October - December 2012 - National Institute of Rural Development

Farmers' Behaviour Towards Risk in Production of Fruit and Vegetable Crops 467While considering all farmers, access tonon-farm income source and credit played asignificant role in explaining their riskbehaviour. Farmers, whose disaster level ofincome is higher than the average incomefrom the crop, can afford to take risk as nonfarmincome source provided themsafeguard, in terms of money available formeeting the minimum subsistence needs ofthe households. Also, availability of credit, onthe one hand provide them money forinvestment in these high capital and labourintensive crops and on the other hand alsohedge against risk at the time of failure ofprice and/or production of the crop. Moreimportantly, higher level of assets or wealthis found significant in explaining the risktakingbehaviour of farmers of both thegroups. Farmers with higher amount of assetsare more prone to take risk especiallybecause they can always liquidate some oftheir assets at the time of requirement (or inthe event of crop failure).ConclusionsIn this paper, we examined the typologyof risks and risk attitudes of farmers growingfruits and vegetable crops. The results showthat fruit growers experienced high variabilityin yield of the crop as compared to variabilityin price, whereas majority of the vegetablegrowers experienced high price variabilitythan yield. This means stabilising yield of thecrop would be much more effective instabilising revenues of fruits whereasstabilising price, on the other hand, wouldbe a more effective strategy to reducerevenue risk of vegetables. Using Roy’s riskcoefficient, we found a difference betweenthe fruit and vegetable growers in terms oftheir risk-taking nature in the productiondecisions; cauliflower growers more risktakersthan apple growers. The differencebetween apple and cauliflower growers canbe attributed mainly to the difference in theflexibility in land allocation and incomepotential of the crop concerned; incomepotential is relatively higher for applegrowers. In addition, most apple growers havelarge farm size as compared to cauliflowergrowers, which again might contribute to thedifference in income between the twogroups. Access to non-farm income sourceand credit are found to have played asignificant role in the risk behaviour offarmers. Farmers whose disaster level ofincome is higher than the expected incomefrom the crop can afford to be risk takers asnon-farm income source would provide themsecure position. Family size is positive andsignificantly correlated with the risk attitude.As the family size increases, the disaster levelof income is also expected to be high asfamily members require more food forconsumption and higher outlays forexpenditure. Availability of credit is positivelyrelated with the risk coefficient, indicatingthat risk-takers could do so by having accessto credit.Notes1 The disaster level of income is the minimum consumption requirements of the farmfamily plus other critical expenditures by the household during a year.2 This is very normal feature in the case of horticultural crops whose price fluctuates widelywithin a single season.3 There are categories of fruits, which have lesser gestation period also but in general, mostof the fruit crops have higher production or gestation period as compared to vegetablecrops and are perennial in nature.Journal of Rural Development, Vol. 31, No. 4, October - December : 2012