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Risk perceptions and management strategies by smallholder farmers in KwaZulu-Natal Province, South Africa

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  • Kisaka-Lwayo, Maggie
  • Obi, Ajuruchukwu
Abstract
Risk is a central issue in rural areas that affects many different aspects of people’s livelihoods in the developing world. Unless well managed, risks in agriculture can slow development and hinder poverty reduction. Farmers’ perceptions of and responses to risk are therefore important in understanding their risk behaviour. This paper examines risk perceptions and management strategies using field data collected from 200 smallholder rural farmers. The relationships between various socioeconomic characteristics and perceived sources of risk were also examined. In general, price, production and financial risks were perceived as the most important sources of risk. Using Principal Components Analysis, seven principal components (PCs) that explained 66.13% of the variation were extracted. Socio economic factors identified to have a significant relationship with the various sources of risk are age, gender, education, location, information access and risk-taking ability. The most important traditional risk management strategies used by the surveyed farmers were identified as crop diversification, precautionary savings and participating in social networks. The result of this study provides useful insights for policy makers, advisers, developers and sellers of risk management instruments.

Suggested Citation

  • Kisaka-Lwayo, Maggie & Obi, Ajuruchukwu, 2012. "Risk perceptions and management strategies by smallholder farmers in KwaZulu-Natal Province, South Africa," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 1(3), pages 1-12.
    • Handle: RePEc:ags:ijameu:149748
    DOI: 10.22004/ag.econ.149748
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    References listed on IDEAS

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    Cited by:

    1. K M Mehedi Adnan & Liu Ying & Swati Anindita Sarker & Muhammad Hafeez & Amar Razzaq & Muhammad Haseeb Raza, 2018. "Adoption of Contract Farming and Precautionary Savings to Manage the Catastrophic Risk of Maize Farming: Evidence from Bangladesh," Sustainability, MDPI, vol. 11(1), pages 1-19, December.
    2. Yohana James Mgale & Yan Yunxian, 2020. "Marketing efficiency and determinants of marketing channel choice by rice farmers in rural Tanzania: Evidence from Mbeya region, Tanzania," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1239-1259, October.
    3. Yohannes Girma & Berhanu Kuma & Amsalu Bedemo, 2023. "Risk Aversion and Perception of Farmers about Endogenous Risks: An Empirical Study for Maize Producers in Awi Zone, Amhara Region of Ethiopia," JRFM, MDPI, vol. 16(2), pages 1-29, February.
    4. Huet, E.K. & Adam, M. & Giller, K.E. & Descheemaeker, K., 2020. "Diversity in perception and management of farming risks in southern Mali," Agricultural Systems, Elsevier, vol. 184(C).
    5. Kabir, Md. Jahangir & Cramb, Rob & Alauddin, Mohammad & Gaydon, Donald S., 2019. "Farmers’ perceptions and management of risk in rice-based farming systems of south-west coastal Bangladesh," Land Use Policy, Elsevier, vol. 86(C), pages 177-188.
    6. Thi Tam Duong & Tom Brewer & Jo Luck & Kerstin Zander, 2019. "A Global Review of Farmers’ Perceptions of Agricultural Risks and Risk Management Strategies," Agriculture, MDPI, vol. 9(1), pages 1-16, January.
    7. Vitalii Nitsenko & Abbas Mardani & Justas Streimikis & Mykola Ishchenko & Marina Chaikovsky & Svitlana Stoyanovakoval & Ruzanna Arutiunian, 2019. "Automatic Information System of Risk Assessment for Agricultural Enterprises of Ukraine," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 15(2), pages 139-152.
    8. Wustro, Ivo & Conradie, Beatrice, 2019. "How stable are farmers’ risk perceptions? A follow-up study of one community in the Karoo," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 59(1), September.

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    Risk and Uncertainty;

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