Impact of Socio-Economic Factors on Risk Behaviour of Small Farmers: An Empirical Evidence from Oyo North Agricultural Development Project, Nigeria

A. A. Adubi*

Ahstrrrct: This study csnniincs tlic cstcnt to \vhich incorporation of clicitcd risk attitudcs of farnicrs can hclp in farm planning. It also csplorcs tlic possibil- ity of csplaining risk bchnviour of farnicrs from thcir socio-ccononiic chnrac- tcristics. Age of farnicrs, farm incomc, family sizc, of€ farm incomc and loan procurcmcnt \vcrc found significant in this rcgard.

R&susunze' : Lctudc csaniinc dans qucllc nicsurc la prisc cn coniptc dcs atti- tudcs a risquc niiscs au jour clicz Ics agricultcurs pcut contribucr a la planificntion agricolc. Ellc csplorc dgalcmcnt la possibilitc d'cspliqucr 1c coniportcmcnt a risquc dcs agricultcurs par lcurs caractdristiqucs socio~cononiiqucs. LAgc dcs agriculteurs, Ic rcvcnu agricolc, la taillc dc la faniillc, Ic rcvcnu autrc qu'agricolc ct I'octroi dcs prtts sont jugds importants a cct dgard.

In t rod uclioii

Risk has long bccn rccogniscd as an important fcaturc of tlic cnvironmcnt facing tlic farmer. A dccision is said to bc risky ivlicn its prccisc outcome is not known at tlic time whcn the decision must bc taken. In farm ninnagcnient, such dccisions arc pcrvasivc and oftcn incscapablc. Crops arc planted \vithout pcr- fcct knowlcdgc of tlic wcatlicr or markcts, unprcdictablc economic and political cvcnts may occur, yct a dccision must bc tnkcn. This situation is particularly niorc burdcnsomc to tlic small farmers givcn tlicir ntdimcntary technology and thcsc factors niakc farm rcturns low and unccrtain (MabaIvonku ( 1 986), Atobatclc, (1986)). Sincc thcsc farnicrs doniinatc tlic agricultural production i n most dcvcloping countrics, an undcrstanding of tlic risk factor as it affects thcir production and fnrni dcvclopnicnt is csscntinl for rational planning of individual farms and tlic rural scctor as a \vholc.

* /\clii ig IIcad orRcscarch and CoiisuI1;iiicy a1 tlie National Ccn(rc for 1:coiioiiiic Al~iiiagcitisii~ a i d .+\diiiiiiis-

tralioii (NCEhL\), Ihadaii, Nigeria. The ai i t l ior ackiio\vledgcs tiis financial suppoi1 of tlic Coiiiicil Tor llcvcl- opiiiciil of Economic at id Social llcscarcli i n r\frica (COl>ESlU,\), I laknr Scnsgal. A l m y 1li:iiihs also to tlic rcvicwcrs of this aiiiclc f o r cotisti-uctivc crilicisiiis.

Farmers allocate tlicir rcsourccs bascd on tlicir cspcctation of yield and priccs. If tlicsc cspcctations arc Lvrotig, tlicir rcsourcc allocation will bc less than optimal. In a \vorld diicli conforms to tlic assumption of ncoclassical cconomics, \vIicrc cvcry decision is cspcctcd to bc niadc with perfect kno\vlcdgc and more is alivays prcfcrrcd to less, it is a siinplc niattcr to predict and prc- scribe decision niaking behavior. Oncc \vc relax tlicsc assumptions and intro- duce unccrtaint!. \\it11 respect to the outconics of action clioiccs, tlic decision maker’s behavior cannot bc prcdictcd lvitliout sonic kno\vlcdgc of his pcrccp- tion of the distribution of outconics from availablc action clioiccs, attitude to- \vard risk and prcfcrcncc for additional income. Succcssfiil policies aiiiicd at improving agricultural production must tlicrcforc include consideration of farm- crs’ attitude to\vard risk.

