Profit And Risk Management Strategies In Selected Agribusinesses In Imo State, Nigeria

ABSTRACT

This study was designed to analyze profit and risk management strategies in selected agribusinesses in Imo, Nigeria. The methods of proportionate sampling, followed by random sampling techniques were adopted in selecting the Local Government Areas and the sample size. Data were collected with the use of questionnaire administered on 168 agribusiness entrepreneurs (87 food crops and 81 livestock entrepreneurs). The data collected were analyzed using frequency distribution, percentages, mean, variance, the ordinary least square multiple regression model and z-statistic. Results obtained indicate that the mean age of the agribusiness entrepreneurs was 47 years for food crops and 45 years for livestock, education was 9 years for food crops and 10 years for livestock and agribusiness experience was 19 years for food crops and 12 years for livestock. The net income generated by food crops and livestock entrepreneurs was ₦152195 and ₦256955 per year respectively. Production, market, financial and human risks were found to be serious risks in the study area. The major risk management strategies identified were disease control (47.4% for food crops and 66.7% for livestock agribusinesses) followed by enterprise diversification (23% food crops and 18.5% livestock). The mean variance or risk level was 23345 for food crops and 53671 for livestock agribusinesses. Results of the regression analyses showed that variables such as age, sex, household size, education, experience and farm size were significant factors influencing profit of the food crops and livestock agribusinesses. Also variables such as age, marital status, household size, education, experience and income were significant factors influencing risk level of food crops and livestock agribusinesses. The hypothesis that there is no positive relationship between the socio-economic characteristics of agribusiness entrepreneurs and the profit of the selected agribusinesses tested was rejected with respect to variables with positive coefficients, and accepted with respect to variables with negative coefficients. The hypotheses that there is no significant difference between the level of profit of food crops and livestock agribusinesses, and there is no significant difference between the risk levels of food crops and livestock agribusinesses tested were significant at 5% level which led to rejection of null hypotheses. It was concluded that both food crops and livestock agribusinesses were profitable but risky ventures and that the agribusinesses require entrepreneurs proper understanding of the risk management strategies to adopt so as to improve profit. Therefore it was recommended that government should review the system of land ownership in the State, create awareness campaign group to sensitize the citizens on the need to engage in agribusiness, provides incentives and suitable market for the agricultural products and also encourage agribusiness entrepreneurs to be educated so as to enable them adopt proper risk management strategies so that agribusiness returns can be closer to expectations.