RISKS MANAGEMENT IN POULTRY PRODUCTION IN IKEDURU LOCAL GOVERNMENT AREA OF IMO STATE, NIGERIA
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1 RISKS MANAGEMENT IN POULTRY PRODUCTION IN IKEDURU LOCAL GOVERNMENT AREA OF IMO STATE, NIGERIA ABSTRACT Iheke, O. R. and Igbelina, C. A. Department of Agricultural Economics, Michael Okpara University of agriculture, Umudike, PMB 7267, Umuahia, Abia State, Nigeria , The study examines the management of risks in poultry production in Ikeduru Local Government of Imo State, Nigeria. Purposive and random sampling techniques were used in selecting 80 respondents used in the study. Primary data collected with the use of well-structured questionnaire were analyzed with both descriptive and inferential statistical tools. The result of the study revealed that majority of the poultry farmers (75%) were males, young and active with mean age of 49.8 years. 85.0% were married, 63.8% had tertiary education, 53.8% were primarily farmers and on the average had spent 23 years in farming. The mean household size was 6 persons per household; the mean farm income of N and 61.2% were members of cooperatives. Majority (91.2%) of poultry farmers practice intensive system of farming and there was prevalence of risks and uncertainties in poultry production in the area. It was observed that the level of adoption of risk management strategy was low. The significant variables influencing poultry production were sex (p < 0.10), age of the farmer (p < 0.05), education (p < 0.01), farming experience (p < 0.10), income (p < 0.01), medication cost (p < 0.01), feed cost (p < 0.05), capital (p < 0.10), and the index of risk situations (p = 0.05). Based on the findings of the study, it was therefore recommended that training programmes should be organized for the farmers on improved poultry technologies and management of risks situations to enhance their productivity and income. INTRODUCTION Poultry production in Nigeria is estimated to be above 140 million birds which comparatively make Nigeria to be well developed in poultry industry among West African nations (Akpabio et al., 2007). The importance of the poultry industry cannot be over-emphasized as the industry has been described as the fastest means of bridging the protein deficiency gap prevailing in Nigeria (Oso, 2002 in Abimbola et al. 2014). Iheke et al. (2009) noted that animal protein is superior to plant protein because of its high content of amino acids and that the supply of protein in adequate quantity is a vital factor in the life of a man. Hence, poultry production is becoming the first priority to supply animal protein source foods and is an income generating activity. FAO (2009) reported that nowadays, poultry meat represents about 33% of the total global meat production. Also, poultry meat and egg production is the most environmentally efficient animal protein production system. According to Folorunsho and Onibi (2005), it offers considerable potential for meeting human needs for dietary animal supply. Among the rural poor, poultry is a crucial means of livelihood which sometimes serves for augmenting households protein consumption and sources of income in times of financial distress (Maltsoglou and Rapsomanikis, 2005; Roland-Hoist et al., 2007; Iheke and Nwagbara, 2010). Akpabio et al. (2007) stressed that its relevance can be derived from the fact that it partially or fully sustains the livelihood of about 675 million of the rural and urban poor. In Nigeria, production of poultry occupies the prime position for improving animal protein consumption for both rural and urban households (Alabi and Aruna, 2008). Keeping poultry makes a substantial contribution to household food security throughout the developing world. It helps to generate income, improve human nutrition, supplies inputs for crop production and confectionary industries, and provide quality food, energy fertilizer and a renewable asset in over 80% of rural household. In spite of the seemingly impressive breakthrough of the poultry industry in Nigeria, it is yet to witness a commensurate growth due to major problems such as risk and uncertainties as identified by (Effiong et al., 2014). In essence, decisions contain some elements of risk because of the unpredictability of outcomes. Agricultural production decisions are taken in the environment of risk which affects the production and marketing decisions of the farmer. Farmers make decision every now and then that affect farming operations. Ayinde et al. (2008) stated that production decisions are generally made under the environment of risks and uncertainties as yield, product