Risk analysis of applying improved agricultural technologies in Gedaref rain-fed sector of eastern Sudan (1990-2004)

Rajaa H. Mustafa, Mohamed B. Elgali, F. Kuhlmann

Abstract


It is argued that the adoption of recommended improved technology in the Gedaref area can increase farm income while diversification by introducing sheep and gum arabic enterprises to sorghum monoculture of the Gedaref may lead to farm income stability. Under these arguments in favor of diversification and the use of improved technology, this research work aims mainly at studying and analyzing the performance of the mechanized rain-fed sector of Gedaref under uncertainty. Specifically, the study has evaluated different production strategies in terms of risk efficiency under the proposed improved cultural practices. The study mainly applies a stochastic budgeting approach to evaluate the proposed production strategies under improved cultural practices. The stochastic budgeting simulation is done by using @ Risk software that allows the representation of uncertainty as probability distributions and then performs stochastic simulation using Latin Hypercube technique and the results are then given also as probability distributions. By applying the strategies of improved practices, farmer’s chance to lose at the end of the planning period is very small. The Cumulative Distribution Functions (CDFs) graphs and the statistics generated from the stochastic simulation for the strategies under improved practices showed that, they are the dominant alternatives in terms of risk efficiency in a first degree sense i.e. they are preferable for a wide range of farmers’ absolute risk aversion level (+∞ > ra <-∞). The results of comparing the distribution of each strategy within improved practices indicated that the application of the improved technological packages has a positive impact in maintaining income stability in all investigated strategies.


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