Livestock production, particularly pig production has an instrumental value for producers and consumers. Smallholders also consider it as an income-smoothing activity. However, pig production is plagued by many exogenous factors, especially diseases, making it a risky activity with considerable variability in income. The purpose of this study is to evaluate the drivers of income variability and farmers’ risk preferences in pig production.
Using survey data from an archetypical risk-prone environment, we shed light on the drivers of income variability and farmers’ risk attitudes. We also evaluate the performances of pig farmers. In so doing, we employ various econometric techniques. First, we apply the Generalised Linear Model to determine the extent to which production risks influence income variability. Second, we used Sharpe’s ratio to conduct a comparative evaluation of the income and investment performance of pig farmers.
Our results confirm the risk-averse nature of pig farmers. Further analysis indicates that farmers’ gender, as well as the presence of pests and diseases, positively influences income variability, while the ability of pig farmers to adopt new farming methods negatively drives income variability. Our results generally indicate a positive performance, with risk-averse farmers being the most performing category of pig farmers.
We suggest improvements in pig farm management such as in the quality and frequency of administration of vaccines and drugs, which may boost animal health and reduce income variability. Our results and suggestions, though context-specific, provide support for policy development in pig production in developing countries in the tropics.
This study provides rare evidence of drivers of income variability and farmers’ risk preferences in tropical livestock production.