prices, input prices and quantities are usually not known with certainty when investment decisions are being made. Many of the factors that affect the decision cannot be predicted with complete accuracy. Abimbola et al. (2009) enumerated these factors to include climate variability, input price variability, technology change, theft, insecurity, incidence of pest and diseases, equipment breakdown, high cost of veterinary services, change in government policy, borrowing money with sudden change in interest rates, scarcity of labour at peak time and change in health and wellbeing of the farmers. All of these changes are examples of the risks and uncertainties that farmers face in managing their farms as a business. These factors make small-scale farmers inadequately equipped against risks and uncertainties (Ayinde et al., 2008). NJAFE VOL. 12 No. 1,
2 Risk and uncertainty is an inherent feature of modern poultry production. The poultry production decision environment is characterized by risk and the absence of perfect and complete information. The poultry industry in Nigeria has suffered a great deal of losses which affects poultry farmers as well as consumers (Ogoke, 2009). It should be emphasized that many poultry farmers in Nigeria are less equipped to mitigate risks associated with production, consumption, income, assets and their health. This could lead to eventual collapse of poultry industry if intensive and collaborative efforts are not made by government and stakeholders to salvage the situation (Abimbola, et al., 2009). In particular, the failure to rise up to this challenge to saving the industry could lead to a serious reduction in poultry production and protein intake of people. This results into malnutrition and ill health, lower productivity and output (Bamiro et al., 2009). The need for the management of risk and uncertainty associated with poultry production will be better appreciated when it is realized that 70% of the Nigerian population are farmers (Ekong, 2010). These farmers do not have the understanding of risks and uncertainties as well as risk management skills or approach to manage problems and reduce consequences of risks and uncertainties. These situations therefore justify the need for a thorough assessment of existing risks in management of poultry farms. Also, an understanding of how the farmers are affected and react to these risks will in due course help in the design of improved risk and uncertainty management approach. The above scenario forms the crux of the study. Specifically, the study examined the socio-economic characteristics of the poultry farmers; ascertained the risks and uncertainties in poultry production in the study area; determined the risks management practices or approaches adopted in the study area; and determined the effect of risks and uncertainties on poultry production. METHODOLOGY This study was conducted in Ikeduru Local Government Area of Imo State, Nigeria. Ikeduru is located in the western part of Imo State. Ikeduru was previously carved out of the Mbaitolu/Ikeduru Local government Area and has it s headquarter at Iho. Ikeduru has a population of 102,798 (NPC 2006); with land mass of about 203 square kilometers and it is made up of 17 communities. The area is predominantly rural with agriculture as their major occupation. The culture of the people here is homogeneous and there is commonality of shared norms which ensures social order and harmony. Primary data used in this study were obtained from 80 poultry farmers selected randomly. Data collection was by the researcher through personal interview and the use of the structured questionnaire to elicit the required information for the study. Descriptive statistical tools were used to analyze the socioeconomic characteristics of the respondents, while the risks approaches adopted were analysed using mean decision of five (5) point likert rating scale. Ordinary Least Square regression was used to analyze the effect of risks on poultry production. The model used is specified in the implicit form as: Y= f (X 1, X 2, X 3, X 4, X 4, X 5, X 6, 7, X 8, X 9, X 10, X 11) Where: Y = poultry output (annual sales, Naira), X 1 = Sex (male and female), X 2 = Age (years) Sex (male and female), X 3 = Education attainment (years), X 4 = Primary Occupation (Farming = 1, others =0), X 5 = Farming Experience (in years), X 6 = Household size, X 7 = Monthly income (Naira), X 8 = Membership to cooperative (member= 1, non-member 0), X 9 = Farm size (Number of birds housed), X 10 = Labour cost, X 11 = Medication cost, X 12 = Feed cost (Naira), X 13 = Capital (Naira), and X 14 = index of risk (ratio of number of risks encountered by the ith farmer to total risks recorded in the study area). RESULTS AND DISCUSSION Socioeconomic characteristics of respondents The distribution of the respondents based on their socioeconomic characteristics was presented in Table 1. The result showed that majority (75%) of the poultry farmers were males and within the age range of years and average age of 50 years. This result implies that the farm households are ageing and that younger people are no longer going into farming. However, the result shows that the bulk of the farmers are still energetic and should be reasonably enterprising. As noted by Iheke (2010) and Iheke and Nwaru (2014), the risk bearing abilities and innovativeness of a farmer, his mental capacity to cope with the daily challenges and demands of farm production activities and his ability to do manual work decrease with advancing age. About 85% of the poultry farmers were married. The result implies that majority of the farm households are stable. According to Nwaru (2004), this stability should create conducive environments for good citizenship training, development of personal integrity and entrepreneurship, which are very important for efficient use of resources. The educational attainment showed that farmers were literate, and hence should have technical knowledge of the enterprise for enhanced productivity. Education has been described as being pivotal to unlocking the entrepreneurial abilities of farmers and enhancing their ability to understand and evaluate new production techniques (Obasi, 1991; Iheke, 2010; Nwaru et al., 2011). NJAFE VOL. 12 No. 1,
3 Table 1: Distribution of respondents according to their socioeconomic characteristics Socioeconomic characteristics Frequency Percentage Mean Gender Male Female Age Below Marital Status Single Married Widowed Separated Divorced Level of education no formal education Primary Secondary Tertiary Others Primary occupation Farming civil servant Trading Unemployment self employed Total Farming experience Household size Income 10, , , , , , , , , , , , , , , , , , ,000-1,000, ,000,000-2,000, Membership to cooperative Yes No NJAFE VOL. 12 No. 1,
4 Results further showed that the mean farming experience was 23 years, implying that the farmers were reasonably experienced and this has some positive implications for increased poultry productivity. According to Nwaru et al. (2011), the number of years a farmer has spent in the farming business may give an indication of the practical knowledge he has acquired on how he can overcome certain inherent farm production problems. The mean household size was 6 persons per household. This is consistent with the findings of Iheke and Ukaegbu (2015). According to Iheke (2010), large household size is desirable and of great importance in farm production as rural households rely more on members of their households than hired workers for labour on their farms. Majority of the respondents (58%) had farming as their primary occupation. The mean income from the enterprise was N and 61.2% were members of farmers cooperative societies. Iheke (2010) noted that cooperative societies/ farmers associations serve as sources of good quality inputs, labour, credit, information and organized marketing of products. Onyenweaku and Ohajianya (2005) posited that members of cooperative societies have enhanced ability to adopt innovations than non-members. Types of risks encountered by the farmers The distribution of the respondents according the type of risk they encountered is presented in Table 2. Table 2 showed that the major risks encountered by the poultry farmers were production risk (92.5%), financial risk (90.0%), price/marketing risk (66.3%) and casualty risk (61.3%). As reported by OECD (2011), there has been increased price volatility, with sharp swings in product and input prices. It noted that markets have been affected by macro-economic disturbances, disease outbreaks and adverse weather events such as floods and droughts. The latter may become more frequent through climate change. With agricultural policies that are more decoupled from production and prices, farmers are now more exposed to market forces than in the past. Table 2: Distribution of respondents according to sources of risks Sources of risk and uncertainty Frequency* Percentage Production risk Price /marketing risk Casualty risk Technological risk Government and institutional risk Financial risk Human and personal risk Multiple Responses Recorded* Severity of risk situations The distribution of respondents according to severity of risk situations was shown in Table 3. The