Risk Attitudes and Financial Profi tability of Tomato Farmers - A Study in Bangladesh

Abstract

Purpose: Tomato production in the world has increased tremendously within last few decades. Nevertheless, tomato farmers are facing production, market, price and fi nancial uncertainty. Management of these risks is greatly infl uenced by their attitudes towards risk. So, the objective of this study is to determine the risk attitude and profi tability of tomato farmers in Bangladesh. Research Method: Sixty sample respondents of tomato farmers were selected from Mymensingh district. The Safety-First principle was used to estimate risk attitude coeffi cient while obit regression model was utilized to estimate the factors aff ecting risk attitudes of tomato farmers. In addition, fi nancial profi tability was analyzed from diff erent points of view. Findings: Most of the tomato farmers were risk averse. Results fi nd that only 18% of farmers were risk preferring while 42% of farmers were risk averse. Risk preferences of farmers increase with training and education while risk preference decrease with age and experience. Training and education help to understand the importance of receiving newly introduced technology, timely application of seed, irrigation and fertilizer. Education assists to earn from diversifi ed sources that make them risk preferred. The benefi t cost ratio (BCR) of tomato farming was 2.31 indicating that tomato farming is profi table. Research Limitation: A small sample size was used for this study. Therefore, policy makers should be cautious to generalize the results to a wide context of tomato farmers in developing countries. Originality/ Value: Productivity and profi tability of tomato farmers can be improved if farmers can manage diff erent risks and uncertainty associated with production practices.