Managing risks for operational efficiency of smallholder farmers: a pathway for resilience and sustainable agro-food system in Nigeria

Abstract

The reality that risk is present in every operation involving humans across the world necessitates a rethink on how smallholder farmers can be strengthened for resiliency and sustainability of agro-food system in Nigeria without appropriate risk management. No doubt, farming is risky; smallholder farmers live with risk and make decisions affecting their operations daily. As they may find it difficult to access formal indemnity-based risk management options, there is need to explore alternatives strategies for managing these risks. This study is thus conducted to investigate the risks in smallholder farming and appropriate management strategies for use by smallholder farmers in Nigeria. A qualitative research approach was adopted using systematic literature review (SLR) technique. We followed Cervantes-Godoy, Kimura and Antón’s smallholder risk management model. Findings revealed that risks affecting smallholder farmers globally do not differ as they come basically from non-agricultural events (e.g., health problem); shocks in production, market, institutional, personal, financial and legal operations none of which are exclusive to any particular country, Nigeria inclusive. A number of risk management (Ex ante) and risk coping (Ex post) instruments and strategies considered to be effective and efficient were found to include among others, crop and plot diversification, inter-cropping practices, family-intra-community charity, liquid asset (crop) and buffer stock, avoidance, social network, diversification (both on-and off-the-farm), agricultural credit, contract farming, and most interesting index-insurance services. We have proposed a risk management matrix for smallholder farmers to use in selecting the most appropriate strategy for handling risk in their business.