result showed that the severe risks were disease outbreak, pest attack, price fluctuation, market, culling, death of the farmer, theft and burglary, fire outbreak, and power failure. Effiong et al (2014) reported that power failure, disease outbreak, climate (weather) and price fluctuation are the most severe risk factors (with mean score 3). As noted by Briner and Finger (2012), risks directly affect farmers incomes and can be a threat for the future of their farms. In the future, risks in agricultural production are expected to increase due to climate change and increasing volatility in agricultural markets (Meuwissen et al., 2003; Sckokai and Moro, 2005; Howden et al., 2007). Management of risk situations The distribution of respondents according to management of risk and uncertainty was shown in Table 4. In ascertaining the management strategies adopted by poultry farmers in the study area, 5.0 likert rating scale on the different strategies with reference bench mark mean of 3.0 was employed. The result revealed a grand mean score of 2.8 indicating a general low adoption of risks and uncertainty management strategies. The result revealed that enterprise diversification ( =3.3) was widely adopted. This implies that the farmers tend not to rely solely on poultry production, they still engage on other enterprise to make for lost in risk and uncertainty situations. Marketing strategies ( =3.9) was also adopted by poultry farmers in the study area. Farmers tend to increase their price and/or adjust their marketing strategies during risk situations. Production strategies ( =4.1) was also widely adopted by the poultry farmers in the study area. This suggests that farmers tend to accommodate risks during production. Some farmers tend to produce more to accommodate or make up for losses as a result of risk and uncertainty situations. However, production strategies appeared to be widely used among poultry farmers because the majority of risk and uncertainty situations occur at the production stage. NJAFE VOL. 12 No. 1,
5 Table 3: Distribution of respondents according to risk and uncertainty situation Risks/uncertainty situations SA A UD DA SD x F % F % F % F % F % Disease outbreak Pests Natural disaster (heat stress) Price fluctuation Government policy Market Climate Culling Death of the farmer Theft and burglary Health status of poultry farmers Fire outbreak Power failure Grand mean 3.3 Key: SA = Strongly Agree, A = Agree, UD = Undecided, DA = Disagree, SD= Strongly Disagree; Benchmark mean = 3.0 Table 4: Distribution of respondents according to management of risks Risks and uncertainty situations SA A UD DA SD x F % F % F % F % F % Enterprise diversification Insurance Marketing strategies Financial strategies Production strategies Risks coping Grand mean 2.8 Key: SA = Strongly Agree, A = Agree, UD = Undecided, DA = Disagree, SD= Strongly Disagree; Benchmark mean = 3.0 Effect of risks on poultry production The multiple regression result of effects of risks and uncertainties and other factors in production is presented in Table 5. The semi-log function was chosen as the lead equation based on the R 2 (coefficient of multiple determination) value and number of significant variables and the conformity of the signs borne by the variables to a priori expectations. The R 2 value was 0.75 which indicates that 75% of the total observed variations in poultry output were explained by the variables included in the model while 25% of the variation was due to error. The F ratio was significant at1% indicating the goodness-of -fit of the model. The results also show that 9 variables were statistically significant and conform to a prior expectation. The F-ratio was which is statistically significant at 1% indicating a high goodness of fit of the model. The coefficient of sex was statistically significant at 10% and negatively related to output. This inverse relationship implies that the sex of the farmers does not necessarily increase their output. The increase in the output of the farmer depend more on other factors than their sex. This is in consonance with the findings of Effiong et al (2014) who found a negative relationship between sex and output of the farmer. The coefficient of age was statistically significant at 5% and positively related to the output. This implies that as the age of farmers increased, their output also increased. Expectedly, the increase in farmer s age come with demanding responsibilities and as such increase his knowledge, experience, income and efficiency. In contrast, Effiong et al (2014) found age to be negatively signed to output indicating that the farmers