential for success. In addition, the use of life insurance tools and/or the implementation of equitable, but unequal treatment of heirs improve the likelihood of successful farm transition between generations.

Revisiting the diversification and insurance relationship: Differences between on– and off-farm strategies

Crop insurance is an important instrument for farmers to cope with climate risks. Yet, also, diversification plays a crucial role. The use of crop insurance and diversification is interrelated. For example, an increasing support and uptake of insurance solutions may discourage farmers to take diversification measures on the farm, given that they now have an insurance dealing with risks. This may have unintended consequences, such as biodiversity decline.We examine the relationships between seven different kinds of income diversification and the uptake of crop insurance. Theoretically, both substitutive and complementary relationships are possible. The reason is that, depending on their preferences and constraints, farmers choose income bundles that optimally balance profits and risks. Here we provide the first systematic empirical examination of this issue. Our analysis is based on our own survey data from 1176 Swiss fruit growers. We consider on– and off-farm diversification strategies, namely inter-varietal diversity, agro-tourism, processing and direct marketing of products, creation of financial reserves for bad times, forestry work, off-farm investment, off-farm income and their association with insurance uptake. In line with our theoretical reasoning, we do indeed find both substitutive and complementary relationships. In general, on-farm diversification is associated with positive insurance demand, whereas off-farm diversification has a negative association.

Determining of Risk Sources and Risk Management Strategies in Dairy Farms: A Case of Çanakkale Province

This study was aimed to determine farmers’ risk sources and risk management strategies in dairy cattle farms in Canakkale Province. Data were obtained from 302 farms selected by stratified random sampling method from dairy farms in Biga and Can districts of Canakkale province in Turkey between May 2017 and September 2017. Descriptive statistics and factor analysis were used to analyze the data. The results of this study show that the most important risk source for farmers was lack of credit availability. This risk was followed by inadequacy of artificial insemination and increase in debt amount. Parasite control was the most important risk management for farmers. This was followed by off-farm work, off-farm investment and on-farm measures. As a solution to the lack of credit availability, it should be provided to ease of repayment in credit use and to inceasing opportunities to loan use with low interest rate of farmers. In terms of parasite control in farms, it is important to the use of regularly parasitic drugs and determining of an effective parasite control program. As a result, it is expected to contribute to farmers and agricultural policy makers of the findings of this research.

English

Risk is a major issue that affects so many aspects of people’s livelihoods in the developing world. It is imminent in all management decisions of agricultural systems, as a result of fluctuations in price, yield and resource uncertainty. Hence, uncertainty, risk aversion and management strategies were investigated among the cocoa farmers in Osun State, Nigeria. Primary data employed in the study were obtained from 102 cocoa farmers selected through a multi-stage sampling technique. Data were analyzed using descriptive statistics and multivariate probit model. Results showed that farmers view rainfall as the most important source of risk and uncertainty and majority of the farmers utilized mixed cropping as a risk management strategy in their farms. The result of multivariate probit model indicated that age of farmer negatively influenced the probability of precautionary savings while household number and access to information determined their choice of social network as risk management decisions used in the farms. The study recommends government policies and institutional mechanisms that reduce risk (such as crop insurance) and those that facilitate farmers’ access to assets like off-farm investments in order to manage risks. Key words: Livelihoods, precautionary savings, social network, mixed cropping, agricultural systems.

