Researchers from Department of Agricultural Economics Provide Details of New Studies and Findings in the Area of Risk Management (Risk Aversion and Perception of Farmers about Endogenous Risks: An Empirical Study for Maize Producers in Awi …): Risk Management

Insurance Daily News

2023 MAR 14 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Investigators publish new report on risk management. According to news reporting out of the Department of Agricultural Economics by NewsRx editors, research stated, “Agriculture is a risky business that is subject to endogenous risks. Endogenous risks caused by input utilization, input affordability and input availability may prove detrimental to the production potential of farmers.”

Our news reporters obtained a quote from the research from Department of Agricultural Economics: “The study was aimed at examining the risk perception, risk aversion and risk management strategies of maize producers in Awi zone, which is found in the northwest part of Ethiopia. The study involved 343 respondents who produced maize under risk. Descriptive statistics, a seven-point Likert scale, the observed economic behaviour method, factor analysis and a seemingly unrelated regression model were used to process the data. The results showed that farmers have different perceptions of the endogenous risk associated with input availability and input affordability which has a different probability of occurrence and severity of damage. The observed economic behaviour method showed that farmers in the area also have different risk aversion behaviours: about 7.29% of the respondents in the study area have high risk aversion attitudes, while about 30.61% have medium risk aversion attitudes and 62.10% of them have low risk aversion attitudes. The seemingly unrelated regression model output showed that farmers’ economic, social, demographic and institutional factors, as well as their risk behaviour, determine the risk management strategies that they employ. Maize farmers in the area applied human risk management strategies, production risk management strategies, diversification, financial risk management strategies and marketing risk management strategies to tackle the endogenous risks in the area.”

According to the news editors, the research concluded: “It was deduced that maize farmers have a risk averse behaviour even if their risk aversion levels differ based on the scope of the management strategies that they employ to combat risk. Following the finding of the study, a holistic approach to risk management that encompasses all actors, such as farmers, researchers, extension services and financial institutions should be involved to make the appropriate interventions.”

For more information on this research see: Risk Aversion and Perception of Farmers about Endogenous Risks: An Empirical Study for Maize Producers in Awi Zone, Amhara Region of Ethiopia. Journal of Risk and Financial Management, 2023,16(87):87. (Journal of Risk and Financial Management - http://www.mdpi.com/journal/jrfm). The publisher for Journal of Risk and Financial Management is MDPI AG.

A free version of this journal article is available at https://doi.org/10.3390/jrfm16020087.

Our news journalists report that more information may be obtained by contacting Yohannes Girma, Department of Agricultural Economics, Injibara University, Injibara P.O. Box 40, Ethiopia. Additional authors for this research include Berhanu Kuma, Amsalu Bedemo.