• Optional decision making needs rational selection of a course of action.
105 6.0 Tutor Marked Assignment 1. What is decision making 2. What are the various steps involved in decision making. 7.0 References and other sources Giles T and Stansfield M (1990): The Farmer as Manager, Second Edition CAB International Publishers, Wallingford, UK. Chapter 5 PP 44 – 57. Damisa M.A and M. Yohanna (2007): Role of Rural women in farm management Decision making Process: Ordered probit Analysis. World Journal of Agricultural Science 3 (4): 543-546 IDOSI Publisher
106 Unit 4: Risks and uncertainty in Agriculture 1.0 Introduction 2.0 Objectives 3.0 The body of the unit 3.1 Meaning and scope of risk and uncertainty 3.2 Sources of risks and uncertainty in Agriculture 4.0 Conclusion 5.0 Summary 6.0 Tutor Marked Assignment 7.0 References
107 1.0 Introduction Any decision or course of action is liable to risk or uncertainty if several possible outcomes could arise from it. In this unit, you will get more acquainted with the meaning and scope of risk and uncertainty as well as the various sources of risks and uncertainties in agriculture 2.0 Objective It is hoped that at the end of this unit, you will be able to: • Define and explain risk and uncertainty • Discuss the various sources of risks and uncertainties in agriculture 3.0 The body of the unit 3.1 Meaning and scope of risk and uncertainty As strictly defined in economics probabilities can be given to the alternative outcomes when there are alternative outcomes to which objective probabilities cannot be fixed that is, the form of each possible outcome is known but the chance of occurring is not, the situation is one of uncertainty. The most distinguishing feature of agriculture from other business is its great dependence on forces of nature. Farming is continuously subjective to the effect of the forces of nature. Farm managers are often concerned with how to cope with uncertainties such as fire, drought, insects, various diseases, flood etc. Risk can be defined as uncertainty of loss. This definition has two main features: • It eliminates a situation where there is no likelihood of loss. • It also eliminates the situation where the loss is certain. Technically speaking one can talk about the likelihood or the probability of occurrence if it is possible to back this up with a probability figure based on adequate research findings. For example, a statistical probability of having an occurrence of drought in the middle belt of Nigerian should be known to the meteorologist if he has collected rainfall data over the past two years and have done necessary calculations. Technically speaking, in case of uncertainty, the probability of occurrence of the event under consideration is not known most probably because there is no available data with which any meaningful estimation and calculation can be done. There are definite risks and uncertainty in almost every production activity the farmer undertakes. For example,
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