Farmers' perceptions towards various risk sources: Evidence from Tunisia

The objective of this paper is twofold. First, we analyze farmers’ perceptions of various risk sources. Second, we identify socio-demographic characteristics of the farmers that affect their risk perceptions. The data were collected using a structured questionnaire administered to a sample of 931 farmers distributed between different regions of Tunisia (Central and Northwestern). The data were analyzed using principal component analysis, cluster analysis, and a bivariate probit model. We identify two components out of nine risk sources: socio-economic and natural risks. The estimation results of the bivariate probit model reveal that rainfed farming, agriculture as main activity, young age, not being assisted from extension services, and being a female farmer are significantly and positively related to higher perceived risk levels. Location is only significant for the socio-economic component risk. We therefore suggest that there is a need of targeted risk management strategies for different categories of farmers in order to reduce risk and enhance the efficiency of agriculture in Tunisia.