This study csaiiiincs the cstcnt to \vliicli incorporation of attitude to\vard risk i n farm planning help farnicrs to plan for crop production and policy mak- crs to predict farnicrs’ rcsponsc to policy decisions. It provides sonic quantita- tiizc inforination on risk attitudes of farmers under safctj4rst principle and Espcctcd Return-Absolute Dcviation (E-A) critcrion. The relation bctwccn measured risk cocficicnts and socio-cconomic characteristics of the farnicrs \vas csamincd to asccrtain a possible correlation.

D :I 1 a Col I cc t i o 11

The data used for tlic stud!, \vas collected from the Savannah zone of O!,o Statc Agricultural Dcvclopnicnt Project (OYSADEP) i n Nigcria. Primary data \vas collected from 754 wards crcatcd by tlic projcct authorities from tlicsc zones. The survey \vliicli was carried out in 1989/90 using a niulti-stagc strati- fied sampling technique with probability proportional to sizc lvas done using a highly structured qucstionnairc in addition to infortnal discussion \\it11 the rc- spondcnts. Information ivas collected on various aspcct of tcclinology iisc among farmers. Given tlic naturc of the model utilized, secondary data ~ v a s obtained from ADP records, past studies in the study area, and records of tlic Federal Agricultitral Coordinating Unit (FACU) in Nigeria. Thcsc data ivcrc utilized i n forming risk deviation matrix and form tlic basis for clicititig risk cocfficicnts, for the farmers (Scc Adubi, 1993).

Tlic Tarsct-MOTAD model (Tar~ct-Minimization of Total Absolute Dcvia- tion) \\.as utilized i n cliciting risk cocficicnts for tlic farmers. Tlic risk cocfi- cicnt for each farnicr was dcrivcd by calculating tlic standard deviation of his farm plan returns using the Mean Absolittc Deviation dcrivcd from tlic niodcl rcsii 1 t.

Thc T-MOTAD is givcn as:

Mas C X (1)

Subjcct to AX < Bi

T - CCX - y r > 0 (3)

ivlicrc X, A, B, C rcprcscnt activity Icvcl, rcsourcc uscs, rcsourcc availabilitics and gross margin cspcctation rcspcctivcly. T is tlic targct rcturns \vliilc 1-r rcp- rcscnt tlic Total Absolutc Dcviation of tlic formulation. Pr is tlic probability that tlic statc of naturc r will occur. Eq (3) and (4) arc tlic risk constraints of the niodcl (Scc Adubi, (1993)).

Tlicrc arc two stcps in tlic computational proccdurc of tlic niodcl. First, a convciitional lincar progranlniing maximization problcni is fomiulatcd and solvcd to dctcrminc tlic niasiniuni rcturn without risk constraint. This givcs tlic Iiighcst point on tlic risk-rcturn cfficicncy fronticr. Sccond, tlic clcnicnt of risk is forniu- latcd as a niatris of gross margin dcviation from cspcctcd rcturns. Points on the risk cfficicncy fronticr arc obtaincd by dccrcasing tlic valuc of a paranictricnlly in arbitrary dccrcnicnt. Along tlic cficicncy fronticr, tlic T-MOTAD niodcl mini- mizcs tlic nican ncgativc dcviation (MND) for any givcn cspcctcd gross margin (Bcrbcl 1990). Esscntially, this niininiizcs tlic standard dcviation of rcturns to tlic fami nicasurcd by tlic cstiniator:

Standard Deviation = D [xs] 2(s-1)

s = nunibcr of statcs of naturc (ycars)

D = cstiniatcd nican absolutc dcviation of rchirns to tlic farm (Hazcll, 1973)

All variables arc as dcfincd cnrlicr.

Thc standard dcviation of cacli farnicr’s csisting plan f o r m tlic risk attitudc cocfficicnt for tlic farnicr. This is calculatcd as follows. “An csisting plan” was obtaincd for cacli farnicr. This is dcfincd as tlic currcnt farm plan of tlic fnrnicr

