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Research Paper | Economics | Indonesia | Volume 8 Issue 10, October 2019
Risk and Social Economic Factor as a Management Risk Revealing (Vegetables Farmer Decision Making Study in Pujon Sub District Malang Regency)
Abstract: The aim of this research is to analyze farmer risk preferences and to examine the effect of risk and social-economic factors on the risk management strategy applied by the farmer. The data was collected by interviewing 137 sample farmer-respondents located in Pujon sub-district Malang regency. The findings of the research are as follow: First, it is found that small land farmer which cultivated land 0.69 ha on average, has a risk avert preference. It is also found that the larger the land cultivated the greater the certainty equivalent. If the farmer grows other crops in addition to cabbage and potatoes, then the farmer's income will be smaller. The price risk and yield risk are overcome by production contract, marketing contract, and crop insurance if the last scheme was implemented. It is also found that market information is mostly accessed by larger land cultivated farmers. Secondly, larger land farmer, which cultivated land 1.9 ha on average, has a risk-taker preference. The larger the land cultivated; the bigger the family number; and the higher the farm income the higher the certainty equivalent value will be. This group of farmers overcame the price risk by both production and marketing contracts. It is also found here that the longer farm experience will increase access to market information. The higher farm income will increase farmer participation in crop insurance programs if it was implemented. Third, in general, it was found that the average farmer which cultivated land 1.44 ha, has a risk-neutral preference. The higher the land cultivated and number of family, the higher the value of certainty equivalent will be. If the farmer grows other crops in addition to cabbage and potatoes, then the farmer's income will be smaller. It is also found here that the longer farm experience will increase access to market information.
Keywords: risk, risk management, farmer, social economic
Edition: Volume 8 Issue 10, October 2019,
Pages: 35 - 49
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