Risk Sources and Risk Management Strategies in Coffee Farming: A Case Study of Rwanda

Abstract

Purpose: The purpose of this research is to evaluate farmers' incentives and perceptions to adopt the risk coping (adaptation) strategies that have been already implemented and to determine the socio-economic factors affecting farmers' participation in the risk reduction strategies on the coffee sector of Rwanda.

Design/methodology/approach: In this research, both secondary and primary data were used and 110 coffee farmers were interviewed in August-September 2016. Primary data were collected using structured questionnaires that were administered to the sample of households' heads via person-interviews. The factor analysis was used to determine the risk sources of the coffee farmers and the risk management strategies in the examined coffee farms. Collected data were analyzed using SPSS 20 (Statistical Program for Social Scientists).

Findings: According to research results; the main risk sources then were identified to be: price volatility of coffee cherries, lack of enough rain, non-reproductive coffee varieties and floods, and the main risk adaptation strategies were: mixed farming (intercropping), followed by use of enough chemical inputs, use new and resistant coffee varieties and pesticides usage.

Originality/value: No studies have been found on the risk of coffee production.

Keywords

• Coffee,risk sources,factor analysis,risk management,Rwanda

Kahve Yetiştiriciliğinde Risk Kaynakları ve Risk Yönet m Stratejiler: Ruanda Örneği

Abstract

Amaç: Bu araştırmanın amacı, halihazırda uygulanmış olan riskle başa çıkma (adaptasyon) stratejilerini benimsemek için çiftçilerin algılarını değerlendirmek ve çiftçilerin Ruanda kahve sektöründeki risk yönetimi stratejilerine katılımını etkileyen sosyo-ekonomik faktörleri belirlemektir.

Tasarım/metodoloji/yaklaşım: Bu araştırmada, hem birincil hem ikincil veriler kullanılmış ve Ağustos-Eylül 2016 döneminde 110 kahve çiftçisi ile görüşülmüştür. Birincil veriler, hanehalkı reislerine daha önceden hazırlanmış anket formları ile yüz yüze görüşülerek toplanmıştır. İncelenen kahve çiftliklerinde kahve üreticilerinin risk kaynaklarını ve risk yönetimi stratejilerini belirlemek için faktör analizi kullanılmıştır. Toplanan veriler SPSS 20 programı kullanılarak analiz edilmiştir.

Bulgular: Araştırmadan elde edilen sonuçlara göre risk kaynakları, kahve kirazının fiyat değişkenliği, yetersiz yağış, kahve çeşidinin verimsizliği ve sel; risk yönetimi stratejileri, çeşitlendirme, yeterli kimyasal girdi kullanımı, yeni ve dayanıklı kahve çeşitlerinin kullanımı ve pestisit kullanımı olarak tanımlanmıştır.

Özgünlük/değer: Kahve üretiminde risk konusunda çalışmalar bulunmamaktadır.

Keywords

• Kahve,risk kaynakları,risk yönetimi,faktör analizi,Ruanda

References

1. Akcaoz, H.V. 2001. Risk in Agricultural Production, Risk Analysis and Risk Attitudes: Applications for Cukurova Region. Ph.D. Thesis, Department of Agricultural Economics, University of Cukurova, Institute of Natural And Applied Sciences, Adana, Code no. 609.
2. Akcaoz, H., Ozkan, B. 2005. Determing Risk Sources and Strategies among Farmers of Contrasting Risk Awareness: Acase Study for Çukurova Region of Turkey. Journal of Arid Environments, 62(4):661-675.
3. Akcaoz, H., Kizilay, H., Ozcatalbas, O. 2009a. Risk Management Strategies in Dairy Farming: A Case Study in Turkey. Journal of Animal and Veterinary Advances, 8(5): 949-958.
4. Akcaoz, H., Ozcatalbas, O., Kizilay, H. 2009b. Risk Mamangement and Sustainability in Banana Production: A Case Study from Turkey. Journal of Food, Agriculture and Environment, 7(2): 283-294.
5. Akcaoz, H., Kizilay, H., Ozcatalbas, O. 2010. Risk and Sustainability in Tobacco Production in Turkey. Journal of Food, Agriculture and Environment, 8(394): 717-722.
6. Bagheri, A., Fami, H.S. 2016. Potato Growers' Risk Perception: A Case Study in Ardabil Province of Iran. Journal of Agricultural Science and Technology, 18(1): 55-65.
7. Bernard, K., Pratt, L., Jones, C., Villalobos, A. 2004. Can the Private Sector Be Competitive and Contribute to Development through Sustainable Agricultural Business? A Case Study of Coffee in Latin America. International Food and Agribusiness Management Review, 7(3): 21-45.
8. Bishu, K.G., O'Reilly, S., Lahiff, E., Steiner, B. 2018. Cattle Farmers' Perceptions of Risk and Risk Management Strategies: Evidence from Northern Ethiopia. Journal of Risk Research, 21(5): 579-598.

