Navitha Raj and Allan Thomas
College of Agriculture, Ambalavayal, Kerala- 673593
Risks and uncertainty significantly lower vegetable production levels and cause major losses. Farmer’s economic decisions under risky situations are best analysed by considering their perceptions, risk propensity and responses to risk. Risk perception and propensities influence a decision-maker's behaviour when facing a risky situation. This study was conducted in Special Agricultural Zones for vegetables in Kerala to identify major sources of risk, and farmer’s risk propensity and to analyse the risk management strategies adopted to overcome risks. A sample of 270 vegetable farmers was selected using a purposive sampling technique. The study identified the most severe risk sources affecting vegetable production based on farmers' perception of production, market, financial, institutional, and human risk categories. Also, the study identified the risk propensity of vegetable farmers with the help of a risk propensity index and found that the majority of the vegetable farmers were risk-neutral (69.63%) followed by risk takers (18.15%) and risk-aversive farmers (12.22%). Risk management refers to actions farmers take to increase the chances of success of the farm business. The risk management strategies adopted by vegetable farmers in the decreasing order of importance were a combination of other farm-based enterprises along with vegetable farming (4.82), crop diversification (4.03), investing in non-farm businesses (3.42), decreasing area under vegetable crops (3.38) and reducing farm investments (3.04). The findings of this paper may be of practical use for producers and farm management agencies providing risk management services and may help policy-makers to better target their advice and services to the decision-making process of farmers.