bascd on thc tjpc, numbcr and hcctaragcs of crops plantcd for the gro\\ing scason. Risk attitude cocfficicnts ncrc thcn calculatcd for tlic farnicrs bascd on thc risk lcvcl of cntcrpriscs gcncratcd through thc Targct MOTAD model using thc E-A critcrion. Thus k s k attitudc cocficicnt ofa farnicr is the summation i n naira (N) of thc risk lcvcl of cntcrpriscs under his cxisting plan as dctcrniincd from the niodcl using standard deviation as a nicasurc of risk. Thcsc cocff- cicnts wcrc clicitcd from tlic niodcl for farmcrs and related to thc paramctcrs of tlicir socio-economic charactcristics and cnvironincnt through a stcp\visc rc- grcssion niodcl in ordcr to csplain tlic diffcrcntial dcgrcc of risk bchavior among pcasant farnicrs. The farnicrs utilizcd for this purposc wcrc thosc that have had u p to 7 ).cars or morc cspcricticc in farniing. I t is cspcctcd that thcir past cspc- ricncc would havc influcnccd thcir dccision to opcratc thcir prcscnt plan.

The gcncral functional form adoptcd is givcn by:

f(S,, X,,. ..Xi) in ordcr of priority - Y -

\\-licrc

Dcpcndcnt variablc is tlic Estimatcd standard dcvia- tion of tlic farnicr’s cxisting plan in N

- - Y

i‘” socio-ccononiic variablc (i = 1, 2...n) - Xi -

Thc socio-ccononiic variablcs for dctcrtnining farnicrs attitudc to risk in this study arc tlic following:

age of farmer in )cars;

ycars of fomial cducation;

family sizc;

0, I dummy variablc signifjring marital status;

numbcr of adults carning inconic in thc houschold;

ycars of cspcricncc i n farming;

total farm sizc in hcctarcs;

proportion of croppcd Iicctamgc to total farm arca;

Icvcl of off-farm inconic i n N;

RE W E AFRTCATNE DE DEVELOPPEMENT 119

T o - - 0, 1 duiiuny variablc signifying mcnibcrship of a com- niunity group.

Empirical Results

This study hypothcsizcd that risk-inconic prcfcrcnccs of fanncrs vary with thcir cliaractcristics and socio-cconomic cnvironmcnt. Thrcc classcs of vari- ablcs wcrc uscd to dcfinc tlic socio-cconoinic cliaractcristics of tlic pcasant housc- holds in thc study arca. Thc first class of variablcs rclatcd to tlic naturc of the Houschold hcad. Thcsc variablcs includcd Age, Farming Ycars, Education and Family sizc. Thc sccond sct of variablcs rcprcscntcd tlic incomc gcncrating op- portunitics of the pcasant houschold and includcd croppcd arca, lcvcl of off- fami incomc, farm incomc, numbcr of workcrs in tlic family and tlic quadratic form of thc croppcd arca. Thc third sct of variablcs which dcfincd acccss of tlic farmcrs to fonnal and informal institutions wcrc rcprcscntcd by mcmbcrship of coininunity association, loan procurcmcnt and whcthcr a sclcctcd farincr is an ADP contact farincr or not.

In ordcr to asccrtain thc rclativc importancc of thc abovc class of variablcs in tcnns of contribution to tlic variation in risk lcvcls of tlic farmcrs, scparatc stcpwisc rcgrcssions wcrc pcrformcd for cach class of variablcs bcforc combin- ing tlicni to dctcrminc thc rclativc impact on risk duc to intcractions.

Tablc 1 prcscnts thc stcpwisc rcgrcssion rcsults with variablcs rcprcscnting tlic naturc of tlic fanncrs houschold. Thc variablcs accountcd for up to 72 pcr ccnt variation i n risk cocfficicnts. Agc appcars to bc tlic ovcrriding factor in risk considcration followcd by cspcricncc of farmcrs i n farming, family sizc and cducation. Positivc cocficicnts indicatc grcatcr risk as tlic variablc incrcascs and vicc vcrsa.

Thc sccond sct of variablcs rcprcscnting thc incomc gcncrating oppoituni- tics of tlic farmcrs’ accountcd for about 56 pcr ccnt variation in risk among thc farmcrs. This is shown in Tablc 2. Thc numbcr of workcrs in tlic family is thc most important factor followcd by thc croppcd arca, off-farm inconic, farin incomc and quadratic form of croppcd arca. For tlic third sct of variablcs high- lighted in Tablc 3 which also significantly contributcd to risk cocficicnt varia- tions among farmcrs, espcricncc as ADP contact famicr conics first into tlic stcpwisc rcgrcssion though not statistically significant in tlic final rcgrcssion equation. Ability to procurc loan and mcnibcrship of community association follow in ordcr of priority.

