1 min
In a business environment, risks occur as a normal event, which could be caused by either internal or external factors. Thus, it is expected that a successful business must be able to manage their business risks effectively in order to fully enjoy the available business benefits. Therefore, risk management skill becomes mandatory for any business person to survive in emerging markets like ours.
As smallholder farmers, this skill should not be alien to them as they transit to a business enterprise. This is essential for the agricultural sector because of its high exposure to various risks. Furthermore, they should be able to diagnose and identify the various risks in their operations, and have the capacity to proffer practicable mitigations to manage and monitor them to achieve the desired goal (which is food security).
In practice, there are several risks that a smallholder farmer faces; from production risk, to financial risk, market risk, labour risk, climate risk and other risks that impede his or her growth to scale. When these risks crystallize without any mitigant, such farmers become poorer and less productive than before, and sadly some of these risks occur almost every season or periodically, leading to destabilised processes or operations. Therefore, having the required risk management skills would help smallholder farmers to build more resilience, better decision making process and quickly transit into a business enterprise as those risks become business opportunities that can be seized. For instance, a smallholder farmer with the required knowledge of the various insurance packages (cover) and processes would not only buy for himself or herself, but becomes an agent who sells to other farmers and earns additional income from it. Likewise for the reclaim process, he or she can guide the farmers or farmers group to obtain all the necessary information and evidence to make a strong case for a good claim package. This is a case of applied knowledge linked with impact, and this is the stage where we should aim to get smallholder farmers on their journey to food security.
The stage should also be the goal of every stakeholder. It is very important that we develop strategies and blueprint to help the smallholder farmers to transition beyond farming to providing appropriate knowledge to them to grow business, especially equipping them with risk management skills, which is the foundation of agribusiness. To achieve food security, our smallholder farmers must be risk managers, who understand the changing dynamics of our food system, having the capacity to develop strategies that support the food system and help to manage and optimize the food system for higher productivity. This should be the starting point for us and now is the time to start.
In practice, there are several risks that a smallholder farmer faces; from production risk, to financial risk, market risk, labour risk, climate risk and other risks that impede his or her growth to scale. When these risks crystallize without any mitigant, such farmers become poorer and less productive than before, and sadly some of these risks occur almost every season or periodically, leading to destabilised processes or operations. Therefore, having the required risk management skills would help smallholder farmers to build more resilience, better decision making process and quickly transit into a business enterprise as those risks become business opportunities that can be seized. For instance, a smallholder farmer with the required knowledge of the various insurance packages (cover) and processes would not only buy for himself or herself, but becomes an agent who sells to other farmers and earns additional income from it. Likewise for the reclaim process, he or she can guide the farmers or farmers group to obtain all the necessary information and evidence to make a strong case for a good claim package. This is a case of applied knowledge linked with impact, and this is the stage where we should aim to get smallholder farmers on their journey to food security.
The stage should also be the goal of every stakeholder. It is very important that we develop strategies and blueprint to help the smallholder farmers to transition beyond farming to providing appropriate knowledge to them to grow business, especially equipping them with risk management skills, which is the foundation of agribusiness. To achieve food security, our smallholder farmers must be risk managers, who understand the changing dynamics of our food system, having the capacity to develop strategies that support the food system and help to manage and optimize the food system for higher productivity. This should be the starting point for us and now is the time to start.
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