Sustainable Crop Production, the Concurrent Adoption of Contract Farming, and Managing Risks through Income Diversification

Abstract

This paper is aimed at evaluating the factors affecting the concurrent adoption of two risk coping strategies among hybrid maize farmers, namely income diversification supplemented with off-farm work and contract farming in the wake of changing climatic conditions. Climatic changes and food insecurity at the national level have emerged as key risk elements for hybrid maize production due to varying economic conditions. The present paper addresses these risks by examining various sources of risks faced by hybrid maize farmers and develops ideas to tackle these risks. Bivariate and multinomial probit models were employed to analyze numerous factors that influence farmers’ choice of the simultaneous adoption of income diversification (both on and off the farm) and contract farming at the farm level. The results reveal that hybrid maize farmers’ socioeconomic attributes significantly affect their adoption of risk coping tools. Similarly, the climatic, economic (price-related), biological, and financial risk perceptions and risk preference significantly influence the utilization of risk coping strategies in maize production. These outcomes extend our understanding of farmers’ risk preferences and provide parameters for policymakers to forestall diverse risk sources associated with hybrid maize production.

A Quest for Livelihood Sustainability? Patterns, Motives and Determinants of Non-Farm Income Diversification among Agricultural Households in Punjab, Pakistan

“…On the contrary, farming experience and family size decrease the probability of self-employed activities. This finding on farming experience is supported by the fact that increased experience provides an added advantage to the farmer for increased farm output by employing his/her skill to obtain higher agricultural earnings [7]. The sign of the variable on family size is unexpectedly negative, as reported by [54].…”

“…The province contributes about 53% to the overall agricultural GDP of the country [7] and consists of nine divisions on an administrative basis. Among these nine divisions, three divisions were selected randomly, namely Multan, Bahawalpur, and the DG Khan divisions.…”

“…A scant body of literature has explored the pattern, motives, and drivers of non-farm income diversification in the case of Pakistani agriculture. Agriculture has remained the backbone of Pakistan's economy for decades; however, this sector has suffered from multifarious shocks in recent years, casting serious implications for the sustainability of farm income while forcing select farm communities to leave the farming business altogether [7,19]. These circumstances, however, offer a great avenue for future research, particularly regarding the fate of those who substituted non-farm work for farming as a profession.…”

“…Its performance in the last decade has shown a declining trend due to many factors including climate change, lack of policy focus, poor market integration, farmers' own constraints and preferences in terms of labour availability, financial issues, and alternative working options. Climate change is perceived to be one of the major reasons as farm production is highly dependent on weather conditions beyond human beings' control [5][6][7]. In addition, recent statistics reveal some good prospects of agricultural growth courtesy of strong institutional support, credit provision, farmers' proactive behaviour, and mass awareness campaigns [8][9][10].…”

“…Such options pave the way for income sustainability among farm families while enabling them to easily and timely finance farm operations. Farmers in Pakistan also face similar issues, along with uncertain policy support, weaker institutional frameworks, higher incidence of crop and livestock disease, rampant pest infestation, higher vulnerability to catastrophic risk, poor resilience and coping capacity, and staggered mode of climate change adaptation [7,18,19]. All these factors place intense pressure on farmers to seek alternative options of income sources other than agriculture.…”