Abstract:
In this research, the risk attitude of wheat farmers and the damage management methods employed in the event of potential damage have been identified. To determine risk attitude, the Expected Utility Theory and the direct extraction method of the utility function were used. To this end, interviews were conducted with 126 wheat farmers in Golestan Province, and their relevant questionnaires were completed. The results of the research show that 88 percent of wheat farmers are risk-averse and most fall into the moderate risk-aversion category. Furthermore, in the event of damage and crop loss, wheat farmers use loans and credits as the primary tools for financing and managing the damage.
Machine summary:
IB} Keywords: {VKRisk attitude, direct utility function extraction method, wheat farmers of Golestan provinceVK} {o(*)-respectively: PhD student and Professor of the Department of Agricultural Economics, University of Tehran e-mail: o@refordswhoo.
Research Background Similar studies have been conducted regarding the determination of farmers' attitudes toward risk inside and outside the country, the results of which are as follows: Dillon and Scandizzo (1987) using the direct utility function extraction method for two groups of smallholders and slashers in northern Brazil in two situations, guaranteed livelihood and risky livelihood, showed that in the first situation 70% of smallholders and 58% of slashers are risk-averse, and in the second situation 87 percent of smallholders and 79 percent of slashers are risk-averse.
Bond and Wander (1980) regarding the attitude toward risk of farmers throughout Australia using the direct utility function extraction method showed that risk aversion is the most dominant tendency in the Australian agricultural sector; however, the degree of risk aversion is relatively low.
The study by Oghelterp (1995) using the direct utility function extraction method regarding farmers in northern England showed that all sampled individuals are risk-averse.
The expected utility of the risky prospect for a person is equal to: (1)(refer to page image) {o(1)- o direct elicitation of utility function} {o(2)- o experimental methods} {o(3)- o observed economic behavior} The mathematical expectation or expected value of x is defined as (refer to page image), and the difference between E[u(x)] and u(x) can be used to determine risk preference.
{o(1)- etna-xe o} Research Findings Using the Utility Function Direct Extraction method or UED, the risk premium of 126 wheat farmers was determined.
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