Adoption of risk management strategies in European agriculture

Abstract

Given the increased attention to risk management in the European Union's (EU) Common Agricultural Policy (CAP), it is important to monitor and evaluate the rates of adoption by farmers and their determinants over time. Current European agricultural statistics (Farm Accountancy Data Network) capture few indicators that assess such strategies, but complementing data collected during the EU Framework 7 project FLINT have allowed the adoption of risk management strategies and the determinants of farmers' preference for complementary or substitute instruments to be assessed. Adoption rates of risk management instruments such as insurance contracts, price contracts, off-farm income, other types risk of reduction measures and other gainful activities vary signifi cantly across EU Member States and farming types. Econometric analysis indicates that larger farms more often adopt crop insurance, occupational accident insurance, price contracts and diversifi cation but are less likely to adopt credit avoidance and off-farm employment (at a signifi cance level of 1 per cent). For policy analyses these indicators are a step forward for the determination of the net impacts and establishment of counterfactuals in the long term (i.e. time series encompassing also adverse years) for measuring the impact of the CAP at farm level.

Positie primaire producent in de keten : samenwerking en prijsvorming

“…Relatief weinig aandacht is besteed aan inkomensfluctuaties en risico's. Voor meer informatie over risico's en maatregelen om de risico's te verminderen zie Asseldonk et al (2016 In de volgende paragrafen is kort toegelicht welke aanpak en welke data gebruikt zijn bij bovengenoemde activiteiten.…”

Income Risk Management in Agriculture using Financial Support

“…All these strategies have pros and cons and considering the level of risk tolerance of the farmer, one or several combinations may be used. Van Asseldonk et al (2016) argued, that European farmers may choose from three general types of risk management strategies: on-farm (e.g. diversification), price risk transfer (e.g.…”

“…To better fit the agricultural policy, the policy-makers also need to have a better understanding of farmers' intentions to apply different risk management strategies. Some authors (Hardaker et al 2015, Ratas and Nurmet 2017, Huirne et al 2000, Musser and Patrick 2002, Kimura et al 2010, Girdžiūtė 2013, OECD 2000, 2009, 2011, van Asseldonk et al 2016, van Winsen et al 2016) present a comprehensive view on risks in agriculture and different strategies to manage these risks. Other authors (Marra et al 2003, Emery and Franks 2012, Bocquého, et al 2014, Emery 2015, Prager 2015, Barham et al 2018, Pivoto et al 2018) made some interesting studies on how farmer"s behaviour influenced the decision-making process and risk perception.…”

Impact of off-farm income and paid taxes on the composition and volatility of incomes and wealth of dairy farmers in the Netherlands

“…Partly these are on-farm measures, and partly off-farm. Diversification into different agricultural production activities is one of the most adopted risk management strategies (Asseldonk et al, 2016). Trestini et al (2017) look at the impact of diversification on the income variability.…”

“…Off-farm activities are relevant because a diversification of activities (inside the farm but especially outside the farm) is an important risk management strategy (van Asseldonk et al, 2016;de Mey et al, 2018). Ahmadzai (2020) analyses the link between off-farm income and diversification on farms in Afghanistan.…”