Vulnerability and Risk Management among Turkmen Leaseholders

High risk is inherent to agriculture in Turkmenistan, a post-socialist desert country where the political uncertainties of transition exacerbate natural unpredictability. This study examines risk coping strategies of Turkmen farmers based on a survey of 1100 respondents carried out in 2002 in all five provinces. We propose a new composite index of vulnerability, which includes human capital indicators and geographic location. The analysis relies on a single independent variable, which nevertheless incorporates the effect of criteria interactions. Using survey data, we analyze income smoothing as a mechanisms of risk management across vulnerability groups. Consistently with theoretical expectations, the most vulnerable households seem prefer a smaller, but safer outcome over a larger but uncertain one: the most vulnerable households tend to specialize in wheat, which is less risky (and less profitable) than cotton, while less vulnerable households emphasize cotton. However, contrary to expectations and findings in other countries, Turkmen farmers do not follow many of the common risk coping strategies. The more vulnerable households do not readily diversify their income generating activities: they seldom take off-farm employment; rarely engage in cottage industries; do not diversify the production mix on their household plot. Nor is there evidence that the more vulnerable families show greater reliance on their subsistence household plot. The results seem to suggest that the more vulnerable households are trapped in a deep vulnerability trap, lacking initiative and probably resources to break out through income diversification strategies.