How Farmers Cope With Rainfall Risk

The strategies farmers use to manage uncertain rains, from choosing safer crops and diversifying income to borrowing and migrating, and why some of these strategies keep them poor.

Farmers in rainfed areas face constant uncertainty about rain. They have developed many strategies to manage this risk.

Before the season: reducing risk

Safer crops: choosing drought-tolerant crops like millets or short-duration varieties instead of higher-return but riskier crops.
Crop and plot diversification: planting several crops or on scattered plots with different soils.
Delayed investment: holding back on fertiliser and other inputs until rains look reliable.

Economists Mark Rosenzweig and Hans Binswanger found in a 1993 study of Indian villages that poorer farmers facing more rainfall risk chose safer, lower-return crops and investments. This protects them from disaster but lowers their average income, helping to keep them poor. Richer farmers could take more risk and earn more.

After a shock: coping

Selling livestock or other assets.
Borrowing from moneylenders, relatives or self-help groups.
Migrating to cities for work.
Cutting consumption, sometimes including food and children’s schooling.
Relying on government schemes, like MGNREGA and food rations.

Some coping strategies, such as pulling children from school or selling productive assets, harm long-term prospects.

Formal tools

Crop insurance, such as PM Fasal Bima Yojana, launched in 2016.
Irrigation investments, including drip and sprinkler systems.
Weather advisories on phones.
Income support like PM-KISAN.

Why reducing risk matters for growth

When farmers are protected against disasters, they can take more productive risks, such as using better seeds and more fertiliser. Research in several countries found that when farmers had rainfall insurance, they invested more in their farms.

The cautious choice

A farmer in Karnataka could plant a higher-value crop but fears a dry spell would wipe out her investment. She plants ragi instead, which survives dry weather but earns less. With reliable insurance, she might take the risk and earn more on average.

Thinking poor farmers avoid new crops out of ignorance

Choosing safer crops is often a rational response to risk when a bad year could be disastrous.

Key takeaways

Farmers manage rainfall risk through crop choice, diversification and delayed investment.
Poorer farmers often choose safer, lower-return options, which can keep them poor.
After shocks, households sell assets, borrow, migrate or cut consumption.
Insurance, irrigation and advisories let farmers take more productive risks.