Risk and Risk Management Practices of Rice Millers in Selected Local Government Areas in Cross River State, Nigeria

The study is on risk and risk management practices of rice millers in selected Local Government Areas in Cross River State, Nigeria. Specifically, the study analyzed the perception of rice millers on sources of risk in rice milling in the study area, identified the various risk management practices used by the rice millers, determined the relationship between risk management practices and rice milling output and examined the factors affecting the utilization of risk management practices by rice millers. Two Local Government Areas were purposively selected from each of the three agricultural zones in Cross River based on their level of rice production in the State. Proportionate random sampling was used to select 105 rice millers from the list of rice millers in the study area. Data were collected using structured questionnaire and analyzed using mean, frequency table, percentages and standard deviation, Kendall W-statistics, correlation analysis and binary logistic regression. The study showed that respondents perceived lack of capital, output price variability, input price variability, changes in technology, high cost of labour, high rate of interest and access to input as sources of high risk while the theft, ill-health, war and government regulations were considered as low risk in the study area. Also, diversification of enterprise was the most favoured risk management practice in the study area followed by diversification of source of income for the enterprise, cooperative marketing and insurance. There was a weak but positive correlation between risks management practices and rice milling output with risk management practices explaining only 5 percent of the variation in rice milling output. The weak relationship is an indication that risk management practices is not the only determinant of increase in milling output but other factors like direct production inputs and capacity of the mill may also influence output. The binary logistic regression explained 62.3 percent (Nagelkerke R2) of the variance in utilization of risk management practices and correctly classified 81.0 percent of cases. It showed that variables such as education, household size, mill capacity, farmer of rice, and perceived risk sources were also positively affected the utilization of risk management practices. The implication of the findings is that rice millers require a level of education and orientation in enterprise management to enable them overcome the negative effect of risk in business.