Journal of Applied Biosciences (J. Appl. Biosci.) [ISSN 1997 - 5902]
Volume 10(2): 511 - 522. Published October 7, 2008.
Risk attitudes, resource rationalization and dairy intensification in Uganda: Stochastic dominance with observed and optimal net farm benefits
Nanyeenya WN.*, Mugisha J.***, Staal SJ.**, Baltenweck I.**, Romney D.**, Fawcett R.*^^ and Halberg N.*^
*National Agricultural Research Organisation, P.O. Box 295 Entebbe, Uganda; ** International Livestock Research Institute P.O. Box 30709, Nairobi, Kenya; *** Makerere University, PO Box 7062, Kampala, Uganda; *^ DIAS, Denmark; *^^ Bio-parametrics, Bradford, UK.
Corresponding author e–mail:will04nan@yahoo.com; williamnanyeenya@hotmail.com
ABSTRACT
Objective: Despite policy and development focus promoting dairy intensification, dairy management in Uganda still exhibits a continuum stretching from intensive to extensive systems. The purpose of this study was to examine farmers’ risk attitudes and its effects on enterprise choices and resource use under different dairy intensification systems.
Methodology and results: Longitudinal data were obtained from 14 cattle farms drawn from Masaka, Mbarara and Jinja districts. Farms were sampled to represent increasing levels of intensification i.e. zero grazing, semi-intensive fenced, tethered, and herded dairy systems. Observed and profit driven farm plans were established by net farm benefit maximization using linear programming whole-farm modeling. Risk attitudes were examined by stochastic dominance techniques. Results of net farm benefit maximization show that all dairy systems are profitable under observed plans and that profit plans would lead to higher farm net benefits in all dairy systems. All systems, except tethered ones, have second order degree stochastic dominance (SSD). Tethered systems show first order stochastic dominance (FSD). Producers in zero grazed, semi-intensive, fenced and herded systems are risk averse whereas tethered farms extravagantly utilized farm resources beyond optimal levels. Farmers’ risk averting behavior resulted into raising multiple crop enterprises in dairy systems. Optimal cattle herd sizes were in fenced and herded systems, slightly larger than optimal herds were kept in the semi-intensive and tethered systems while slightly lower than optimal herd sizes were raised in the zero grazing system.
Conclusion and application of findings: In order to successfully shift to more profitable systems, alternative management practices proposed are (1) adopting fewer but bigger crop enterprises; (2) maintaining traditional staple foods to cater for subsistence needs and preferences and to ensure gradual adjustment; (3) reclaiming fallow lands into production in zero-grazed, semi-intensive, fenced and herded systems; (4) releasing some land out of production in the tethered system; and (5) using more hired labour. Land released from the tethered system could be rented out to other land constrained systems. The proposed plans would lead to more stable dairy livelihood dynamics that are necessary for household subsistence needs, at the same time catering for traditional food preferences and nutritional diversity and also ensuring shifts towards the desired sustainable commercialisation of dairy systems under the Government’s Plan for Modernisation of Agriculture (PMA) development policy framework.
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