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Farmers’ Response to Rainfall Variability and Crop Portfolio Choice: Evidence from Ethiopia
Mintewab Bezabih, Salvatore Di Falco, Mahmud Yesuf
RFF Discussion Paper EfD 11-10 | December 2011
RESEARCH TOPICS:
Abstract
This paper studies the patterns of farmers’ crop choices for a multiple-crop portfolio, where production risk considerations and rainfall uncertainty are likely to be critical factors. Our analysisemploys plot-level panel data from Ethiopia, combined with seasonal and yearly rainfall variability (from 30 years of meteorological data corresponding to the survey villages). Using the single indexapproach, our results indicate that the combined riskiness of crop portfolios at a household level responds negatively to annual rainfall variability, while seasonal rainfall variability has less consistent impact. Farmers are more likely to select less risky crops with less return, even when intercrop interactions are taken into account. Moreover, development policies designed to enhance accumulation and risk taking should take into account the importance of such exogenous factors as weather in ex-ante risk taking.
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