Risk Management Strategies to Cope Catastrophic Risks in Agriculture: The Case of Contract Farming, Diversification and Precautionary Savings

K M Mehedi Adnan, Liu Ying, Zeraibi Ayoub, Swati Anindita Sarker, Rashid Menhas, Feiyu Chen and Man (Mark) Yu
Additional contact information
K M Mehedi Adnan: College of Economics and Management, Huazhong Agricultural University, Wuhan 430070, China
Liu Ying: College of Economics and Management, Huazhong Agricultural University, Wuhan 430070, China
Zeraibi Ayoub: School of Economics and Finance, Xi’an Jiao-Tong University, Xi’an 710049, China
Swati Anindita Sarker: School of Economics & Management, University of Chinese Academy of Sciences, Beijing 100864, China
Rashid Menhas: School of Physical Education, Soochow University, Suzhou, Jiangsu 215006, China
Feiyu Chen: School of Economics and Management, China University of Mining and Technology, No.1 Daxue Road, Xuzhou 221116, China
Man (Mark) Yu: Department of Agriculture and Consumer Science, Box: T0040, Tarleton State University, Stephenville, TX 76402, USA

Agriculture, 2020, vol. 10, issue 8, 1-16

Abstract: Risk management is an essential way for farmers to reduce uncertainty. In this research, a stratified random sampling method was used to survey 350 maize farmers in four different agro-ecological regions in Bangladesh. Using the multivariate probit model, this study explored the possible correlation between farmers’ perceptions of catastrophic risks and their attitudes towards risk sources—as well as the possible correlation between contract farming, diversification and precautionary savings as risk management strategies. The results confirm the relevance of risk management adoption decisions and reveal that the use of one risk management tool may simultaneously influence the use of another risk management tool. In addition, the research results also show that age, education level, extension experience, monthly household income, farming areas, land ownership and risk aversion nature are the most important factors that affect the adoption of risk management strategies. The research results provide further explanation and information and provide a platform for decision-makers to predict appropriate risk management strategies.

Keywords: risk management tools; precautionary savings; diversification; contract farming; probit regression; Bangladesh (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://www.mdpi.com/2077-0472/10/8/351/pdf (application/pdf)
https://www.mdpi.com/2077-0472/10/8/351/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jagris:v:10:y:2020:i:8:p:351-:d:398123

Access Statistics for this article

Agriculture is currently edited by Ms. Leda Xuan

More articles in Agriculture from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().