NAVIGATING FARMING RISKS BY SIMULTANEOUS DIVERSIFICATION AND CREDIT THROUGH FORMAL AND INFORMAL COMMUNICATION CHANNEL
Raza Ullah*, Mariam Rehman*, Maria Anjum*, Muhammad Asif
Kamran**, Khuda Bakhsh***, Abdul Saboor****
ABSTRACT
Main purpose of the study is to investigate the role of access to information on farmers' risk management adoption decisions keeping in view the potential correlation between these risk management adoption decisions. Bivariate and multinomial probit models are used to assess the impact of access to information on farmers' risk management adoption decisions using data collected from 330 randomly selected respondents from four districts of Khyber Pakhtunkhwa Province of Pakistan. Bivariate and multinomial probit models take into account the possibility of simultaneous adoption of the two risk management tools at the same time. The decisions to adopt diversification and agricultural credit for risk management are correlated and adopting one risk management tool may make it more likely to adopt the other tool at the same time. Moreover, access to formal sources of information significantly encourages the use of both of the risk management tools to manage farm risk. Based on the information from the bivariate and multinomial probit approaches the agricultural extension educators can also improve their programs to guide the farmers in a better way and target farmers who need risk management information the most. At policy level, emphasis may be given to formal training and awareness of the farmers for diversification to compensate production risks. The existing extension network can be strengthened through its institutional linkage with metrology department and information communication technologies to further inform and train the farmers about disasters and disaster associated risks.
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