The factors AR1-4 can be named according to each factor structure as follows: Factor one (AR1): this factor has a relatively high loading of the risk strategy variables related to ‘apply pests and diseases programme’, ‘storing feed and/or seed reserves’, ‘have a farm reservoir for water supplies in dry season’, ‘spreading sale over several time period’ and ‘obtaining market information on prices forecast and trends’. The results of the sources of risk perceptions, showed that ‘unexpected variability of product prices’ was the second most important source of risk among the central and north east region farmers. Gender was negatively related to ‘off-farm income’, which means that female household heads perceived this risk strategy as more important than male household heads. (19) On the other hand, New Zealand farmers used a mix of risk management strategies to reduce risk. sources of total risk, such as interest rate risk and market risk, which are explained. Crop insurance is, theoretically, an efficient instrument in managing risks and can facilitate efforts to protect farmers from either the loss of their crops or farm income caused by natural disasters or drops in commodity prices. The small size farm group tended to have a higher awareness of production risks than the other two groups. The authors ranked production cost variability and animal welfare policy as the greatest worries for conventional dairy farmers. Establishing categories for risks provides a mechanism for collecting and organizing risks as well as ensuring appropriate scrutiny and management attention to risks that can have serious consequences on meeting project objectives. This result suggests that less experienced farmers, farmers who have higher annual household income and farmers with larger household size tended to perceive risk related to ‘economic and political’ as highly important. (26) In their study, the Participatory Risk Mapping (PRM) technique was used to elicit sources of risk. A part of risk management is a determination of risk versus reward. Institutional risks related to ‘changes in Thailand’s economic and political situation’ and ‘changes in national government laws and policies’ were ranked third and fourth, among the north-east region farmers, respectively. and Meuwissen et al. Risk management is essential in any business. Only 10 per cent of the farmers in both regions had used this strategy to manage risk. However, the north-east farmers perceived the importance of ‘holding cash and easily converted cash assets’ significantly higher than the central region farmers. (28, 29) The Kaiser-Meyer-Oklin (KMO) method measured the appropriateness for factor analysis of both data sets. (18) In addition, smallholder farmers in Thailand also face various sources of risk that vary both seasonally and annually. With regard to reliability, the Cronbach’s Alpha values for factors AR1-3 were 0.742, 0.711 and 0.642, respectively. Contact our London head office or media team here. The final results of the varimax rotated factor loadings for each risk strategy are documented in Table 6. (10-12) Thai farmers typically grow their crops in rain-fed conditions due to poor irrigation systems. Farm size was positively related to the ‘diversification’ strategy. This result indicates that the central region farmers hold average farm sizes larger than north-east farmers (P<0.01). 9 - Discuss the reasons why top-management commitment... Ch. (13) The annual rainfall fluctuates widely each year, and pests, diseases and poor soil fertility affect the yields of cash crops in Thailand. The results reflect the heavy floods that inundated the central provinces during September 2008. In this section, the results of the factor analysis of sources of risk and risk management strategies are discussed. Farmers with larger households perceived ‘farm production and marketing management’ as slightly more important than smaller household farmers. Identifying risks is a key step in a proactive risk management process. This interesting finding might be attributable to the fact that sources of risk vary depending on the farm’s geographical condition, farm type, the environmental impact and the country’s political and economic situation. As the project progresses, additional sources of risk can be identified. For DFID, general risk management” incorporates all the activities required to identify and control the exposure to risk”, with risk being d efined as uncertainty, whether positive or negative, that will affect the outcome of an activity (DFID, 2013 – also see latest 2016 corporate risk management guidance. ) Return on investment and business risk always move together and at any stage of your business life cycle, your return may turn into loss. Fire, wind, theft, and other casualties are also sources of production risk. Unhealthy concentrations that make a company vulnerable to the loss of a business keystone—a major customer, a uniquely skilled employee, a custom machine, or a single raw material supplier. Risk Management Strategies Some of the major sources of production risks are weather, pests, diseases, technology and its interaction with farm and management characteristics, genetics, equipment and quality of factor inputs. (9) Using size of the respondents’ farms as large, medium, and small farms, the author argued that a farmer’s awareness of the sources of risk varied depending on farm size. The reason is because the more educated farmers realized that the family farm situation and the changes in farm business environment, such as high labour wages and relatively high prices of agricultural land, may indirectly affect their farm operations. They are defined by: 1. 1: List the Potential Sources of Construction Risk. The central and north-east regions differ in terms of resources, economic development and income distribution. Therefore, this factor is named ‘personal and farm business environment’. Evidently, the small farm business may be affected in different ways by changes in these sources of risk. The majority of the farmers obtained short-term loans (see Table 2). Changes in family situation such as marital status, inheritances, etc. (21) The respondents were asked to define risk and then to rank the sources of risk and risk management strategies based on how important each risk was to their farm. Sources of risk that obtained low mean scores included ‘changes in technology and breeding’, ‘changes in land prices’, ‘risk from theft’, ‘changes in the situation of farm families’ and ‘unable to meet contracting obligations’. The major sources of production risks are weather, climate changes, pests, diseases, technology, genetics, machinery efficiency, and the quality of inputs. This is because farmers’ groups or cooperatives can help farmers to improve their negotiating power. Our readership spans scientists, professors, researchers, librarians, and students, as well as business professionals. Flaten et al. First, the provinces in each region were separated into two main groups: (a) the provinces with large and medium irrigation systems and (b) the provinces in the rain-fed area. Multiple regression was employed to evaluate the influence of farm and farmer characteristics on the smallholder farmers’ risk perception and risk management responses. The age distribution between the farmers in both regions was significantly different with the north-east region farmers more likely to be older than the central region farmers. However, empirical studies on farmers’ responses to risks and how risk affects farmers’ income, especially in rural Thailand are limited. Ranking of perceptions of risk management strategies by sampled farmers in central and north-east Thailand. (1, 42, 44). states that “the welfare of the farm family and the survival of farm business may depend on how well farming risks are managed”.