Onion Farmers Attitudes Towards Risks in West Shewa, Ethiopia. Application of Discriminant Analysis

Abstract

Agricultural risk is changing with high frequency and severity due to climate change and market liberalization. Onion is one of the basic ingredients in the Ethiopian cuisine and thus an important crop. The study was carried out to identify risks involved in onion farming in West Shewa, Ethiopia. Specifically, the study examined the risk attitude of farmers, factors influencing risk attitude as well as farmer’s perception on major sources of risks. The sample size was 300 farmers and data were collected using a semi-structured questionnaire. Both descriptive and econometrics analysis were employed in data analysis. Linear discriminant model showed that education status, household size, other sources of income, membership of association, proportion of farm income to total income, availability of storage facilities and gender affect the risk attitudes of onion farmers in the study area. The kruskal-wallis ranking analysis showed that weather dependency and damage by pest and disease were perceived as the highest ranked sources of production risk while low price for produce, poor product handling, and packaging were perceived as the highest sources of market risks as ranked by the onion respondents. For production and marketing risks, the result showed that the five sources of risks in the onion respondents were significant at 5% significance level and that they are statistically different from one another. Out of the total sample respondents about 65% of the onion farmers maintained good relationship with traders as an effective risk management strategy. Based on the study findings, it is recommended that introduction of a more comprehensive agricultural insurance scheme and improved technology can ameliorate the effect of risks on onion farmers. In addition, public intervention can facilitate better risk management through improved information system.

Keywords: Kruskal-wallis ranking, linear discriminant model, risk, Onion, farmers