Tablc 4 highlights thc rcsults of stcpwisc rcgrcssion incorporating all thc socio-cconomic variablcs that might influcncc farmcrs’ risk bcliavior in crop production. This rcsult has thcrcforc incorporatcd intcractions among all tlic variablcs and is discusscd in dctails bclow.

Slcps

1

2

3

4

-.(JOG** (-1.87) .65 23.7 -.22 ,066 -.o04** -.004 (-3.64) (-1.35) .67 13.06 -,2X ,065 -.002** -.00-1 -.006 (-1 .Xi) (-1.53) (-1 3 1 ) .G9 9.48 - 2 0 ,065

(-1.73) (-1.92) (-1.53) (-1 2 7 ) .70 7.65 -.2X ,063 -001** -.005** -.007 -.003

No. o r Ci-oplicd Skl. 1Jrror

Slcps i n la in i ly Iiicomc Oll'-l:ariii Income Iiitciisily (Adjuslcd) 1; Iiilcrccpl 1Jsliin;ilc Workers arca Fai-m Cropped I<' oc

1 -.02** (-2.57)

2 -.017** (-2.16)

3 -.017** (-2.31)

4 -.018** (-3.33)

5 -.018** (-2.29)

.008 (1 3 3 ) .013** (2.12) .o 1 2* (1.83) .013

(1.94)

.41 6.62** .3X .06

.4G -1.37** 3 5 .OG . l54** (2.00) .5G 4.-16** .29 .06 .157** ,549

. I S * * 5 7 3 -.200 (1.83) ( . 63 ) ( - . l l ) .56 ? . G I * * 29 .06

(2.03) ( 6 3 ) .56 3.37** 2 9 .06

Steps

1

2

3

Table 3 Regression Result of the Estimated Risk Coefficients of Fanners with

Variables Representing Access to Institutions

Ycars as Mcmbcrsliip Std. Error

Farm of Loan Assoc. (Adj ustcd) F Intcrccpl Estimatc AD Contact Amount of Cotnm. R2 O f

-.015** (-2.5) .49 10.6** .3G .OG

-.019** ,032 (-2.71) (.W .52 5.66** .36 .06 -.02** .03 ,002 (2.85) (.7 1 ) (.05) .51 3.65** 3 6 .OG

(t - ratios are in parcnthcsis) **Significant at .05 lcvcl (a) Loan procurcmcnl is codcd as 1 if tlic farmcr obtains loan for farming and 0 olhcnvisc (b) Mcmbcrsliip of cotnniunily association is codcd as 1 if farmcr belong to a coiiimunily

association and 0 othcnvisc Source: Ficld Survcy Data, 1989190

13

3

AFR

ICA

N D

EVEL

OPM

ENT

REV

IFW

Farm

Fa

mily

O

ff-F

arm

St

eps

Age

In

com

e Si

ze

Inco

me

1.

2.

3.

4.

5.

6.

7.

8.

9. 10.

11.

12.

13.

-.oo~

"*

(-5.

02)

-.005

* .1

44**

(-

5.57

(2

.13)

-.

004*

.1

48*

(-4.

41

(2.2

9 -.0

05*

,164

' (-4

.45

(2.3

9 -.0

03*

.162

* (-

1.73

(2

.38

-.003

.1

59*

(-1.

55

(2.3

3 -.0

02

.I29

(-

1.22

(1

.74

-.003

,1

55

(-1.

51

(1.9

5 -.0

03

,176

-.002

* .1

54*

-.002

* .1

54*

-.002

* ,1

53

-.002

* .1

49*

(-1.

32

(2.2

3

(-1.

09

(1.8

9

(-1.

71

(1.8

3

(-1.9

2 (1

.78

(-1.

86

(1.8

8

-.004

(-

1.71

) -.0

04

(-1.

