Risk management in the rain-fed sector of Sudan [Elektronische Ressource] : case study, Gedaref area eastern Sudan / by Rajaa Hassan Mustafa

Informations

• Publié par: justus-liebig-universitat_giessen
• Publié le: 01 janvier 2006
• Nombre de lectures: 29
• Langue: English
• Poids de l'ouvrage: 2 Mo

Extrait

INSTITUTE OF AGRICULTURAL AND FOOD SYSTEMS
MANAGEMENT

FACULTY OF AGRICULTURAL AND NUTRITIONAL SCIENCES,
HOME ECONOMICS AND ENVIRONMENTAL MANAGEMENT


JUSTUS – LIEBIG UNIVERSITY, GIESSEN






Risk Management in the Rain-fed Sector of Sudan:
Case Study, Gedaref Area Eastern Sudan

By


Rajaa Hassan Mustafa
M Sc. Agriculture Economics (1997)
Faculty of Agricultural Sciences
University of Gezira – Sudan


May 2006

A Dissertation Submitted in Fulfillment of the Academic Degree of
Doctor of Agricultural Sciences (Dr. Agr.)

Supervisor

Prof. Dr. Dr. h. c. Friedrich Kuhlmann



Preface
This study is a part of a series of analysis of the economic development and social problems
in developing countries, carried out at the University of Giessen within the DAAD program
“Agricultural Economics and Related Sciences”. The underlying empirical research work,
including a six month field study was done during the period 2001-2006 and has led to a PhD
degree for the author.

The Study aims mainly to analyze the rain-fed mechanized farming system of Eastern Sudan
under uncertainty with special reference to yield and price instability. The research work
results show that business and financial risks can have serious implications for farmer’s
decisions and farm income variability. However, farmers could be more risk-efficient and
earn more income by adopting more diversified farming systems and by applying the
recommended improved practices.

For the editors: Siegfried Bauer, University of Giessen, Germany











Acknowledgements

I am greatly indebted to my supervisor Prof. Dr. Dr. h. c. F. Kuhlmann for his valuable
guidance and advice throughout this study. Without his continuous support I would not have
gone any far. I am also grateful to my second supervisor Prof. Dr. S. Bauer for his supportive
advice and comments that led to a successful completion of the research. My thanks extend to
Prof. M. Mau for his continuous help and follow up from the early stages of this work.

I am grateful to my colleagues in the Institute of Agricultural and Food Systems Management
and in the DAAD PhD program, Giessen University for their assistance and help during my
stay in Germany. I would like also to thank my colleagues in the Department of Agricultural
Economics of the Gezira University, and the officials of the Gedaref State, Sudan for their
tremendous support during the field survey.

I am thankful to the German Academic Exchange Service (DAAD), for its financial support
during the whole period of the work. Finally, special thanks to my husband Mohamed and my
daughters Dahlia and Leena for their love, patience and support without them this work would
not have been accomplished.






TABLE OF CONTENT i


TABLE OF CONTENTS

TABLE OF CONTENTS …………………………………………………….… i
LIST OF TABLES…………………………………………………………….... v
LIST OF FIGURES…………………………………………………………….. vii
ABBREVIATIONS ……………………………………………………………. x

1 INTRODUCTION1
1.1 Introduction………………..……………………………………………… 1
1.2 Problem statement………………………………………………………… 2
1.3 Objective of the Study…………………………………………………..... 4
1.4 Hypothesis………………………………………………………………… 5
1.5 Organization of the Study………………………………………………… 5

2 ECONOMY AND AGRICULTURAL DEVELOPMENT IN SUDAN……... 6
2.1 General Background……………………………………………………… 6
2.2 Structure of the Sudanese Economy……………………………………… 8
2.3 Growth Trends of Sudan Economy……………………………………….. 9
2.4 Structure of Exports and Imports………………………………………..... 10
2.4.1 Sudan Exports………………………………………………………… 11
2.4.2 Sudan Imports………………………………………………………… 12
2.5 Economic Policies and Development Plans…………………….………… 15
2.5.1 The Three-Year Economic Salvation Program, (TYESP) (1990-
1993)………………………………………………………………….. 15
2.6 The Agriculture Sector of Sudan………………………………………..... 16
2.6.1 Structure of the Sudanese Agriculture………………………………... 17
2.6.1.1 The Irrigated Sub-Sector………………………………………... 18 .1.2 The Mechanized Rain fed Sub-Sector………………………….. 18
2.6.1.3 Traditional Rain fed Sub-Sector………………………………... 19 .1.4 Livestock………………………………………………………... 19
2.6.1.5 Forests…………………………………………………………... 19
2.6.2 Performance of the Agriculture Sector……………………………...... 20
2.6.3 Concluding Remarks………………………………………………….. 21

