Determinants of Farm Income and Agricultural Risk Management

The research presented in this book explores the reasons for the low
productivity of rain-fed agriculture and risky nature of agriculture of
Pothwar region with focus on the determinants of overall farm income and
major crops yield. The results show that operational land holding is
inversely proportional to per acre farm income. The area irrigated,
off-farm income, the number of livestock, cost incurred on livestock,
hired labor, and tractor ownership show signi cant positive effects on
farm income. Irrigated area and respective prices of crops has positive
affect on yield of major crops of area.
The seven important factors for agricultural risk sources include
imperfect market risks, catastrophe, lack of information risks, weather
and lack of insurance risks, price risks, drought and disease risks,
and nancial risks. Thsix factors sorted for risk management strategies
include planning and policy, infrastructure development, research and
information management, diversi cation and off-farm employment
generation, nancial management security, and input management. The
farm households are categorized into three distinct groups on the basis
of risk factors' cluster analysis according to their risk attitudes
towards different risk sources. These three groups of farmers are named
as risk averse (49.5 % farmers), risk neutral (31.0 % farmers) and risk
seekers (19.5 % farmers).