Evaluation of Risk Factors in Agriculture: An Application of the Analytical Hierarchical Process (AHP) Methodology

Roger Toledo1, Alejandra Engler2*, and Víctor Ahumada3

Risk in the agricultural sector has multiple dimensions or factors and prioritization of these can support decision making. On the other hand, knowing the importance of these risk factors for distinct agricultural activities and how they vary according to geographic zone constitutes relevant information for agricultural development. The objective of this study was to prioritize risk factors that are highly relevant for farmers in Central South Chile. The multi-criteria Analytical Hierarchical Process (AHP) methodology was used to define a decision structure with four risk factors or criteria: climate, price and direct cost variability, human factor, and commercialization. In general, results obtained showed that there are no important imbalances in the weightings of different risk factors. Price and cost variability was the most important factor (0.30) whereas climate was the least important (0.20). It also confirmed that there are spatial differences in the weightings obtained for the distinct risk factors which determine distinct risk levels for the respective agricultural activities according to geographic region.

Keywords: risk analysis, AHP, multi-criteria decisions.
1Instituto de Investigaciones Agropecuarias INIA, Av. Vicente Méndez 515, Chillán, Chile.
2Universidad de Talca, Facultad de Ciencias Agrarias, Av. Lircay s/n, Talca, Chile. *Corresponding author (mengler@utalca.cl).
3Universidad de Viña del Mar, Escuela de Ciencias Agropecuarias, Av. Agua Santa 7255, Viña del Mar, Chile.