An Economic Study for Estimating Risk Premium of Sheep Milk Production in AL-Nabk Area in Damascus Countryside Governorate

Abstract

This research aimed to conduct an economic study to estimate risk premium of sheep milk production in AL-Nabk area in Damascus countryside governorate, and to classify respondents whether they were risk-neutral, or risk-averse, or risk-lovers, using risk-premium model. The research relied on primary data of a sample of 165 sheep growers randomly selected from AL-Kastal, AL-Sahhel, and other places related to Dair-Atteaa and Qarra. The results showed that sheep milk total production costs were calculated nearly 53.5 thousand SP/head, of which variable costs and fixed costs accounted for 14.5 and 38.9 thousand SP/head respectively. In addition, milk revenues on average were nearly 35.887 thousand SP, and milk cost of 1 Kg on average was nearly 226.4 SP. The results also indicated that 28, 79, and 58 surveyed growers (i. e. 16.97%, 47.88%, and 35.15%) were risk-neutral, risk-averse, and risk-lovers respectively while risk-premium was positive and accounted nearly 2190 SP/head of milk producers who were risk-averse, and it was 0 of those who were risk-neutral. Meantime, risk-premium was negative and accounted nearly -1509.6 SP/head of milk producers who were risk-lovers. The research recommended that it is necessary to increase fodder, especially during dry seasons to prevent a reduction in herd size because of lack of fodder, and to establish specialized training courses of people living in areas that grow sheep, offer extension information to those people, and provide information about milk market and prices to reduce related risks and control them.