Farmers' Behaviour towards Risk in Production of Fruit and Vegetable Crops

Abstract

Within the horticultural sector, fruits and vegetables differ from each other on the basis of gestation period in production that is expected to influence the risk-taking abilities of farmers differently. In this paper, we assess the typology of risks in production of fruits and vegetables, examine the risk attitudes of these farmers under the safety-first framework and identify factors determining their risk-taking behaviour. The results revealed that stabilising the yield of the crop would be much more effective in stabilising revenues of fruits whereas stabilising price, on the other hand, is a more effective strategy to reduce revenue risk of vegetables. Also, the vegetable growers are more risk-takers than fruit growers. The risk attitudes of farmers growing fruits and vegetables are explained by income and farm-related factors including farm size, access to non-farm income, family size and access to credit. Specifically, access to non-farm income and credit helps farmers take more risk in their production of high value horticultural crops.