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It is the more economical and scalable way to upgrade to digital farming for mostly for risk management purposes.
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It is equally important to note that a veritable technology tool to manage risk is Full Stack Software as a service (SaaS). With Agriculture being the main source of income for rural areas in many developing countries, it is important to leverage the power of technology to manage the accompanying Agribusiness risks.
ARM does not only allow farmers and businesses to be pro-active, it also helps to increase their capacity to assess, prepare for, absorb and adapt to risks. It mostly involves choosing processes and among alternatives that can help reduce financial effects resulting from uncertainties.
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It is however important to understand how to mitigate the above identified risks, and that is how the concept of Agricultural Risk Management (ARM) came about which is simply described as an innovative approach for improving the resilience of vulnerable rural households. Accidents, illness, death, and divorce are examples of personal crises that can threaten a farm business. Human or personal risk refers to factors such as problems with human health or personal relationships that can affect the farm business. Tax laws, regulations for chemical use, rules for animal waste disposal, and the level of price or income support payments are examples of government decisions that can have a major impact on the farm business.ĥ. Institutional risk results from uncertainties surrounding Government actions. Rising interest rates, the prospect of loans being called by lenders, and restricted credit availability are also aspects of financial risk.Ĥ. Financial risk results when the farm business borrows money and creates an obligation to repay debt. The nature of price risk varies significantly from commodity to commodity.ģ. Price or market risk: This refers to uncertainty about the price producers will receive for commodities or the prices they must pay for inputs. Weather, disease, pests, and other factors affect both the quantity and quality of commodities produced.Ģ. Production risk: This occurs from the uncertain natural growth processes of crops and livestock. The uncertainties inherent in weather, yields, prices, Government policies, global markets, and other factors that impact farming can cause wide swings in farm income.įurthermore, based on my research, I discovered that there are five general types of risk which are production risk, price or market risk, financial risk, institutional risk, and human or personal risk.ġ.
In actual sense, risk is an important aspect of the farming business. This is what this article intends to address, more specifically about how Software as a service (Saas) is helping key stakeholders of the agri-ecosystem to mitigate farmers and farm risk in a bid to boost food security in Africa. Does technology play a role in this regard? Many farmers do not know whether rainfall will be good or bad over a season they do not know the prices they will receive for produce sold and they do not know whether their crops will be infected by disease and because these risks are not under the control of farmers, even as they become more commercial, there is need to manage their risk effectively enough to catalyze financing for them. Many farmers live on the edge of extreme uncertainty, sometimes falling just below, and sometimes rising just above the threshold of survival. Farmers in developing countries are frequently exposed to the uncertainties of weather, prices and disease.
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