output decreases as the farmer s age increases. The coefficient for years of education was significant at1% and positively related. This implies that as the educational level increases, the output increases. This is in conformity with a- priori expectation that the level of education of the farmers enhances their knowledge of risks and uncertainties as well as their technical and managerial efficiency. The more educated the farmers is, the more his/her efficiency in poultry farming. This result is in agreement with the research findings of Salimonu and Falusi (2009) that farmers level of education increase their output. The coefficient of farming experience was significant at 10% and positively related to output. It shows that a unit increase in the years of farming experience will lead to an increase in the reduction of risks and uncertainties on output of farmers. Ogoke (2009) observed that the longer the years of farming experience, the more efficient the farmer becomes because the number of years a farmer has spent in the farming business may clearly give an NJAFE VOL. 12 No. 1,
6 indication of the practical knowledge he has acquired. This is an advantage in reducing farming risk which will help to boost production in any pre-determined period of farming business.the coefficient of income was significant at 1% and it is positively related to output. This implies that a unit increase in income will lead to an increase in output. This implies that a unit increase on farm income of the respondents would lead to an increase in the reduction of risk on the output. (Walker et al., 2001 in Effiong et al., 2014) however reported that increased income will assist farmers in tackling additional risk on the farm without being risk averse. This in essence will lead to an increase in output of the poultry products and will also help farmers to generate income needed to manage other additional farm risks. This may be attributed to the fact that an increase in income will enable the farmer to adopt proper risk management practices. Table 5: Effect of risks and uncertainties and other factors in poultry production Variables Linear Exponential Semi log + Double log Constant (2.228)*** (8.913)*** (11.334)*** (0.545) Sex (-1.310) (-2.440)** (-1.944)* )** Age (2.290)** (1.907)* (2.348)** (1.972)* Years of education (5.950)*** (0.132) (5.050)*** (1.830)* Primary occupation (-0.596) (-0.907) (-0.101) ) Farming experience (8.690)*** (3.570)*** (1.962)* (0.033) Household size (-0.743) (-0.390) (0.613) (0.255) Income E (0.586) (6.988)*** (3.330)*** (1.716)* Membership to cooperative (-0.587) (-0.044) (-0.131) (-0.255) Number of birds E (-1.977)* (-1.988)** (-1.120) (-1.971)* Labour cost E (-0.747) (-0.417) (-0.538) (0.554) Medication cost E (5.885)*** (1.676) (3.063)*** (2.199)*** Feed cost 5.313E E (5.596)*** (0.564) (2.039)** (2.171)** Capital E (2.875)*** (1.706)* (2.079)** (2.282)** Number of risks encountered (-1.956)* (-1.745)* (-2.260)** (-1.430) R R Adjusted F Ratio *** *** *** *** Key: * = Significance at 10%, ** = Significance at 5%, *** = Significance at 1% ***, + = lead equation and ( ) = t-values The coefficient of medication cost was significant at 1% and it is positively related to the output. This implies that as the cost of medication increases, the output of the farmer increases as well. Medication is a high measure of risk management as it reduces the outbreak of diseases. If the medications administered are efficient, it will reduce the risk on the output of the farmers. The coefficient of feed cost was statistically significant at 5% and it is positively related to the output. This explains that a unit increase in the cost of feed will result to an increase in the output. This result is consistent with Rowlinson (2008). Rowlinson (2008) noted that the cost of feeding poultry determines the quality and quantity of the farmers output as well as influences the farmers market price. The coefficient of capital input was statistically significant at 10% and positively related to poultry output. This suggest that a unit increase in the farmer s capital will result to an increase in poultry output. This result indicated that the more capital investment, the more the propensity for higher output as a result of technical and managerial efficiency. Conversely, Effiong et al. (2014), found that capital input is negatively signed to poultry output. This may be due to high incidence of risk and uncertainties associated to poultry farming. NJAFE VOL. 12 No. 1,
