Risk Management in Farming Enterprise in Rural Anambra State: Exploring the Financial Institutions’ and Farmers’ Mitigation Strategies.

Abstract

Risk Management in Agriculture Enterprise in Rural Anambra State from Financial Institutions’ and Farmers perceptive was investigated. The research is as a result of numerous risks associated with agricultural enterprises which increased their inability in loan repayment. Many researchers have neglected this important issue in agricultural funding. To achieve the broad objective of this study, a combination of purposive and random sampling techniques were used to select 140 agricultural enterprises and 50 Rural Financial Institutions. Relevant data were sourced from both primary and secondary sources. Data generated were analyzed using descriptive statistics and probit regression model. The major findings of the study is Production/yield risks and price risk were highly rated as factors that influence their loan repayment ability. The study also identified diversification as the most practiced form of risk mitigation strategy. In addition, majority of financial institutions used Asset Financing and collateral as risk mitigation strategies. Based on this findings, development of Microfinance Institutions (MFIs) that will build on existing social capital in their area of domain is important in reducing the risk associated with lending to Rural Agricultural Enterprise as well as informing Agricultural Entrepreneurs on insurance policies through education and capacity building workshops were major recommendations of the study.

Keywords: Risk, rural agricultural enterprise, financial institutions