DefinePK

Abstract

Identifying strategies to cope with risks and selecting methods to reduce, transfer and/ or bear risks are considered to be the most crucial decisions for an agricultural producer. The choice of risk management strategies is of vital importance for the feasibility and continuation of the farm level practices. This study examined a sample of tobacco farmers (n = 202) in major flue-cured Virginia (FCV) tobacco growing districts of Khyber Pakhtunkhwa Province of Pakistan. A comprehensive interview schedule was used to collect data face to face related to the different components of perceived benefits from contract farming. Similarly, data on farmers’ perceptions for different calamitous risk sources were collected based on their incidence and severity on a Likert scale from 1 to 5 (very low–very high) to observe the significance of these risk sources in terms of its potential impact on the tobacco production. The incidence and severity rating for each of the risk sources are then used to determine the risk treatment priorities and to suggest the relevant risk treatment responses for each of the risk sources. The analysis indicates that, although the sampled farmers are effectively managing the price risks related to tobacco crop as far as their responses regarding the perceived benefits from contract farming are concerned; many catastrophic risk sources pertaining to tobacco crop are still needed to be managed properly. The goal of this study is identifying various calamitous risk sources perceived by tobacco growers in Pakistan and suggesting different treatment actions is needed for such type of risk sources. The policy implication of this study is rejuvenating the existing risk management practices adopted by the tobacco growers.