3 STUDY AREA……………………………………………………………….. 23
3.1 Historical Overview of Mechanized Rain-fed Farming in Sudan……..…. 23
3.2 Relative Importance of the Gedaref Area………………………………… 26
3.3 General Features of the Study Area……………………………………..... 28
3.3.1 Rainfall………………………………………………………………... 29 ii TABLE OF CONTENT

3.3.2 Soils…………………………………………………………………… 32

3.4 Overview of the Farming System and Related Institutions in the Study
Area……………………………………………………………………........ 32
3.4.1 Agricultural Activities………………………………………………... 32
3.4.1.1 Crop Production……………………………………………........ 33
3.4.1.1.1 Sorghum………………………………………………… 33 3.4.1.1.2 Sesame……………………………………….…………. 34
3.4.1.2 Livestock Production…………………………………................ 36 .1.3 Forests Production…………………………………………........ 36
3.4.2 Field Operations for Sorghum and Sesame Production……….……… 37
3.4.3 Land Tenure…………………………………………………………... 41
3.4.4 Markets and Marketing Systems……………………………………… 41
3.4.5 Financial Institutions and Methods of Finance……………………….. 43
3.4.5.1 The Formal Credit……………………………….……………… 43
3.4.5.1.1 The Agricultural Bank of Sudan (ABS)……………........ 43
3.4.5.1.2 Financing Methods ……………………………….…….. 44
3.4.5.1.2.1 The Salam………………………....………….. 44
3.4.5.1.2.2 The Murabaha…………………………............ 45
3.4.5.2 The Informal Credit…………………………………………….. 45
3.4.6 Government Agricultural Development policies……………….…….. 46
3.5 Risk and Agriculture in the Study Area…………………………….…….. 46
3.6 The Sudanese-Canadian Mechanized Rain fed Agricultural Project….….. 49

4 DATA COLLECTION AND RESLTUS OF THE FIELD SURVEY……….. 51
4.1 Data Collection…………………………………………………………… 51
4.1.1 Primary Data………………………………………………………...... 51
4.1.2 Secondary Data……………………………………………………….. 52
4.1.3 Data Problems and Management……………………………………... 52
4.2 Results of the Field Survey……………………………………………….. 53
4.2.1 Farmer’s Socio-Economic Characteristics……………………………. 53
4.2.1.1 Age Structure………………………………………………….... 53 .1.2 Education Levels…………………………………………….….. 54
4.2.2 Farming Activities……………………………………………………. 55
4.2.2.1 Crop Production……………………………………………........ 55 .2.2 Livestock Production………………………………………….... 56
4.2.3 Off-farm Activities…………………………………………………… 57
4.2.4 Land Use……………………………………………………………… 58
4.2.5 Technology Adoption………………………………………………… 59
4.2.6 Farmer’s Access to Credit……………………………………………. 61 TABLE OF CONTENT iii

4.2.7 Farmer’s Storage Capacity………………………….………………… 65
4.2.8 Machinery Ownership………………………………………………… 68
4.3 Concluding Remarks……………………………………………………… 69

5 METHODOLOGY…………………………………………………………… 70
5.1 Introduction……………………………………………………………….. 70
5.1.1 Definition of Risk…………………………………………………...... 70
5.1.2 Measurements of Risk………………………………………………… 71
5.1.3 Sources and Types of Farm-System Risk…………………………….. 72
5.2 Decision Analysis, Utility Theory and Certainty Equivalent Concepts….. 73
5.2.1 Decision Analysis: General Background………………………….….. 73
5.2.2 The Concept of Subjective Expected Utility (SEU)………………….. 75
5.2.3 The Concept of the Certainty Equivalent (CE)……………………….. 76
5.3 The Analytical Framework: Theoretical Approach………... ……………. 77
5.3.1 Introduction…………………………………………………………… 77
5.3.2 Stochastic Simulation: General Approach……………………………. 78
5.3.2.1 Stochastic Simulation as a Tool in Decision Analysis…………. 78 .2.2 Stochastic Budgeting Principles………………………………... 79
5.3.2.3 Stochastic Simulation and Stochastic Budgeting Software…….. 82
5.3.2.3.1 Basic Sampling Techniques……………………………. 82
5.3.2.3.1.1 Monte Carlo Sampling……………………....... 83 3.1.2 Latin Hypercube Sampling…………………… 84
5.3.3 Stochastic Efficiency Methods……………………………………….. 85
5.3.3.1 First -Degree Stochastic Dominance (FSD)……………………. 86 .3.2 Second–Degree Stochastic Dominance (SSD)…………………. 87
5.3.3.3 Stochastic Dominance with Reference to Function (SDRF)…… 87 .3.4 The SERF Method…………………………………………….... 88
5.4 Empirical Approach for Analyzing Business and Financial Risks……….. 89
5.4.1 Business Risk Analysis……………………………………………...... 90
5.4.1.1 Overvi