Five reasons why it is difficult to talk to Australian farmers about the impacts of, and their adaptation to, climate change

Some recent funding programmes in Australia on climate adaptation have expected active engagement with farmers in research projects. Based on our direct experience with 30 farmers and their advisors, we list five reasons why it is difficult to gain traction with farmers in discussing the likely impacts of climate change on their farms and the possible adaptation options they should be considering in preparation for a future changed climate. The reasons concern the slow and uncertain trajectory for changes in climate relative to the time horizon for farm decision-making, when set against short-term fluctuations in weather, prices, costs and government policy. Farmers have optimism for ongoing technological progress keeping abreast of any negative impacts of climate on their production. As one moves from incremental to transformational adaptation options, biophysical research has less to offer because decisions become based more on business structure, portfolio management, off-farm investments and geographical diversification. Some farmers also doubt the intentions of climate change researchers and are wary of anything they may have to offer. We propose there is an actionable decision space where agricultural science and economics can contribute to meaningful analysis of impacts and adaptation to climate change by farmers. This will involve emphasising the principles of farm management rather than defining optimal farm plans; the use of scenario planning to explore possible futures in a turbulent environment for farming; a focus on short-term adjustments as a path to longer term adaptation; re-gaining the trust of some farmers towards climate change scientists through better communication strategies; and understanding the linkages between adaptation options and enabling factors and technologies.

Risk management strategies of cattle farmers in Namibia - Case study from Omaheke and Otjozondjupa region.

A sample survey of 269 questionnaires was administered to commercial and communal cattle farmers in the two regions of Namibia, (Omaheke and Otjozondjupa) to identify factors which affect the adoption of livestock insurance. About 205 questionnaires were collected and the 64 questionnaires were regarded as irregular responses or not returned. A computer software programme was used to generate a logit model. This model was used to test the alternative risk management strategies used by farmers in the two regions. In addition, this research took into account the off-farm investment and farm enterprise diversification. The logit model produced results that are statistically significant and negative estimated coefficient of the household characteristics. This implies that the Namibian livestock industry growth can be achieved with improved education, experience and support from other income as way of diversifying risk strategy. However, the positive relationship of variables FTHEFT and PROD implies the sector is suffering from continuous risk of theft and requires quality production to get market access. This necessitates the need for policy makers and insurers to design programme to educate farmers so that they can adopt proper risk management tools and thereby increase their participation in insurance. The low level of education of many farmers in the study area may have negatively influenced the decision to purchase livestock insurance in addition to other factors.

Small ruminant production in smallholder and pastoral/extensive farming systems in Kenya

A survey was conducted by way of personal interviews with 562 respondents comprising 459 farmers and 103 butchers/traders in selected districts in the central and western parts of Kenya, consisting of three predominantly smallholder and four predominantly pastoral/extensive districts. The study aimed to provide a better understanding of smallholder and pastoral/extensive sheep and goat farming systems in the tropics, by taking Kenya as an example. The results showed that 58% of the pastoral/extensive farmers and 46% of the smallholders indicated livestock as their main activity. Small ruminants ranked closely behind cattle in their importance. Thirty-four percent of the households kept only sheep, 18% only goats and 48% both species. The survey demonstrated the relative importance to the farmers of tangible benefits of farming sheep and goats (e.g., regular cash income, meat, manure and, in the case of goats, milk) versus intangible benefits (e.g., the role of small ruminants as an insurance against emergencies). Regular cash income and an insurance against emergencies were the highest priorities. Seventy-eight percent of the farmers reported animal sales over the previous 12 months of the survey date. Of these sales, the income was spent on school fees (32%), purchase of food (22%), farm investment (18%), medical expenses (10%), off-farm investment (9%), social activities (5%) and re-stocking (4%). Indigenous genotypes were predominant among the pastoralists and mixed crosses predominant among the smallholders. A range of traits: growth rate, body size, body shape, drought tolerance, meat quality, fertility, disease and heat tolerance, prolificacy and temperament were all considered important for both sheep and goats in both farming systems and across the different genotypes. Compared with other pure breeds, the Red Maasai sheep and the Small East African goats were rated poorly in terms of body size, body shape, growth and fertility, but highly in terms of drought and (for the Red Maasai) heat tolerance by both smallholder and pastoralist farmers. In general, crosses were perceived less favourably than indigenous pure breeds. Body size and performance ranked as the most important traits in the choice of breeding males. Approximately half the farmers inherited their males, reared them on the farm and kept them for an average of 2–3 years. Uncontrolled mating within the household's flock was predominant in both farming systems. Over 98% of the farmers reported incidence of disease, especially pneumonia (in pastoral/extensive areas), helminthosis, tick-borne diseases, diarrhoea and foot-rot. Over 95% of the farmers fed supplements in both dry and wet seasons. Pure exotic and indigenous × exotic genotypes fetched higher prices than indigenous genotypes due to their heavier body weight. In conclusion, the foregoing issues need attention in genetic improvement programmes, with more emphasis on the conservation and utilisation of indigenous small ruminant genotypes.

