CHAPTER ONE

INTRODUCTION

1.1. Background of Study

Agricultural risk is the principal cause of transient food insecurity and disruption to agricultural supply chains. It creates a poverty trap and causes volatile economic growth in many developing economies (Li et al., 2014). Crop failure is often the biggest shock faced by rural households and perhaps also the biggest poverty trap. Agricultural risks have a profound impact on poverty because they undermine rural entrepreneurs’ (particularly farmers’) possibilities to accumulate assets, invest in and develop businesses, and gain access to health and education services (Panicker, et al., 2012). The increasing prevalence of “shock-recovery-shock” cycles vastly reduces many countries’ ability to plan sustainable development paths. This is especially the case in agriculture dependent countries such as those in Sub-Saharan Africa (Luca et al., 2018).

The expanding range of experiences across several countries and agricultural commodities has extended and refined the understanding of agricultural risks, their impacts, their transmission along supply chains, and the efficacy of different strategies to manage them. (Schoenherr et al (2011). these guidelines try to capture the lessons learned as a contribution to the process of mainstreaming risk management practices into policy and investment decisions. Although the literature addressing issues related to risk uses definitions of terms that conform to the particular conceptual and regulatory requirements of their users and intended purposes, risk can be looked at from various angles and disciplines, and the terminology can be confusing. Contains a glossary of terms used in this document as they apply to ASRAs. (Juttner, 2019).

Risks are inherent, ubiquitous, and varied in the agricultural sector, posing potentially serious consequences for all stakeholders. This stems from a range of factors including the vagaries of weather, the unpredictable nature of biological processes, the pronounced seasonality of production and market cycles, the geographic separation of production from end users, and the unique and uncertain political economy of the food and agricultural sectors, both domestically and internationally (Jaffee, et al., 2012).

Agricultural risk is the principal source of agricultural supply chain disruptions and commodity chain failures. Such disruptions have negative impacts that can last several years. As a result, many governments introduce policy measures to protect their population, such as export bans. These policies can trigger a ripple effect that adversely affects neighbouring countries (possibly reducing grain supplies and triggering conflict). Ultimately, these protectionist policies may have adverse consequences for the country implementing them (Juttner et al., 2019).

Although levels of risk vary from one country to the next, lower-income and highly agriculture-dependent countries are more vulnerable to agriculture-related risks. A pressing need exists for them to better assess risks, understand where they are most vulnerable, and reinforce their risk management strategies (Peck et al.,. 2021). Highlighting the types and orders of magnitude of potential risks can improve planning and investments in prioritized strategies critical for mitigating identified risks, promoting risk transfer mechanisms, and making exante provisions for coping with realized risks The benefits of a more holistic and targeted risk management strategy are many (Peck, 2021). Adopting a risk management strategy can help mitigate risks before they occur. It can also lessen the impact on the government’s fiscal balance, particularly at catastrophic levels, by tempering the need for costly and often poorly targeted post shock humanitarian relief to affected communities (Christopher et al., 2004). Additionally, a well-planned exante risk management strategy facilitates expedient resource mobilization when risk events occur. For example, ex ante planning can assist farmers in returning to production more quickly by using previously identified delivery channels. Finally, better risk management helps poor rural households, women, and other vulnerable groups avoid depleting their assets or increasing indebtedness in response to shocks. (FAO, 2015).

1.2. Problem Statements

In Sub-Saharan African countries, around 30 percent of the population remain food insecure and poor and more than 60 percent live in rural areas (FAO, 2015). Food insecurity and poverty are largely the results of low productivity in agriculture, which is, in turn, linked to the low use of improved inputs in rain-fed systems and heavy reliance on subsistence farming (Norton et al., 2010). Agricultural growth could provide a partial solution to this problem, because it contributes to food security directly through auto-consumption, and indirectly through income generation (FAO, 2015).

