ABSTRACT

The study examined risk, investment and productivity of smallholder arable crop agribusiness entrepreneurs in Akwa-Ibom State, Nigeria. Objectives of the study were to examine the socioeconomic characteristics of smallholder entrepreneurs, derive an index of risk attitude for the farmers and classify them into risk averse, risk neutral and risk takers; derive and compare investment and productivity indices of farmers based on their risk attitudes; examine risk management strategies used by farmers and examine the determinants of risk attitude, investment and productivity of agribusiness entrepreneurs. A multistage sampling technique was adopted in selecting 120 entrepreneurs for the study while structured questionnaire was used to elicit data from them. Data were analyzed using descriptive and inferential statistics such as Total Factor Productivity model, Ordinary Least Square (OLS), and multinomial logit models. Mean age of 47 years indicates that farmers were moderately young, innovative and able to take risks; men were predominantly in farming activities. Marital status of the respondents indicates that majority of the entrepreneurs (72%) were married.  A risk index mean score of 2.41 strongly indicates that majority of the respondents were risk averse while the productivity distribution of farmers showed that as expected, risk takers were the most productive. The mean value of N36, 834 for risk-seeking farmers implies that this group of farmers invested more than other groups of farmers. The Multinomial result shows that gender, household size, farm size and total income were positively related to risk-averseness, while age, access to credit, level of education, land acquisition and labour cost were negative. On the other hand, access to credit, level of education, household size, farming experience, farm size, land tenure, labour cost and cooperative membership were positively related to risk-taking attitude of the farmers and negative for gender and income. Also, age, education, farm size, farming experience and gender were positively related to the farm productivity of risk-taking farmers and negatively related to household size, capital inputs and fertilizer. Results further showed that extension contacts and cooperative membership were positively related to the productivity of risk-averse while age of farmers, level of education of farmers, household size, farming experience, capital inputs and gender were negatively related. The result further showed that age, education, loan size, farming experience and nature of ownership were positively related to the amount of capital invested of risk-taking farmers and negatively related to interest rate. Age of farmers, education, loan size, farm size, source of investment capital and nature of ownership were inversely related to amount of capital invested while off-farm income was positive. Enterprise diversification, insurance against disaster and loans from cooperative societies were some of the risk-mitigating measures adopted. Policies that will encourage subsidizing of cost of inputs, provisions of cheap credit facilities to farmers, stability of agricultural product prices, and the use of improved technologies are recommended. Diversification should be encouraged to ensure that farmers’ assets are improved at regular farming seasons and intervals. Development programmes that aim at reducing farmers’ risks need to be tailored to specific characteristics of farmers.