Identify Risk Management Tools in Fish Farms and their Effect on the Technical Efficiency in Mahneshan County

Among agricultural activities, aquaculture has shown the highest growth among food production sources in the last two decades. According to the F.A.O., aquaculture is the best supply of the maximum motivation for poverty alleviation. Uncertainty and risk in the aquaculture subsector, like other agricultural subsectors, are formed due to unfavorable weather conditions, the prevalence of diseases, and price fluctuations. Naturally, due to uncontrollable factors and risks, the efficiency of production units is expected to decline. Identifying sources of these risk in aquaculture activities is one of the key points for risk management. It is clear that risk can never be eliminated, but it can be managed by identification. Zanjan province is one of the major fish farming regions of the country and among them is the city of Mahneshan which accounts for about 65% of the total fish production of this province.

The purpose of this study is to the identification of risk management tools in fish farms and their effect on the technical efficiency of these farms in Mahneshan county. To this end, the stochastic frontier production function was applied and the required data were collected by surveying a questionnaire by stratified proportional random sampling from salmon farms in three-zone including Central, Angoran, and Oryad in Mahneshan county in 2020. In general, risk management strategies in the agriculture sector were divided into two categories: in-farm risk management strategy and off-farm risk management strategy. These two categories are classified into 8 risk management tools and then measured by the Likert spectrum. The Cobb-Douglas functional form was selected to estimate the stochastic frontier production function.

The results showed that among the in-farm risk management strategies, the selection technology with less risk tool is the most popular and the tool of the financing method is very common in the off-farm risk management strategies. In address to the comparison between In-farm and Off-farm’s risk management strategies, the fish farmers are more likely to use in-farm risk management strategies. The estimated results of the Cobb-Douglas production function showed that the total area of pools, number of baby fish, labor, and feed cost, Floating usage, and Aerator usage have a significant effect on fish production. According to the results, if the total pools area increases by one percentage, the frontier fish production will increase by 0.06 percentages, and if the number of baby fish increase by one percentage, the fish production will increase more than one percent. After estimating the frontier production function, the technical inefficiency model was estimated. The results showed that with increasing age, the technical efficiency rise and enhancing the participation to the fish training courses and being fish breeding as the main job, have a positive effect on the technical efficiency so that it improves significantly. Also, increasing the number of pools and being fish farming as the main job has a positive effect on the technical efficiency of farms. Regarding the impact of risk management tools on the technical efficiency of fish farms, it was observed that the technology selection with fewer risk tools has a negative impact, and the flexibility tools, and the use of marketing contracts tools have a positive effect on breeders' technical efficiency. So, by using these tools, the technical efficiency of the farms also increases. Finally, the technical efficiency of the farms was calculated and results revealed that about 50% of farms have an efficiency of more than 90%, and farms with a pool area of 1000-1500 square meters with 89% efficiency, have the highest technical efficiency.

The results showed that among the in-farm risk management strategies, the selection technology with less risk tool is the most popular and the tool of the financing method is very common in the off-farm risk management strategies. In address to the comparison between In-farm and Off-farm’s risk management strategies, the fish farmers are more likely to use in-farm risk management strategies. The estimated results of the Cobb-Douglas production function showed that the total area of pools, number of baby fish, labor, and feed cost, Floating usage, and Aerator usage have a significant effect on fish production. According to the results, if the total pools area increases by one percentage, the frontier fish production will increase by 0.06 percentages, and if the number of baby fish increase by one percentage, the fish production will increase more than one percent. After estimating the frontier production function, the technical inefficiency model was estimated. The results showed that with increasing age, the technical efficiency rise and enhancing the participation to the fish training courses and being fish breeding as the main job, have a positive effect on the technical efficiency so that it improves significantly. Also, increasing the number of pools and being fish farming as the main job has a positive effect on the technical efficiency of farms. Regarding the impact of risk management tools on the technical efficiency of fish farms, it was observed that the technology selection with fewer risk tools has a negative impact, and the flexibility tools, and the use of marketing contracts tools have a positive effect on breeders' technical efficiency. So, by using these tools, the technical efficiency of the farms also increases. Finally, the technical efficiency of the farms was calculated and results revealed that about 50% of farms have an efficiency of more than 90%, and farms with a pool area of 1000-1500 square meters with 89% efficiency, have the highest technical efficiency.

Given that producers use risk-reduction tools rather than transferring risk on farms and this also harms the technical efficiency, so it is recommended that in a progressive world to take advantage of modern production technology, a great facility should be provided.