9. Bunn, C. 2015. Modeling the Climate Change Impacts on Global Coffee Production. Dissertation for the completion of the academic degree Doctor rerum agriculturarum, submitted to the Faculty of Life Sciences at Humboldt-Universitätzu Berlin.
10. Byamukama, B., Carey, C., Cole, M., Dyszynski, J., Warnest, M. 2011. National Strategy on Climate Change and Low Carbon Development for Rwanda, University of Oxford Smith School of Enterprise and the Environment, Baseline Report. United Kingdom. https://cdkn.org/wp-content/uploads/2010/12/FINAL-Baseline-Report-Rwanda-CCLCD-Strategy-super-low-res.pdf.
11. Chalmers, M., Paswel, M., Dil, R., Menale, K. 2017. Response to Climate Risks among Smallholder Farmers in Malawi: A Multivariate Probit Assessment of The Role of Information, Household Demographics and Farm Characteristics. Climate Risk Management, 16: 208-221.
12. Church, R. A., Clay, D. C. 2016. Estimating Farmer Cost of Production for Fully-Washed Coffee in Rwanda. Africa Great Lakes Region Coffee Support Program (AGLC), Food Security Policy Research Papers 33, October, USA. https://www.researchgate.net/publication/329130747_Estimating_Farmer_Cost_ of_Production_for_Fully-Washed_Coffee_in_Rwanda.
13. Delille, N. 2008. Relations Between Coffee World Market Price and Retail Price in Belgium. European Association of Agricultural Economists (EAAE), International Congress, August 26-29, 2008, Ghent, Belgium AgEcon Search, Waite Library, Dept. of Applied Economics, University of Minnesota.
14. Dusenge, A. 2009. Assessing the Role of Coffee Cooperatives on Regional Development: A Case of Huye District, Rwanda. Master of Science Thesis, International Institute for Geo-Information Science and Earth Observation, Enschede The Netherlands. https://www.semanticscholar.org/paper/Assessing-the-Role-of-Coffee-Cooperatives-on-A-Case-Dusenge/e940e2aa1be76caf57bd4e17 08bb6e74928ae4df.
15. Fahad, S., Wang, J., Khan, A.A., Ullah, A., Ali, U., Hossain, M.S., Khan, S.U., Huong, N.T.L., Yang, X.Y., Hu, G.Y., Bilal, A. 2018. Evaluation of Farmers' Attitude and Perception toward Production Risk: Lessons from Khyber Pakhtunkhwa Province, Pakistan. Human and Ecological Risk Assessment, 24(6): 1710-1722.
16. Field, A. 2000. Discovering Statistics Using SPSS for Windows. Sage Publications, London- New Delhi.
17. Gebreegziabher, K, Tadesse, T. 2014. Risk Perception and Management in Smallholder Dairy Farming in Tigray, Northern Ethiopia. Journal of Risk Research, 17(3): 367-381.
18. Greiner, R., Patterson, L., Miller, O. 2009. Motivations, Risk Perceptions and Adoption Of Conservation Practices by Farmers. Agricultural Systems, 99(2-3): 86-104.
19. Gustavo, F. 2009. From Coffee Beans to Microchips: Export Diversification and Economic Growth in Costa Rica. Selected Paper prepared for presentation at the Southern Agricultural Economics Association Annual Meeting, Atlanta, Georgia, January 31-February 3, 2009. Hair, F. J., Anderson, R. E., Tatham, R. L. Black, W. C. 1992. Multivariate Data Analysis, with readings, Third Edition, Macmillon Publishing Company, Newyork.
20. Hansson, H., Lagerkvist, C.J. 2012. Measuring Farmers' Preferences for Risk: A Domain-Specific Risk Preference Scale. Journal of Risk Research, 15(7): 737-753.
21. Hardaker, J.B., Richardson, J.W.G., Lien, D. 2004. Stochastic Efficiency Analysis with Risk Aversion Bounds: A Simplified Approach. Australian Journal of Agricultural Resource Economics, 48:253-270.
22. Hazell, P. 2000. Could Futures Markets Help Growers Better Manage Coffee Price Risks in Costa Rica? Environment Production and Technology Division International Food Policy Research Institute, EPTD Discussion Paper No. 57, Washington, USA.
