Modelling risk and constraints among smallholder farmers in North-East region of Nigeria

Smallholder farmers supply over 80% of food consumed in Nigeria. However, they face many challenges, particularly socio-economic constraints and uncertainty associated with variability in yields and prices. In the last ten years, the activities of insurgents have also posed a concern to the personal safety of farmers in the north-east region of Nigeria. Together, these challenges have affected farmers' ability to manage their land. Therefore, building on the earlier optimisation framework of Peter (2019), this research uses a mathematical modelling approach that captures two main elements of the problem that farmers' face: their constraint boundaries and the uncertainty of production and market environments. Models used build on survey data, collected in 2019 and 2021, and reflect the land, labour, capital and social constraints faced by farmers. Crop Gross Margins (output value less Variable Costs of production) were constructed for different farm situations; uncertainty is captured through covariance matrices that reflect both real data and postulated relationships between prices and yields for different crops. We determine theoretically optimal farm plans at different levels of overall (farm) uncertainty through EV (Expected Value) Analysis. Acts of 'insurgency' were incorporated into the uncertainty framework (for example, through the effect of theft on crop production under different assumptions).