(1). of farmland in the central region were damaged.(32). (22) A total of 149 farmers in 12 states were interviewed. Risk sources identify where risks can originate. The results showed that marketing risk (such as change in product prices and change in input costs) was ranked as a very important source of risk by all farmers. This finding may be attributable to the severe floods across Thailand in 2008. The length of farming experience was negatively related to the ‘farm production and marketing management’, ‘diversification’ and ‘financial management’ risk strategies. (30) A higher educated farmer was expected to perform better than an uneducated farmer in terms of management skills and farm resource allocation to maximize farm profitability. who found low explanatory power of regression models between the perceptions of sources of risk and risk strategies with the farmers’ characteristics. In most of those studies, the respondents were asked to rate the sources of risk that affected their farm and the risk management strategies they used on a five-point scale (where 1 is not particularly important and 5 is highly important). This implies that female heads of farm households are likely to perceive these sources of risk as significantly more important than male household heads. A crisis often occurs when it is least expected, so it is important to have a Risk Management Plan in place that establishes the steps to be taken in the case of a crisis. This suggests that the agricultural production under forward contracts in Thailand is still in its developmental stages and is not popular among the smallholder farmers in rural areas. After the number of factors had been identified, the orthogonal (varimax) rotational method was performed in order to minimize the number of variables that have high loadings on each factor. North-east farmers perceived the importance of these two production strategies higher than central region farmers. A. (24) Similarly, Flaten et al. Sources of risk in agriculture are classified into business risk and financial risk. Knowledge of the characteristics of risks that influence smallholder farmers is the key to developing appropriate strategies to deal with risks. (24) An insurance scheme was rated as the appropriate strategy to manage risk. Without much knowledge in risk management, a project manager cannot plan accordingly. With regard to the farm location variable, the regression result showed a strong relationship with more than half of the risk factors. To date, a new crop insurance scheme for Thai farmers that has been operated by BAAC since 2008 is still in the pilot project stage. Similarly, the age of farmers and farm size are negatively related to the ‘natural disaster’ risk, which means young farmers and farmers who have smaller farm sizes tended to perceive ‘natural disaster’ as a higher on-farm source of risk. However, the pledging scheme has been widely debated among policy experts, especially for rice. Similarly, the net farm income coefficient shows a negative relationship with all four risk strategy components. First, the crop insurance scheme itself should not be too complicated because it could lead to high administrative costs for the scheme. Factor three (AR3): this factor is loaded highly on ‘investing in non-farm investment/business’ and ‘working off farm to supplement net farm income’, which represent the influence of off-farm income. The number of years in farming is negatively related to the ‘economic and political’ risk perceptions. In addition, risk management strategies related to ‘farm production and marketing management’ and ‘off-farm income’ were perceived as less important by the farmers who had loans. From the survey, farm machinery, such as hand tractors and four-wheel tractors, was widely used among the central region farmers. There are five main sources of risk in an agricultural operation: production risk, marketing risk, financial risk, legal risk, and human resource risks. Hall, Knight, Coble, Baquet and Patrick found severe drought and meat price variability as the primary sources of risk perceived amongst cattle farmers in Texas and Nebraska. Sources of Risk and Risk Management Strategies: The Case of Smallholder Farmers in a Developing Economy, Risk Management - Current Issues and Challenges, Nerija Banaitiene, IntechOpen, DOI: 10.5772/50392. Although strategic planning is not listed as a resource category, it is critical to the overall success of any operation. (39) Some economists also suggested that the government should discontinue this highly-interventional price policy and should encourage farmers to sell their products using futures contracts to reduce the risk of price and income volatilities. (16) The central region is known as the ‘rice bowl of Thailand’ and more than half of the country’s irrigation systems are located in this region known for wet-rice cultivation. ‘Having diversified crop, animal or other enterprises’ and ‘planting several varieties of crops’ were the least important production strategies for both groups. As part of this process you must look at the following sources: Sources Description Risk registers and risk reports Provide a foundation for evaluating existing risks and their potential risk to an objective. Varimax rotated factor loadings of risk management strategies for all farmers sampled inThailand (n=800). By R. Martínez, D. Hemming, L. Malone, N. Bermudez, G. Cockfield, A. Diongue, J. Hansen, A. Hildebrand, K. Ingram, G. Jakeman, M. Kadi, G. R. McGregor, S. Mushtaq, P. Rao, R. Pulwarty, O. Ndiaye, G. Srinivasan, Eh. Akasinha, Ngamsomsuk, Thongngam, Sinchaikul and Ngamsomsuk examined risk perceptions among rice farmers in Payao and Lampang provinces in the northern region. This finding suggests that the sources of risk on small-holding farms differ significantly between these two regions. Household and farm characteristics of the farmers in central and north-east Thailand, Financial background of the farmers in central and north-east Thailand. Diagnostic tests were carried out to verify that there was no violation of the multiple regression assumptions. In addition, eight per cent of the farmers used their own savings to operate their farm business. argued that the assessment of farmers’ perceptions and how they respond to risk are very important because this can describe the decision making behaviour of farmers when faced with risky situations. As the project progresses, additional sources of risk can be identified. To start managing your construction risks, you need to be able to list out what could jeopardize your projects. Ch. The development of a national agricultural crop insurance scheme should be one of the Thai government’s priorities. Hence, risk identification can start with the source of problems, or with the problem itself. 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