23. Ho, B. V., Teruaki, N., Yosuke, C. 2018. Farmer's Perceptions on Agricultural Risks and their Determinants: The Case of Tea Production in Thai Nguyen Province, Vietnam. Journal of The Faculty of Agriculture Kyushu University, 63(2): 479-485.
24. Iqbal, M.A., Ping, Q., Abid, M., Kazmi, S.M.M., Rizwan, M. 2016. Assessing Risk Perceptions and Attitude among Cotton Farmers: A Case of Punjab Province, Pakistan. International Journal of Disaster Risk Reduction, 16: 68-74.
25. Iqbal, M.A., Ping, Q., Zafar, M.U., Abbas, A., Bashir, M.K., Ali, A., Kousar, R. 2018. Farm Risk Sources and Their Mitigation: A Case of Cotton Growers in Punjab. Pakistan Journal of Agricultural Science, 55(3): 677-684.
26. Jankelova, N., Masar, D., Moricova, S. 2017. Risk Factors in the Agriculture Sector. Agricultural Economics-Zemedelska Ekonomika, 63(6): 247-258.
27. Kalayci, S. 2005. Multivariate Statistical Techniques with SPSS. Asil Publisher, Ankara, Turkey.
28. Kiemen, A., Beuchelt, T. 2010. Certification as an Upgrading Strategy for Small Scale Farmers and Their Cooperatives: A Value Chain Analysis for Nicaraguan Coffee; Department of Agricultural Economics and Social Sciences in the Tropics and Subtropics (Ed.), Forschung zur Entwicklungsökonomie und -politik – Research in Development Economics and Policy, Discussion Paper No. 2/2010.
29. Kirumba, E.G., Pinard, F. 2010. Determinants of Farmers’ Compliance with Coffee Eco-Certification Standards in Mt. Kenya Region. Contributed Paper presented at the Joint 3rd African Association of Agricultural Economists (AAAE) and 48th Agricultural Economists Association of South Africa (AEASA) Conference, Cape Town, South Africa, September 19-23, 2010.
30. Kleinbaum, D.G, Kupper, L.L., Muller, K.E., Nizan, A. 1998. Applied Regression Analysis and Other Multivariate Methods. Duxbury Press, Boston.
31. Kloeppinger-Todd, R., Sharma, M. 2010. Innovations in Rural and Agriculture Finance. 2020 Vision for Food, Agriculture, and the Environment, Focus 18. International Food Policy Research Institute (IFPRI), Washington, USA.
32. Lagerkvist, C. 2005. Assessing Farmers’ Risk Attitudes Based on Economic, Social, Personal, and Environmental Sources of Risk: Evidence from Sweden, Selected Paper prepared for presentation at the American Agricultural Economics Association Annual Meeting, Providence, July 24-27, 2005, Rhode Island.
33. Lisa, H., Melgar, S., Barnett, B. 2003. Victor Melgar's Coffee Farm. International Food and Agribusiness Management Review, 6(3): 94-111.
34. Luke, K. K. 2011. Risk Management Among Agricultural Households and the Role of Off-Farm Investments in Uasin Gishu County, Kenya. A Thesis Submitted to the Graduate School in Partial fulfillment for the Requirements of the Master of Science Degree in Agricultural and Applied Economics of Egerton University.
35. Luna, F., Wilson, P.N. 2015. An Economic Exploration of Smallholder Value Chains: Coffee Transactions in Chiapas, Mexico. International Food and Agribusiness Management Review Volume, 18 (3):85-106.
36. Lwayo, M., Obi, A. 2012. Risk Perceptions and Management Strategies by Smallholder Farmers in KwaZulu-Natal Province, South Africa. International Journal of Agricultural Management, 1 (3) :28-39.
37. Medina, F., Iglesias, A. 2008. Economic Feasibility of Organic Farms and Risk Management Strategies. 12th Congress of the European Association of Agricultural Economists – EAAE 2008. https://ageconsearch.umn.edu/record/44065.
38. MINAGRI, 2013. National Coffee Strategy Rwanda 2009-2012. Ministry of Agriculture & Animal Husbandry together with Ministry of Trade & Industry, (December, 2008), p. 8-9, Available at: http://amis.minagri.gov.rw/content/rwanda-national-coffee-strategies-2009-2012.
39. MINECOFIN, 2006. Ministry of Finance and Economic Planning Office of the United Nations Resident Coordinator; Extraordinary Development partners’ coordination group. Meeting– XXXIV Meeting Tuesday, 10 October 2006, 10h00 Minecofin Basement Conference Room Kigali, Rwanda.