7 -O

O4*

-.00

4 (-

1.8

(-1.

2 -.0

04

(-1.

9 -.0

04

(-1.

8 -.0

05

(-1.

3 -.

004

(-1.

9 -.0

04

(-1.

9 -.0

03

(-1.

8 -.0

02

(-1.

8

,647

(1

.12)

.6

48

(1.1

3 ,4

78

(1.7

8 .7

41*

(1.7

3 ,9

18'

(1.8

4 ,1

23'

(1.7

4 ,1

14

(1.6

3 ,1

12.

(1.7

2 .1

16*

(1.7

0 .1

17*

(1.7

0

Tabl

e 1

Reg

ress

ion

Res

ult o

f the

Est

imat

ed R

isk

Coe

ffic

ient

s with

Far

mer

s'

Soci

o-ec

onom

ic V

aria

bles

(L

inea

r Fu

nctio

nal F

orm

)

Farm

ing

Am

ount

Cro

pped

Y

ears

Lo

an

Are

a

-.002

(-

1.12

) -.0

02

(-1.

2 -.0

03

(-1.

3 -.0

02

(-1.0

-.0

03

(-1.

3 -.0

03

(-1.

3 -.0

03

(-1.

3 -.0

03

(1.2

7 -.o

oi (1

.18

-.516

(-

.84)

-.6

96

(-1.

0 -.9

95

(-1.

3 -.8

59

(-1.

2 -7

58

(-1.

0

(-1.

0

(-1.

0 -.7

09

(-.6

0

-.828

-.866

,006

(1

.06)

,0

06

L99)

.0

05

(36)

,0

06

(1.0

3 ,0

06

(1.0

3 ,0

06

(1.0

1 ,0

06

(.W

Loan

Pr

ocur

e-

men

t

,024

.06

(1.6

8 .0

73*

(1.9

2 .0

8*

(1.9

1 ,0

75

(1.8

3 .0

76*

(1.7

6

c.92

)

Yea

rs a

s M

embe

r A

DP

No.

of

ship

of

Con

tact

Cro

pped

W

orke

rs

Educ

a-

R2

Inte

r C

omm

. Fa

rmer

Int

ensi

ty

inFa

mil

y tio

n (A

djus

ted)

F

cept

-.045

(-

1.43

) -.0

37

-.007

(-

1.19

(-1

.03)

-.0

42

-.006

-.0

15

(-1.

13

(-.8

7)

(-.3

1)

-.049

-.0

06

-.015

(-

.96)

(-

.79)

(-.

30)

-.039

-.0

06

-.019

(-

1.94

(-.

78)

(-.34

)

.66

.71

.73

.74

-76

.76

.78

.78

.80

.81

.81

-.002

(-

. 19)

.8

1 -.0

02

-.692

(-

.20)

(-

.18)

.8

1

25.1

6 .5

5

16.2

5 3

2

11.4

7 .5

2

9.0*

* 5

0

7.51

' .4

7

6.31

' .4

7

5.60

' .4

3

4.98

' .4

4

4.84

' .4

3

4.47

' .4

1

3.91

' .4

3

3.43

* .4

3

3.03

, .4

4

St. E

rror

Estim

ate

Of

.05

.05

.05

.05

.05

.05

.05

.05

.05

.05

.05

.05

.05

**Si

gnifi

cant

at

.05

leve

l. So

urce

: Fi

eld

Surv

ey d

ata.

REVUE AFIITCATNE DE DEVELOI’PEMENT 123

Relalion of Risk Coeflcicnls to tlie Nnti tr~ of the Farmers Household

A priori, othcr things bcing cqual, it is cspcctcd that oldcr farmcrs should bc lcss willing to takc risk than tlic youngcr oncs. This should bc particularly truc in subsistcncc agriculture whcrc agc can hardly imply niorc cspcricncc on the job. Thc data support this asscrtion and agc was ncgativcly corrclatcd with risk taking disposition. This was also the casc with farming cspcricncc and it ap- pears that ability to farm undcr subsistcncc conditions docs not rcquirc a lot of espcricncc.

