Determinants of farm income and agricultural risk management strategies

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).