Risk Perception and Management in Smallholder Vegetable Farming in Eastern Ethiopia

Abstract

This study examines vegetable producing farmers' risk perception and management strategies. Using survey data collected from 385 smallholder vegetable farmers from East Hararghe zone of Oromia region of Ethiopia, descriptive statistics and factor analysis were used for analyzing farmers risk attitude, classifying risk sources and management strategies. The analysis of risk attitude indicated that the majority of vegetable farmers considered themselves to be risk-takers towards important farm decisions which would help in the adoption of risk management strategies. The result of factor analysis identified low profitability, energy inaccessibility, production, price variability, human / social and institutional factors as principal sources of risk. Moreover, factor analysis also identified production management, loss minimizing and diversification as risk management strategies adopted by smallholder vegetable farmers. Policy makers should focus on enhancing the profitability of smallholder vegetable farmers, stabilizing input and output price, managing production risk, expanding energy access and facilitating the provision of necessary farm inputs. Moreover, it is also necessary to make the operation of cooperatives/unions accountable and their input provision fair and efficient.