An Empirical Analysis of Internet Use by U.S. Farmers

The Internet may reduce constraints on a farmer's ability to receive and manage information, regardless of where the farm is located or when the information is used. Using a count data estimation procedure, this study attempts to examine the key farm, operator, regional, and household characteristics that influence the number of Internet applications used by farm households. Findings indicate that educational level of the farm operator, farm size, farm diversification, off-farm income, off-farm investments, and regional location of the farm have a significant impact on the number of Internet applications used.

FACTORS INFLUENCING ADOPTION OF LIVESTOCK INSURANCE BY COMMERCIAL DAIRY FARMERS IN THREE ZOBATAT OF ERITREA

A sample survey of 74 commercial dairy farmers was conducted between November 2002 and February 2003 in three Zobatat (zones) of Eritrea to identify factors that affect the adoption of livestock insurance. The results of a logit model indicate that formal education of the farmer and the farmer's awareness of livestock insurance increase the probability of insurance adoption, whereas farming experience, poor location and use of alternative risk management strategies, such as off-farm investments and farm enterprise diversification, reduce the probability of livestock insurance adoption. Further insight into the factors influencing farmers' adoption of livestock insurance may assist policy makers and the National Insurance Corporation of Eritrea in their future plans. Results of this study have some policy implications, such as the need for a variable rather than fixed insurance premium, improving the know-how of farmers concerning risk assessment, improving Zobatat' infrastructure and a need of a thorough study to be conducted on the demand for agricultural insurance in Eritrea.

Economic trends and drivers affecting the Wheatbelt of Western Australia to 2030

Most of the farm businesses in Western Australia remain profitable, with rates of return comparable with non-farming sectors. However, there is continuing pressure on poor-performing farms, as well as a range of social pressures, which mean that there will continue to be a steady fall in the number of farms in the Wheatbelt of Western Australia. Most remaining farms will continue to be profitable, due in significant part to successful research and development (R&D). Farms will continue to be highly diversified. We expect the real prices of most agricultural commodities to continue to fall, although we note predictions for meat prices to rise in the medium to long-term. Key uncertainties about price trends include: future levels of agricultural protection in developed counties; the levels of price premia for ‘green’ products; the rates of productivity improvement for agriculture in developing countries; and energy prices. Key uncertainties about R&D/technology include the availability of funds for R&D, and the contributions of biotechnologies. Use of information technologies will increase, although not as much as some expect, and in some cases driven by shortages of skilled farm labour rather than production advantages. The fundamental elements of managing a farm have altered little, and we do not expect them to change in the next 30 years. Successful farm management will continue to depend largely on good decisions about the farm’s enterprise mix, machinery replacement, land leasing or purchase, labour hiring, and off-farm investments. Agricultural R&D should continue to address a diversified portfolio of issues, including attention to environmental issues, but not neglecting the need for ongoing productivity improvements in agriculture.