In the literature, sustainable agriculture is defined as farming systems that use locally available resources and farmers’ knowledge and skills (with low use of chemical inputs) to enhance productivity, to build the resilience of local systems, maintain the quality of the environment and to improve household food security (Archarya, 2017). These include, cropping systems, expansion of irrigation, agroforestry systems, integrated pest management, rotational grazing, green compost, laser land levelling, biological controls, improved livestock breeds, soil and water conservation measures, drought-tolerant varieties, crop diversification and manure application (FAO, 2015; Van and Yapwattanaphun, 2015).

Unfortunately, agricultural production has always been risky, and production risk can be among the highly uncertain and potentially devastating which is a cause for uncertainty in consumption, profit and input choice decisions of farmers (World Bank, 2021). The climate change is the main source of production risks. The accompanied impacts of high temperatures, changed patterns of rainfall and possibly increased frequency of extreme events such as drought and floods, will probably combine to depress yields and increase production risks in many world regions, widening the gap between rich and poor countries (IPCC, 2014). A consensus has emerged that developing countries are under pressure from climate change and are more vulnerable to climate change than developed countries, because of the predominance of agriculture in their economies, the scarcity of capital for adaptation measures, their warmer baseline climates and their heightened exposure to extreme events (Fischer, A. (2010).

In addition to weather conditions, pests, diseases, technology and its interaction with farm and management characteristics, genetics, equipment and quality of factor inputs are common sources of production risks. To reduce production risks, at micro level or macro level countries have been following different risk management strategies such as enterprise diversification, crop insurance, contract production, and evaluating new technologies. Due to the underdevelopment of credit and insurance schemes in many developing countries including Cameroon, farmers usually protect themselves against shocks by adjusting their production and consumption decisions accordingly. This particularly applies through modern agricultural technology. Different literatures disclosed that increased farm technology development and adoption can raise agricultural output and reduce downside yield variability (Cochrane (2014).

Adoption improved farm inputs affects poverty and economic growth in different ways. Adoption of improved inputs like improved seeds, herbicide, pesticides and fertilizers increased the productivity as well as the income of adopters. On other hand the increment of production leads to lowering the price, increasing food access, employment creation and growth linkage effect.

sought to measure the effects of applying modern farm inputs on yield productivity and down side risk exposures of the smallholder’s farmers and to establish the factors that explain its variation across households. Substantial literatures have been examined the impact of modern farm inputs such as fertilize, improved seed, pesticide, herbicide on the productivity efficiency and the primary causes for low use of these inputs in Ethiopia (Birhanu et al,. 2014).

This study is somewhat unique in the sense that it accounts the effect of modern farm technology adoption on variance of output and down side production risks in developing countries. Using micro level case study approach, it assesses the sources of risks, risk coping strategies and risk attitude of the farmers to adopt new technology. Moreover, it measures the effects of technology adoption such as chemical fertilizer, improved seed, pesticide and herbicide on mean of output, variance of output and down side risk exposure of farmers in tuba subdivision.

1.3. Research Question

1.3.1. Main Research Question

How can we assess and mitigate risks, develop mitigation strategies, and promote sustainable practices to enhance agricultural productivity in Tubah sub-division?

1.3.2. Specific Questions

1. What are the socio economic characteristics of farmers in Tubah sub division?
2. What are the key risks and challenges that threaten agricultural productivity in Tubah sub-division?

• How can sustainable agricultural practices be integrated into farming systems to enhance productivity and environmental conservation?

1.4. Research Objectives

1.4.1. Main Objective

To enhance agricultural productivity in Tubah sub-division by assessing and mitigating risks, developing mitigation strategies, and promoting sustainable practices.

1.4.2. Specific Objective

1. To evaluate the socio economic characteristics of farmers in Tubah subdivision.
2. To identify and analyze the key risks and challenges impacting agricultural productivity in Tubah sub-division.

• To promote the integration of sustainable agricultural practices into farming systems to enhance productivity while preserving the environment.