Analysis of risk management strategies among commercial egg producers in Osun State, Nigeria

Jegede, Busayo Banke (2016)



This study described the socio-economic characteristics of the respondents in the study area, profiled the risk management strategies adopted by the farmers and determined the effects of risk management strategies adopted on the profitability of egg production in Osun State with a view to providing information on the various risk management strategies employed by poultry farmers in the face of uncertainties. A multistage sampling method was adopted for the study. In the first stage, two Local Government areas (LGAs) were randomly selected from each of the three Agricultural zones of Osun State as classified by Agricultural Development Programme (ADP). At the second stage, two communities were randomly selected from each of the six LGAs making a total of 12 communities. At the third stage, using a list of registered poultry farmers, 15 respondents were randomly selected from each of the communities. In all, 180 respondents were sampled for the study. Data were collected on socio-economic characteristics of respondents such as age, sex, and household size, mitigation practice adopted including medication, security and insurance. Data were analyzed using descriptive statistics, budgetary techniques and Ordinary Least Square Regression model. The findings revealed that the respondents were faced with different types of risks including the death of birds, outbreak of diseases, high cost of feed and inputs. The risk of high cost of feed ranked highest at 95 percent, closely followed by outbreak of diseases with 91.1 percent. The risk management strategies adopted by the respondents were restocking, sales of assets, insurance, extension visits and diversification. The least strategy adopted was formal borrowing (22.2 percent) and consumptions of infected birds (9.4 percent). The study revealed that 65 percent of the respondents were none risk aversed indicating their readiness to increase their investment in spite of the challenges confronting the enterprise. The cost of feed averaging ₦2,465,987.00 and cost of building averaging ₦74988.82 ranked highest in the variable cost and fixed cost components respectively. It also revealed that the enterprise was profitable with a net income of ₦1,290,620.39. The benefit cost ratio of 1.41 showed that for every ₦1 invested in the business, there was a return of 41kobo. The business operating cash ratio of 0.67 which showed that the liabilities of the company were covered by 67 percent of its cash. The regression analysis revealed that extension visits, membership of cooperative society, restocking of the birds, quantity of feed (kg) and insurance had positive I mpacts on profitability. The study concluded that diversification of livelihood should be encouraged to enable farm families augment proceeds from the poultry business, and provide additional another source of income to the family.