Effects of Government Program Payments on Farm Portfolio Diversification

The substitution of capital for labor promotes specialization and results in larger farms capturing size economies. Conversely, when production is labor intensive, farms tend to be smaller and more diversified. Robison and Barry concluded that specialization leads to significant economies of scale that must be expected in order to offset the risk reduction advantage of diversification. In diversifying, the farm sacrifices economies of scale, but tends to stabilize returns at a lower level with the benefit of reduced risk. White and Irwin found that there may exist linkages between size and outputspecialization in United States agriculture. In addition, Pope and Prescott concluded, from a survey of crop farms in California, that as farm firms become wealthier, farms place less emphasis on diversification. While management expertise and many technological advances tend to favor specialization, income uncertainty due to yield and price variability may favor diversification. Such diversification may be viewed as a portfolio investment problem including investment in onfarm enterprise activities and investments off the farm in stock and other financial securities. Government acreage reduction programs also complicate decisions about the ideal farmenterprise activity mix and its relationship to offfarm investments. Further, adjustments in the remainder of the farm portfolio given the availability of government acreage reduction program participation, are not well understood. These issues motivate an analysis of farm versus off-farm asset investment strategies, and the impact of government acreage reduction program payments on risk-efficient investment portfolios.

Cash operating income and liquidity management for feeder cattle operations (1995)

Net cash flow measures the amount of cash remaining after all cash expense obligations are satisfied. This cash is available for additional farm investment, off-farm investment, family living, and additional debt repayment. A 5-year, average, monthly, cash-flow statement was used to determine net cash flow for 18 feeder cattle farms .Results indicate that excess cash was used primarily to invest in equipment, vehicles, and nonfarm assets. Investments in buildings increased moderately over the study period, while investment in land was minimal.

The Effects of Including Bankruptcy on Dynamic Investment Decisions

This article evaluates the effects of including the costs of bankruptcy in a dynamic model of off-farm investment decisions using a stochastic dynamic programming (SDP) model which incorporates the stochastic dynamic nature of investment returns and the interrelationships between financial structure and investment decisions. Our results suggest that in the presence of bankruptcy, optimal investment decisions are affected by financial structure and financial market conditions. Ignoring bankruptcy costs in determining investment decisions results in a high probability of bankruptcy.

USE OF INFORMATION AND COMPUTERS BY EASTERN CAPE DAIRY FARMERS / Gebruik van inligting en rekenaars deur Oos-Kaaplandse suiwelboere

A survey conducted amongst 26 dairy farmers in the Eastern Cape was aimed at determining their sources and costs of information, and use of computers. Respondents spent an average of R1336 per year on information sources and rated financial consultants and own farm records highest for usefulness in decisions. A regression analysis revealed the following factors to be important in influencing the use of consultants: The farmers' perceived value of own farm records in production decisions; self-rating of management skills in overall farm management; computer use; degree of farm diversification; off-farm investment, and farmer's age. Of the respondents, 73.percent used computers in their farm business. Computers were rated as ‘providing better information’ and ‘saved time’ compared to ‘hand’ records. Preparing financial statements and farm planning were the most highly rated applications of the computer. A multivariate logit analysis suggested the following factors to have a significant impact on computer us...

Use and rating of computers by large-scale U.S. Cornbelt farmers

Eighty percent of the 80 respondents attending the 1991 Top Farmer Crop Workshop at Purdue University were using computers. This level of adoption is consistent with predictions based on earlier studies for farmers of this age, educational level, and farm size. Gross farm sales, debt-asset ratio, off-farm investments and the individual's rating of information sources and management skills were some of the additional factors affecting adoption among these farmers. Computers were rated most useful for the management activities of business record-keeping and business planning. These activities and crop record-keeping are the primary uses, in terms of time, of computers by most farmers.