40. Mojo, D., Fischer, C., Degefa, T. 2003. Who Benefits from Collective Action? Determinants and Economic Impacts of Coffee Farmer Cooperatives in Ethiopia. International Association of Agricultural Economists (IAAE) Conference, August 9-14, 2015, Milan, Italy. https://ageconsearch.umn.edu/record/211889.
41. Mukashema, A., Veldkamp, T., Amer, S. 2016. Sixty Percent of Small Coffee Farms Have Suitable Socio-Economic and Environmental Locations in Rwanda. Agronomy for Sustainable Development, 36(2): 1-11.
42. Murekezi, A. K. 2003. Profıtability Analysis and Strategic Planning of Coffee Processing and Marketing in Rwanda: A Case Study of a Coffee Growers’ Association. Master of Science Thesis, Department of Agricultural Economics Michigan State University, USA.
43. Narayana, M. R. 2014. Economic Analysis of Leaf Rust Management by Chemical Controls: Evidence and Implications for Household Coffee Farmers in India. Indian Journal of Agricultural Economics, 69 (4): 459-473.
44. Nazir, A., Li, G., Sheikh, M. J., Zhou, X., Humayoon, A., Rizwan, M., Akhtar, S. 2018. Farmers' Perceptions of Risk Sources and Risk Coping Strategies in Pakistan. Journal of Animal and Plant Sciences, 28 (3): 889-906.
45. Nkurunziza, I. 2014. Socio-Economic Factors Affecting Farmers Participation in Vertical Integration of the Coffee Value Chain in Huye District, Rwanda. Master of Science Thesis, in Agribusiness in the School of Agriculture and Enterprise Development, Kenyatta University.
46. NISR, 2014. The National Institute of Statistics of Rwanda, 2014. Statistical Yearbook 2014.
47. Rizwan, M., Ping, Q., Saboor, A., Ahmed, U.I., Zhang, D., Deyi, Z., Teng, L. 2019. Measuring Rice Farmers’ Risk Perceptions and Attitude: Evidence from Pakistan. Human and Ecological Risk Assessment: An International Journal, 25: 1-16.
48. Saes M. S. M., M. C. M. Souza, and M. N. Otani. 2003. “Strategic alliances and sustainable coffee production: The shaded system of Baturite, State of Ceara, Brazil”. International Food and Agribusiness Management Review 6 (2) : 19-29.
49. Sogue, B., Akcaoz, H. 2017. Risk Management in Agriculture: Examples from Some Countries. Turkish Journal of Agricultural Economics, 23(1); 69-83.
50. Ullah, R., Shivakoti, G.P., Ali, G. 2015. Factors Effecting Farmers' Risk Attitude and Risk Perceptions: The Case of Khyber Pakhtunkhwa, Pakistan. International Journal of Disaster Risk Reduction, 13: 151-157.
51. Ullah, R., Shivakoti, G.P., Zulfiqar, F., Kamran, M. A. 2016. Farm Risks and Uncertainties: Sources, Impacts and Management. Outlook on Agriculture, 45(3): 199-205. USAID, 2006. Assessing USAID’ Investments in Rwanda’s coffee sector. Best Practices and Lesson Learned to Consolidate Results and Expand Impacts. United States Agency for International Development. http://pdf.usaid.gov/pdf_docs/Pnadg793.pdf
52. Velandia, M., Rejesus, R. M., Knight, T. O., Sherrick, B. J.. 2009. Factors affecting farmers’ utilization of agricultural risk management tools: The case of crop insurance, forward contracting, and spreading sales. Journal of Agricultural and Applied Economics, 41(1):107–123.
53. Yamane, T. 2001. Basic Sampling Methods, First Edition, Literatur Publishing, Istanbul, Turkey.
54. Alemu, Z.G., Worako, T.K. 2011. Price Transmission and Adjustment in the Ethiopian Coffee Market. Agrekon Agricultural Economics Research, Policy and Practice in Southern Africa, 50(2): 27-43.
55. Zuluaga, V., Labarta, R., Läderach, P. 2015. Climate Change Adaptation: The Case of the Coffee Sector in Nicaragua. Agricultural & Applied Economics Association and Western Agricultural Economics Association Annual Meeting, July 26-28, San Francisco, CA.