An Assessment of Risk Attitude of Dairy Farmers in Uttaranchal (India)

The study was carried out in the Tarai area of Uttaranchal state to (i) identify the sources of risks perceived to be relevant by the farmers, (ii) examine farmers' risk attitude, (iii) identify the factors that affect risk attitudes and (iv) evaluate the relative importance of different risk management strategies. Adverse effect on family health was perceived as a major source of risk by the dairy farmers, indicating the crucial role that surplus family labour plays in dairy farming in India. Lack of institutional support in dairying was also perceived to be a major source risk. Farmers' risk attitude was measured using an attitudinal scale approach. The attitudinal scale consisted of a series of different risk management strategies and the farmers' attitude was measured by his rating of each of those strategies. The analysis establishes a refined 22-item scale that can be applied by researchers to measure the risk attitude of dairy farm ers in Indian context. The refined scale has high degree of reliability as farmers' responses to the items of the scale revealed a communal variation of 85%, which is higher than the minimally acceptable range of 65% to 70%. The study further revealed slight degree of risk aversion among farmers as revealed by the adoption such risk management tools like vaccinating the animals, calling a veterinarian, prevention of illness, maintaining hygienic conditions, and feeding adequate concentrates. Hence, there is a strong tendency on the part of the farmers to mitigate the production risks at farm level by adapting appropriate measures. But, a certain degree of risk taking behaviour was also seen in regard to certain risk management tools, especially livestock insurance. Regression analysis to ascertain relationship between socio-economic factors with risk attitudes, revealed largely insignificant influence of the variables considered in the study. Herd size and hours spent in off-farm work showed negative and significant impact upon the risk attitude score. Number of dependents showed significant and positive relationship with the total score. The variables included in the study explained 54.5 per cent of variation in risk attitude score. As regards to relative importance of different risk management tools, carrying adequate cash reserve was cited by the farmers as relevant, which is against the general perception that Indian farmers, mostly being subsistent can not afford to hold cash reserve to meet future crisis.