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Onset risk and draft animal investment in nigeria:

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  • Takeshima, Hiroyuki

Abstract

Onset risk, the uncertainty in the onset of rainy season, is an important element of weather risk for African farmers with little access to formal insurance who engage in traditional rainfed farming. A knowledge gap still exists empirically on how onset risk may affect the investment decisions of these farmers. In particular, farm productivity in Africa still depends on substantial labor inputs at the onset of the rainy season, sometimes involving seasonal migration to rural areas. With credit and insurance market failure, poor access to weather-related information, and high labor mobility costs, high and increasing onset risk may affect farmers’ demand for farm mechanization. We test this hypothesis by investigating the effect of onset risk on farmers’ investment in draft animals in northern and central Nigeria. We use the example of a public project providing farmers with financial support for the acquisition of productive assets. We calculate the onset of the rainy season using daily rainfall data in various locations across Nigeria and identify locations that have experienced increasing, decreasing, or constant onset risk in the past few decades. We then exploit the panel structure of our dataset and employ stratified propensity score matching to estimate the average treatment effect on the treated, differentiated by the onset risk and its change. The results support our hypothesis. Farmers in areas with higher, increasing, or constant onset risk were more likely to invest in draft animals, and such effects are clearer among larger-scale farmers. Linkages are also clearer with onset risk compared to annual rainfall risk.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 1198.

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Date of creation: 2012
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Handle: RePEc:fpr:ifprid:1198

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Related research

Keywords: livestock; rainfall; onset risk; Agricultural productivity; Agricultural inputs; Agricultural Investment;

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  1. Nkonya, Ephraim & Phillip, Dayo & Mogues, Tewodaj & Pender, John & Yahaya, Muhammed Kuta & Adebowale, Gbenga & Arokoyo, Tunji & Kato, Edward, 2008. "From the ground up: Impacts of a pro-poor community-driven development project in Nigeria," IFPRI discussion papers 756, International Food Policy Research Institute (IFPRI).
  2. Rosenzweig, Mark R. & Stark, Oded, 1987. "Consumption Smoothing, Migration and Marriage: Evidence from Rural India," Bulletins 7515, University of Minnesota, Economic Development Center.
  3. Salvatore Di Falco & Jean-Paul Chavas, 2007. "On Crop Biodiversity, Risk Exposure, and Food Security in the Highlands of Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 599-611.
  4. Phillip, Dayo & Nkonya, Ephraim & Pender, John L. & Oni, Omobowale Ayoola, 2009. "Constraints to increasing agricultural productivity in Nigeria: A review," NSSP working papers 6, International Food Policy Research Institute (IFPRI).
  5. Jansen, Hans G. P., 1993. "Ex-ante profitability of animal traction investments in semi-arid Sub-Saharan Africa: Evidence from Niger and Nigeria," Agricultural Systems, Elsevier, vol. 43(3), pages 323-349.
  6. Hiroyuki Takeshima & Futoshi Yamauchi, 2012. "Risks and farmers’ investment in productive assets in Nigeria," Agricultural Economics, International Association of Agricultural Economists, vol. 43(2), pages 143-153, 03.
  7. Seema Jayachandran, 2005. "Selling Labor Low: Wage Responses to Productivity Shocks in Developing Countries," UCLA Economics Online Papers 370, UCLA Department of Economics.
  8. Paul A. Lewin & Monica Fisher & Bruce Weber, 2012. "Do rainfall conditions push or pull rural migrants: evidence from Malawi," Agricultural Economics, International Association of Agricultural Economists, vol. 43(2), pages 191-204, 03.
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