Two diffcrcnt intcrprctations can bc givcn to thc rclationships bctwccn risk taking and family sizc. Onc is that, the largcr thc family sizc, the highcr the subsistcncc consuniption nccds and givcn a fixed amount of land, the lowcr the willingncss of thc farmcr to take risk. In this casc, family s i x rcflccts thc con- sumption nccds of family mcmbcrs. On thc othcr hand, a largcr farnily indicatcs grcatcr availability of labour on thc fami which is particularly important at harvcst tinic whcn thcrc is usually labour shortagc and a grcatcr capacity to gcncratc off-farm income. As a rcsult, tlic capacity of thc farmcr to assume risk incrcascs with family size. Thc data support thc carlicr intcrprctation; large family sizc tcnds to dccrcasc the farmcrs ability to takc risk. This may mcan that lcss of the farmcrs houschold mcmbcrs arc cngagcd in off-farm production activitics. Furthcr analysis from survcy data, shows that nienibcrs of the farm- crs’ houschold arc mostly children whose school fcc burdcns niay have contrib- uted to thc farmcrs risk avcrscncss. Thc avcragc family sizc is about 6 with up to 6 1.5 per cent of thc farnicrs having above 6 childrcn.

Highcr lcvcls of cducation havc gcncrally bccn associatcd positivcly with risk taking. In the study area, thc avcragc nunibcr of ycars of schooling is quitc low (3.69) indicating the attcndancc of primary school only and very fcw farm- ers wcnt above this. This 10~1 IcvcI of cducation may bc rcsponsiblc for tlic ncgativc impact of schooling on risk taking though not significant in thc rcgrcs- sion rcsults. In fact, it conics lcast among tlic influcncing factors i n ordcr of priority.

k l a t i o n of Risk Cocficienls to Incoine Generating Oppor/iinities of Farmers ’ Hoirsehold

Farm inconic and off-farm incomc of farnicrs havc positivc impact on risk taking ability of thc farmcrs. The highcr thc lcvcl of thcsc incomcs, thc highcr thc capacity of thc farmcrs to assunic risks in agricultural production. Thcsc two factors, as a rcsult of intcractions with othcr factors, tcnd to influcncc risk bchavior more proniincntly than tlic nunibcr of workcrs in tlic farmcrs housc- hold (as carlicr indicatcd i n Tablc 2). Thc nunibcr of Lvorkcrs in farmcrs family havc a ncgativc impact on risk uhich indicatcs that inconic carncd bjr thosc workcrs do not significantly influcncc thcir dccisions on thc farm. Thcrcforc,

124 AFRICAN DEVELOPMENT REVlEW

thc inconic from thcsc workcrs may not havc hclpcd to rcducc thcir faniilics burdcn and rcsponsibilitics. Thc croppcd arca havc a positivc impact on fartn- crs’ ability to takc risk. This is consistcnt with both Pratt and Arrows formula- tion of decrcasing absolute risk avcrsion for increasing wcalth (if posscssion of land is takcn as a mcasurc of wcalth for the farmcrs) as wcll as Walkcr and Jodha (1982), Fostcr and Rauscr (1991) findings regarding pcasant risk avcr- sion. Following tlic logic of safcty first, this bccomcs lcss cffcctivc as inconic riscs bcyond subsistcncc rcquircmcnt. Thus, as morc arca arc brought into cul- tivation, (as rcprcscntcd by tlic croppcd intcnsity variablc in Tablc 4) thc impact of land on risk taking bcconics ncgativc.

Nelntion of Risk Coqfjicicnts to Farmers Access to Fortml and Infortnnl Inslitillions

Crcdit usc (amount of loan) had a ncgativc impact on risk taking ability as shown in Tablc 4. The morc thc loan farnicrs obtain froni fornial and infornial associations, thc lcss willing tlicy arc to takc risk. Howcvcr, thc sign of loan procurcmcnt (dummy variablc) cocficicnt is positivc and significant showing that a changc froni farnicrs with no acccss to loan or who do not obtain loans to farnicrs who obtaincd loans is charactcrizcd by an upward shift in thc Icvcl of risk taking. An intcrprctation for thcsc obscrvations is that a farnicr’s acccss to loan incrcascs his confidcncc at taking risk as thc loan tcnds to SCNC as sccurity against risk.

