Calculation of Farmers' Risk Aversion Degree and Its Impact on Crop Diversification (Case Study: Agricultural Lands of Northern Rudpay, Sari County)

Introduction The agricultural sector in Iran holds significant importance due to its substantial capabilities and capacities. This sector is full of risk and uncertainty. Risks and crises significantly influence producers’ behavior, shaping both the income derived from their products and their decisions regarding input use and product supply. Since individuals’ attitudes toward risk vary, effective risk management in the agricultural sector is a critical concern for farmers and stakeholders alike. Risk management encompasses the application of diverse methods, tools, and policies designed to mitigate the adverse impacts of different types of hazards. Risk and crises influence the behavior of producers, and the outcomes of these are reflected in their effect on the income generated from products and farmers' decisions regarding the use of inputs and product supply. People's attitudes toward these risks differ. Therefore, risk management in the agricultural sector is a critical issue for farmers and stakeholders in this field. Risk management refers to the use of various methods, tools, and policies to reduce the negative impacts of various types of hazards. Strategies such as crop diversification, contract farming, producing crops in exchange for guaranteed prices, and intercropping complementary crops can help mitigate their negative effects by spreading or distributing risks among individuals, organizations, products, and different options. Given the importance of this issue, the present study investigates the impact of risk aversion on crop diversification in the northern Rudpay region of Sari County.   Materials and Methods    In this study, the degree of risk aversion is calculated using the Multi-Attribute Utility Function (MAUF) method. This technique is based on calculating the weight of risk and, as a result, the risk aversion coefficient. This method is based on weighted goal programming. In this research, the two-stage cluster analysis method is used to classify the risk aversion coefficient. Finally, to examine the impact of risk aversion on crop diversification, the Tobit model will be used. The degree of crop diversification will be analyzed using the developed Herfindahl index. The data required for the research, such as water, land, fertilizer, and capital, were partly provided by centers affiliated with the Ministry of Jihad Agriculture in Mazandaran Province. The rest, such as the cropping patterns of each farmer, were collected through the completion of questionnaires and using simple random sampling in the northern Rudpay region. Results and Discussion Based on the classification, only one farmer is considered risk-neutral. This indicates that this individual among the farmers of the northern Rudpay region is indifferent to risk and chooses activities without considering their level of risk. In other words, the presence or absence of risk in performing activities is not a concern for them. The next category, which includes 24 individuals, indicates that 10% of the farmers have low risk aversion. The final category shows that 225 individuals (90%) of the sample fall into the high-risk aversion category. Therefore, as observed, the dominant tendency among the studied individuals is high risk aversion. This result suggests that farmers in the region are only willing to adopt new phenomena, such as modern programs and technologies, if they expect or anticipate a higher return compared to the current situation. The results of the Herfindahl index analysis show that the average crop diversification index is 0.57, which, according to various studies, is a reasonable and acceptable value. Nearly 70% of the farmers, with an index below the average Herfindahl value, have crop diversification and include different products in their cropping patterns. Furthermore, the results indicate that there is no significant relationship between crop diversification and the farmer's age, while variables such as the risk aversion coefficient, the farmer's education, farm size, and the share of agricultural income have a significant effect on crop diversification.   Conclusion Considering that agricultural products are generally produced in a risky and uncertain environment, this study aimed to calculate the degree of risk aversion of farmers in the northern Rudpay region of Sari County using the Multi-Attribute Utility Function. The results from determining the risk aversion level of farmers in the northern Rudpay region in the first part of the study show that the majority of farmers in the region have a strong degree of risk aversion. The results of examining the impact of socio-economic variables on crop diversification show that there is no significant relationship between crop diversification and the farmer's age. However, variables such as the risk aversion coefficient, the farmer's education, farm size, and the share of agricultural income have a significant effect on crop diversification. The share of agricultural income had the most significant impact on the choice of management tools for crop diversification. Specifically, as the share of income from agriculture increases, the likelihood of using management tools increases by 0.06%. Given the positive impact of education and income on the use of risk management tools, it is recommended to enhance farmers' awareness through agricultural extension programs and increase farmers' income by improving their cropping patterns.