Eucalyptus planting as a response to farm management problems faced by ?on-site? and ?off-site? farmers

The success of the ‘green revolution’ in the fertile and agriculturally surplus plains of western U.P. in north India led to labour shortages, and increased opportunities for off-farm investments by landowners, requiring their time and energies away from farming. These changes impelled landowners to adopt strategies which saved family labour and supervision time in cultivation. Many ‘off-site’ farmers, and such ‘on-site’ farmers who had a high ratio of owned land to male members in the family, resorted to tree farming, mainly eucalyptus. On the other hand, farmers in eastern U.P., with small holdings, subsistence orientation and cheap labour, showed little enthusiasm for planting eucalyptus. Based on field investigation in six villages, this paper argues that woodlot planting of eucalyptus emerged as an attractive option for landowners facing management and labour problems in western U.P., as tree farming allowed saving in family labour time and permitted greater flexibility in the timing of operations. About 60% of the total trees planted were by this category of management-constrained farmers.

Tax Reform Impacts on Agriculture: Discussion

Anyone who has followed the recent literature on the effects of the new tax bill has seen the difficulties in analysis of its provisions. These bring significant changes in the tax environment for agricultural producers, especially in the treatment of capital. I congratulate the authors of both of these papers for their willingness to grapple with the complexities of the Tax Recovery Act (TRA) and for their success in providing us with some assessments of its important effects. The paper by Hanson and Bertelsen includes an informative discussion of the provisions of the TRA. They also note the emphasis on reducing the differences between pre-tax and after-tax evaluation of investments. There is a tendency in the literature to call this increased efficiency; this is appropriate only if the old provisions were the outcome of rentseeking or public policy goals which are no longer present. The distinction in the bill between active and passive management is consistent with this objective. How important it will be depends on how closely the Internal Revenue Service monitors the requirement. Perhaps we will see less of a reduction in off-farm investment than an increase in phone calls from off-farm investors to farm managers. Hanson and Bertelsen also speculate that an increased supply elasticity might result from the TRA, price playing a larger role and tax incentives a smaller one in producers' decisions. This will prove important to the extent that price fluctuations in some commodity markets are lessened by increased supply responses. I agree with their conclusion that tax management is a relatively low priority for many producers these days, compared with ensuring farm survival. However, as both papers made clear, tax treatment has had much to do with the pattern of investment in agriculture, and this will continue beyond the present financial crisis. In this regard, the exemption from taxes of loans forgiven as part of debt restructuring is particularly timely. I hope that we will see some studies soon which quantify the likely effects on financially stressed producers. Depending on one's perspective, this provision either acts along with commodity programs to help producers through a period of low prices and high interest rates or it is something which slows an overdue reduction of capacity in the agricultural sector. Lins, Offutt, and Richardson deal primarily with distributional impacts of the new tax law, both how agricultural producers fare relative to the nonagricultural sector and how various producers are affected. This is another very clear and informative description of the effects of the important provisions of the TRA. Their discussion of each provision and its effects is very helpful. The simulations they report reinforce these qualitative effects, though it is difficult to infer from them any magnitudes for the likely aggregate effects. The main problem is one that Hanson and Bertelsen noted in their work; the effects of the tax bill on producer behavior are not built into such simulations. It was necessary for the authors to make assumptions about land prices, output levels, and product prices. These simulations then tell us how a particular producer fares under two alterative tax codes, but they do not indicate the eventual new equilibrium in the farm sector. This is particularly important in attempting to analyze the effects on livestock commodity markets, for instance, of fewer non-farm investors engaged in production for tax purposes. Lins, Offutt, and Richardson have done a good job on the first part of the analysis of the TRA-holding behavior constant, are there any important effects? Quantitative analyses with a new equilibrium for the agricultural sector will be necessary before all of the effects are known.

Agricultural Pollution: The Economics of Coordination

Institutional design is the major obstacle in reducing agricultural pollution. Cost sharing is being proposed for encouraging best-management practices. Two models, one representing an agricultural firm and the other a management agency, are used to illustrate the flexibility and analytic capacity that agencies must have in determining the cost-sharing rules that apply to on-farm abatement practices. Off-farm investment opportunities should also be considered. If water quality is to be improved, these institutional arrangements will need the capacity to generate information, adapt to changing conditions, and reconcile the conflicting incentives of other programs. 25 references.