It is surprising and intcrcsting that cspcricncc of a farnicr as ADP contact agcnt and his bclonging to a community association havc ncgativc inipact on his risk taking ability. Thc rcgrcssion rcsults with variablcs rcprcscntins naturc of farnicr houschold carlicr shonm in Tablc 1, indicatcd a positivc influcncc of nicmbcrship of community association on risk. But tlic intcraction of othcr fnc- tors havc niadc its cffcct ncgativc in Tablc 4. A priori, onc cspccts thcsc tivo variablcs to influcncc farnicrs ability to takc risk positivcly. This rcsult may bc an indication that thc cstcnsion bvork is not having much impact as rcgards influcncing tlic farnicrs risk bchavior.

This showcd vividly in thc rcniarkablc diffcrcncc bctivccn farnicrs’ csisting plan and thc‘risk cffcicnt plans (Adubi 1993). It also indicatcs to sonic cstcnt thc littlc impact of tlic community associations in assisting production dccisiori and assisting fnrnicrs to follow tcchnological rcconinicndations. Furtlicr analy- sis rcvcals that most of thcsc community associations arc farnicrs’ youth clubs and thrift and crcdit coopcrativcs. Most of tlicm cngagc in assisting fariiicrs to procurc loans. Thc usual conimunity associations that assist in farnicrs farm opcration like “Aro” arc lcss promincnt. Pcrhaps thcn, the cffcctivc community association would bc niarkcting coopcrativcs and morc of production coopcrn- tivcs that will introducc tlic cstcndcd rccommcndations to tlic farnicrs.

Thc forcgoing discussions support the assertion that risk-bcaring capacity of pcasant farmers can bc cxplained by thcir socio-ccononiic and structural charactcristics. Particularly significant for this purposc arc: the age of farmcrs, farm inconic, family size, off-farm income and loan procurcnicnt by farmcrs.

Conclusions and Recomniendations

The likcly rclationship existing bctwccn socio-cconornic charactcristics and risk behavior of farmcrs is an indication that, apart from cspcctcd bchavior of thc farmers due to economic rcasoning and rationality as influcnccd by cco- nomic variablcs such as prices and othcr incentives, there csists a part of risk taking behavior which is inhercnt to individuals. This aspcct which may bc rcfcrrcd to as prcfcrcntial risk attitude varies among famicrs and contributes to farmcrs attitudcs toward ncw tcchnology. The findings from this study suggcst somc policy rccommcndations as follows:

The cstcnsion services should be strcngthcncd for small farmcrs in order to incrcasc rate and mode of information diffusion in the area. Thc cstcnsion should be strcngthcncd in tcrnis of pcrsonncl, education and niatcrials. Also adult lit- eracy classcs and cstcnsion courscs should be organized for thesc farmcrs, es- pccially in rclation to opportunities, constraints and avcnucs for managing risk on the farm. This is hoped to incrcasc thc lcvcl of literacy of thc farmers and ability to takc risk as on-farm espcricncc in farming has no positive influence on risk as cxpcctcd a priori.

Furthcrmorc, loan to farmcrs for fami opcration should be givcn mostly in kind, as amount of loan obtained by farnicrs docs not sccm to affcct thcir risk lcvcl apprcciably.

Emanating from the study is thc nccd to group farmers into functional soci- ctics, unions or coopcrativcs. This will facilitate positivc interactions cspccially on risk sharing. It will also present a collcctivc bargaining front, and scrvc as a conduit for transmitting govcnimcnt cstcnsion rcconiiiicndations to tlic farmcrs Morcovcr, it can serve as a way of facilitating acccss of thcse farmcrs to small scalc crcdits of Nigcrian Agricultural and Coopcrativc Bank (NACB) and Co- opcrativc Fcdcratioii of Nigcria (CFN). Finally, Jkld incrcasing mcthods should bc cniphasizcd for thcsc farnicrs. Thus continuous use of iniprovcd varictics of sccds, fcrtilizcr and insccticidcs should bc cncouragcd.