Farmers’ risk attitudes to influence the productivity and planting decision: A case of rice and maize cultivation in rural Uganda

The effects of Ugandan farmers’ attitudes toward risk on their decisions about rice production are closely analysed and discussed. A three-step procedure is proposed: 1) farmers’ characteristics determine farmers’ risk attitudes, 2) their risk attitudes influence yield, and 3) yield affects decisions on acreage. This procedure is based on the assumption that acreage decisions are a reflection of farmers’ actual yields, which are associated with risk-averting farming practices. The estimation results show that age and religion are significantly correlated with farmers’ risk attitude, that risk-averse farmers perform better in terms of yield, and that higher yields subsequently increase acreage for production. These attitudes partly account for the diminishing increase in rice production. The results imply that effective ways to increase rice acreage are to increase the potential yield of rice and to promote rice cultivation for lands that are suited to rice cultivation.