Abstract:
Social risks are a global phenomenon, having severe and direct implications for society,
incurring large-scale influence, depending on the cultural, political, and economic context
in which this phenomenon manifests itself. In recent years, a more holistic approach and
society-wide arrangements of social risk management that go beyond social protection
have become increasingly important to assist individuals and households to better manage
multiple social risk factors. Given this, in the West Hararghe zone, pastoralists and agropastoralists’
often deal with social risks through the market, informal and public
arrangements in the case of risks due to different reasons. However, the impact of the
institutional arrangements for social risk management has not been well studied and
documented. Hence, the major interest of this study was to identify institutional challenges
in smallholders’ commercialization, to assess perceived sources of social risks, to analyze
factors affecting the choice of institutional arrangements for social risk management; and
to evaluate the impact of institutional arrangements for social risk management on
smallholder’s commercialization the case of Mieso and Gumbi-Bordode districts of West
Hararghe zone of Oromia Regional State. To meet these objectives a total of 382 sampled
households were randomly selected from ten kebeles. Descriptive and inferential statistics
of principal component analysis, multivariate regression, and propensity score matching
(PSM) were employed to achieve these objectives. The result from principal component
analysis reveals that service delivery, tenure security, price changes, insufficient market
facilities, information, and channels were identified as institutional challenges that faced
smallholder’s commercialization having high factor loadings. The result of the principal
component analysis indicates social risks faced by households include loss of life and
property, politico-social instability, displacement, and violent conflict. The result of
multivariate regression inferred that family size, crop income, livestock income, and
extension service, organizational experience, social cohesion, and trust significantly
affected households choice of institutional arrangements. Estimates of the propensity
score matching shows that households’ decision to participate in the output market
decreased by 14%; while an increased in households’ income in crop and livestock
production value of birr 214.80 and 2952.61 respectively among participants than nonparticipants
of institutional arrangements for social risk management. The findings imply
that institutional arrangements are crucial interventions in managing social risks and
enhancing farm income. Thus, this study suggests a well-designed institution and
institutional arraignments for ensuring tenure security and removal of the underlying
sources of social risks and challenges thereby help the creation of consistent livestock
commercialization and sustained social protection in the area.