7 The coefficient of index of risk was statistically significant and negatively related to output. The inverse relationship implied that the increase in the number of occurrence of risk and uncertainty will result to a decrease in the farmers output. Poultry farmers face an ever changing weather, price fluctuation, output changes and changes in government policies which result in risk. Miranda (2002), observed that the production risk in poultry farming are caused by unpredictable weather and hence uncertainty as to good poultry output. Ajieh, (2010) found natural and social factors in risk and uncertainties influences poultry output. Effiong et al. (2014) also found inverse relationship between risk situations and the farmers output. This may be attributed to the proneness of poultry production to risk and uncertainties. However, lack of information, poor record keeping, farmer s level of education and poor/lack of adoption of risk management strategies could be associated to the negative effect of risk and uncertainties on farmers output. CONCLUSION From the results, it could be concluded that risks and uncertainty situations were highly prevalent among poultry farmers in the study area which exert negative effect on the farmers output, and hence income. There is generally low adoption of risks and uncertainty management strategies among the farmers. The behavioural responses of the farmers to risk could constitute a big threat to the rural economy and make rural households fall back deeper into poverty. Therefore, efforts at increasing poultry production should involve policies that strengthen the education of poultry farmers, especially agricultural education. Hence, training programmes should be organized for the farmers on improved poultry technologies and management strategies to enhance their productivity and minimize the effect of risks in production. Also, extension agents should be amply equipped to provide farmers the informal training they require on risk management techniques and best practices in poultry production. REFERENCES Abimbola, O, Adepoju, A. T., Omowunmi, O. and Oyekale, A. S Risk coping behaviour of small scale poultry farmers in Ogun State, Nigeria. Asian Journal of Animal and Veterinary Advance, 8: Ajieh, P. C Poultry Farmers Response to Agricultural Insurance in Delta State. Nigerian Journal of Agric. Sc. 1 (1): Akpabio, 1. A., Okon, D. P., Angba, A. O. and C Aboh, L Avian Influence Scare and the Poultry Egg Production in Uyo Urban, Nigerian Int. J. Poultry Sc., 6: Alabi, R. A. and Aruna, M. B Technical Efficiency of Family Poultry Production in Niger Delta, Nigeria. In: Alder R. G., Spradbrow, P. B. and Young, M. P. (Eds). Village Chicken, Poverty Alleviation and Sustainable Control of Newcastle Disease. Proceedings of an International Conference held in Deressalam, Tanzania, 5-7 th October, ACIAR Proc. Pp Ayinde, E. O., Omotesto, A. O. and Adewumi, O. M Risk Attitudes and Management Strategies of Small Scale Crop Producer in Kwara State, Nigeria. A Ranking Approach. African Journal of Business Management 2 (12): Bamiro, O.M., Momoh, S. and Philip, D. A. O Vertical Integration and Profitability in Poultry Industry in Ogun and Oyo State, Nigeria. Journal. Human Ecol., 27: Briner, R. and Finger, R The Effect of Price and Production Risks on Optimal Farm Plans in Swiss Dairy Production Considering 2 Different Milk Quota Systems. Journal of Dairy Science, 96: Effiong, E. O. Enyenihi, E. A. and George, A. A Analysis of farming risk among small scale poultry farmers in etim Ekpo Local Government Area of Akwa Ibom State, Nigeria. Nigerian Journal of Agriculture, Food and Environment. 10(1): Ekong, A An Introduction and Analysis of Organization of Villages and Communities. hpps//:uniilorin.edu.ng./axr%20204.p FAO Food Outlook (December 2009) Special Feature: The food price crisis of 2007/2008: Evidence and Implications. Food and Agricultural Organization, Rome, Italy. Folorunsho, O. R. and Onibi, G. E Assessment of the Nutritional Quality of Eviscerated waste from selected Chicken Types. In: Onibi, G. E., Agele, G. E and Adekunle, V. A. (Eds) Proceedings of the 1 st Conference of the department of Agriculture and Biological Sciences. 27 th April, School of agriculture and agricultural Technology, Federal University of Technology, Akure. Howden, S. M., Soussana, J. F., Tubiello, F. N., Chhetri, N., Dunlop, M. and Meinke, H Adapting agriculture to climate change. Proc. Natl. Acad. Sci. USA 104: Iheke, O. R Impact of Migrant Remittances on Efficiency and Welfare of Rural Smallholder Arable Crop Farm Households in South Eastern Nigeria. PhD Dissertation. Michael Okpara University of Agriculture, Umudike. NJAFE VOL. 12 No. 1,
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