Smallholder Risk Management in Developing Countries

Dalila Cervantes-Godoy, Shingo Kimura and Jesús Antón
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Dalila Cervantes-Godoy: OECD
Jesús Antón: OECD

No 61, OECD Food, Agriculture and Fisheries Papers from OECD Publishing

Abstract: This paper addresses various aspects of risk and risk management for smallholders in developing countries, and presents a quantitative assessment of farm-level risks and risk management strategies in three emerging economies: Brazil, China and Viet Nam. The analysis covers production, income, and poverty risks. Institutional and political settings in developing countries are frequently less developed and this contributes to a greater incidence of market imperfections in key areas such as credit and insurance, and which in turn lowers farmers’ access to risk management tools and strategies. The result is a widespread reliance on informal mechanisms and community strategies. The effects of risk and responses to risk are also different in developing countries, with smallholders often forced to rely on strategies that perpetuate poverty. When risk is an important consideration in a farm household’s decision on sector transition, insurance or safety-net mechanisms could assist these households to make that transition. The analysis of two regions in Viet Nam shows that those households able to successfully transit to the non-farm sector continued to maintain small plots of land for self-consumption, suggesting that agriculture remains a kind of safety net.

Keywords: agricultural policy; agricultural risk; developing countries; risk management strategies; smallholders (search for similar items in EconPapers)
JEL-codes: G21 G22 O13 Q10 Q11 Q12 Q13 R38 (search for similar items in EconPapers)
Date: 2013-06-10
New Economics Papers: this item is included in nep-agr, nep-rmg and nep-tra
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Citations: View citations in EconPapers (8)

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