Risk management strategies in cotton production in Bungudu and Tsafe Local Government Areas of Zamfara State, Nigeria

Abstract

Cotton is an important cash crop in the study area. Unfortunately its production has experienced a sharp decline in the recent past. The decline has been attributed to several factors one of which is the risk encountered by farmers in its production. The aim of the study was to examine the type of risk encountered by the producers and the strategies they used to manage such risk. A sample of 120 respondents was selected for the study. Portfolio analysis of the main crop enterprises with cotton was also carried out. The main risk that the respondent said they encountered is that caused by natural hazard. Price fluctuation, labour shortage and changing government policies were other risks that threatened cotton production in the study area. The respondents used mostly informal rather than formal methods to manage risk. None of the crop enterprise combination with cotton satisfied the condition for optimum yield. It was therefore concluded that since farmers do not use the formal methods of coping with risk in cotton production, government should come to their aide either by providing some form of insurance or by encouraging cotton producers to establish cooperative or some form of social insurance organizations to cope with the menace of risk. It was also suggested that farmers may be better off if they grow cotton sole than in mixture.