Income Risk Management in Agriculture using Financial Support

Abstract

Agriculture is often characterized by high variability of production outcomes, agricultural commodities prices are extremely fluctuating, and segmented agricultural markets will be influenced mainly by local supply and demand conditions, while more globally integrated markets will be significantly affected by international production dynamics. Unexpected changes in agriculture policy that affect producers" activities constitutes another important source of uncertainty to agricultural producers. Changes in regulations can have significant impact on the profitability of farming activities. Individual farms have different strategies and attitudes to manage the income risk. This article presents some theoretical insights on risks in agriculture, risk management strategies and the impact of financial support to manage risk. Government and other public stakeholders participate in risk management based on the economic benefits that farmers due to ineffective risk management and the inability of the market itself to neutralize the negative effects of the risk receive lower income. Then public stakeholders try to remedy market imperfections using various forms financial support or compensation mechanism. This strategy is often criticized, as it is impeding the functioning of free market and distorting the behaviour of farm managers in terms of risk tolerance. Therefore, the purpose of this article is to present the state-of-play in agriculture risk management and how agricultural producer"s behaviour and risk tolerance affect their risk perception and the choice of different risk management strategies. The results of the review are useful in assessing the effectiveness of the current Common Agricultural Policy and considering the obtained results to draw up strategic guidelines for the future Common Agricultural Policy.

Simulating risk management strategies for specialized farming systems: the potential impact of the EU income stabilization tool

“…, 2015). The risk reduction associated with income will improve farmers' well-being and competitiveness and their ability to expand their activities through innovation and relevant investment decisions (Novickytė, 2018). For instance, Vrolijk and Poppe (2020) study how fluctuations in farm incomes are offset or amplified by fluctuations in other elements affecting the well-being of farmers, such as off-farm income, the payment of taxes, and the wealth effects of an increase in land and quota values.…”

Analisis Risiko Kegagalan Budidaya Jamur Tiram Pada Bintan Cendawan

“…Risiko bencana didefinisikan sebagai probabilitas yang diharapkan dari urutan atau kerugian yang diakibatkan dari interaksi antara bahaya alam atau antropogenik dan kondisi rentan, menurut Birkman et al, dalam (Hernández, Carreño, & Castillo, 2018). Sejalan dengan pendapat yang diungkapkan (Novickyte, 2018), bahwa pendapatan pertanian tergantung pada banyak masalah lingkungan, teknologi dan tantangan ekonomi serta perubahan struktural dalam kebijakan dan lembaga pertanian. Untuk itu, (Hardaker et al, 2015) mengatakan bahwa petani harus menerapkan strategi dan instrumen untuk mengelola pendapatan dan risiko mereka dan untuk mencapai stabilitas pendapatan (Novickyte, 2018).…”

“…Sejalan dengan pendapat yang diungkapkan (Novickyte, 2018), bahwa pendapatan pertanian tergantung pada banyak masalah lingkungan, teknologi dan tantangan ekonomi serta perubahan struktural dalam kebijakan dan lembaga pertanian. Untuk itu, (Hardaker et al, 2015) mengatakan bahwa petani harus menerapkan strategi dan instrumen untuk mengelola pendapatan dan risiko mereka dan untuk mencapai stabilitas pendapatan (Novickyte, 2018).…”

The Designation of Recreational and Tourist Areas in the Sustainable Management of Rural and Suburban Areas

“…One of the main non-agricultural activities in rural areas is tourism [2][3][4]. The process of introducing tourism and recreation into rural space has been occurring for several decades, however, in most rural municipalities and regions, it remains underdeveloped and does not visibly affect their functional structure [5,6].…”