scholarly journals Evaluation of risk management tools for stabilising farm income under CAP 2014-2020

2017 ◽  
Vol 17 (1) ◽  
pp. 3 ◽  
Author(s):  
Alba Castañeda-Vera ◽  
Alberto Garrido
Keyword(s):  
Risk Management ◽  
Public Expenditure ◽  
Crop Insurance ◽  
Farm Income ◽  
Crop Diversification ◽  
Agricultural Policies ◽  
Management Tools ◽  
Direct Payments ◽  
Income Variability ◽  
On Farm

<p>Guaranteeing farm income stability is an objective of the European Union’s and the Spanish agricultural policies. In this paper, CAP direct payments, diversification, crop insurance and an Income Stabilisation Tool (IST) were compared considering (i) their effect on farm income and income stability, (ii) the expected farmers’ willingness for adoption, and (iii) the efficiency of public expenditure invested in supporting them. Main conclusions point at direct payments and  crop diversification as the most effective measures in decreasing income variability. Nevertheless, using crop  insurance or an IST has potential for both improving farm resilience to income variability and limiting public expenditure.</p>

scholarly journals Factors Affecting Farmers' Utilization of Agricultural Risk Management Tools: The Case of Crop Insurance, Forward Contracting, and Spreading Sales

2009 ◽  
Vol 41 (1) ◽  
pp. 107-123 ◽  
Author(s):  
Margarita Velandia ◽  
Roderick M. Rejesus ◽  
Thomas O. Knight ◽  
Bruce J. Sherrick
Keyword(s):  
Risk Management ◽  
Crop Insurance ◽  
Probit Analysis ◽  
Farm Income ◽  
Multinomial Probit ◽  
Agricultural Risk ◽  
Management Tools ◽  
Factors Affecting ◽  
Adoption Decisions ◽  
Forward Contracting

Factors affecting the adoption of crop insurance, forward contracting, and spreading sales are analyzed using multivariate and multinomial probit approaches that account for simultaneous adoption and/or correlation among the three risk management adoption decisions. Our empirical results suggest that the decision to adopt crop insurance, forward contracting, and/or spreading sales are correlated. Richer insights can be drawn from our multivariate and multinomial probit analysis than from separate, single-equation probit estimation that assumes independence of adoption decisions. Some factors significantly affecting the adoption of the risk management tools analyzed are proportion of owned acres, off-farm income, education, age, and level of business risks.

Farm income variability and off-farm employment in Ireland

2016 ◽  
Vol 76 (3) ◽  
pp. 378-401
Author(s):  
Jason Loughrey ◽  
Thia Hennessy
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Positive Association ◽  
Farm Income ◽  
Medium Term ◽  
Short Term ◽  
Employment Decisions ◽  
Management Tools ◽  
Content Type ◽  
Income Variability

Purpose The purpose of this paper is to identify the potential relationship between farm income variability and off-farm employment decisions in the short and medium term for the case of Irish farm operators. Design/methodology/approach Panel probit models of off-farm labour supply are estimated using Teagasc National Farm Survey data for Irish farms. The framework is based largely on standard expected utility but includes a constraint for recent employment history. Findings The analyses identifies some evidence of a positive association between farm income variability and off-farm employment in the medium term but no significant relationship in the short term. This suggests that off-farm employment is part of a wider portfolio decision but is not a strong solution to short-term farm income shocks. Practical implications European farmers increasingly face high income variability but financial risk management tools are not sufficiently developed or widely accessible to assist farmers in managing the associated risk. This deficiency can have negative implications for household economic welfare and future farm investments and hence the future farm income. Off-farm employment can form part of a wider medium-term portfolio strategy but more effective tools are also required for risk management particularly in dealing with short-term volatility and where off-farm employment is not a realistic endeavour given time constraints and/or demographics. Originality/value The estimation of farm income variability includes a detrending method thus reducing the likelihood of overestimating farm income variability for farms in deliberate expansion or decline. While previous research has typically focused on the short-term response of farmers to historical farm income variability, this research has distinguished between the short and medium term.

scholarly journals Factors affecting the use of price risk management tools by large commercial maize producers in South Africa

2000 ◽  
Vol 3 (1) ◽  
pp. 75-96 ◽  
Author(s):  
A. Brown ◽  
G. F. Ortmann ◽  
M. A.G. Darroch
Keyword(s):  
Risk Management ◽  
Formal Education ◽  
Crop Insurance ◽  
Ordinary Least Squares ◽  
Price Risk ◽  
Least Squares Regression ◽  
Sources Of Information ◽  
Management Tools ◽  
Complementary Method ◽  
Price Risk Management

Ordinary Least Squares regression was used to examine what characteristics affect the use of maize price risk management tools by a sample of large commercial South African maize producers in 1998. The use of maize storage facilities, off-farm employment, formal crop insurance, length of formal education of operators and the proportion of farm turnover from maize, all positively influence producers' use of these tools. Crop insurance thus appeared to be a complementary method of risk management. In contrast to previous United States studies, operators' self-rated score of marketing management ability was negatively related to the use of price risk management tools. Maize marketing seminars and other sources of information on managing price risk would reduce adoption costs and encourage broader producer participation

scholarly journals Risk Management Strategies to Reduce Net Income Variability for Farmers

1985 ◽  
Vol 17 (1) ◽  
pp. 117-130 ◽  
Author(s):  
Hamid Falatoonzadeh ◽  
J. Richard Conner ◽  
Rulon D. Pope
Keyword(s):  
Risk Management ◽  
Crop Production ◽  
Management Strategies ◽  
Farm Income ◽  
Net Income ◽  
Combination Strategy ◽  
Management Tools ◽  
Risk Management Strategies ◽  
Price Risks ◽  
The Many

AbstractThe most useful and practical strategy available for reducing variability of net farm income is ascertained. Of the many risk management tools presently available, five of the most commonly used are simultaneously incorporated in an empirically tested model. Quadratic programming provides the basis for decisionmaking in risk management wherein expected utility is assumed to be a function of the mean and variance of net income. Results demonstrate that farmers can reduce production and price risks when a combination strategy including a diversified crop production plan and participation in the futures market and the Federal Crop Insurance Program (FCIP) is implemented.

scholarly journals The role of subsidies in managing the operating risk of agricultural enterprises

2009 ◽  
Vol 55 (No. 4) ◽  
pp. 169-180 ◽  
Author(s):  
J. Špička ◽  
J. Boudný ◽  
B. Janotová
Keyword(s):  
Risk Management ◽  
Crop Yields ◽  
Sample Survey ◽  
Cow Milk ◽  
Management Tool ◽  
Farm Income ◽  
Management Tools ◽  
Operating Risk ◽  
Livestock Productivity

The paper examines the relationship between the farmers’ operating risk and current subsidies. Focused at the commodity level, the analysis is based on a sample survey of costs and yields of two crops (winter wheat and rapeseed) and two livestock commodities (cow milk and fattening cattle) carried out in 2005–2007 in the Czech Republic. The risk analysis relates to the growing conditions, crop yields and the livestock productivity. The future role of the subsidies as the risk management tool in the farming business, as well as the position of this instrument against the other risk management instruments is analysed. The break even analysis and the Monte Carlo simulation are used as analytical tools. The results indicate that the current subsidies have an impact on the stability of the farmers’ income. Partially or fully decoupled payments serve as a “financial pillow” increasing the level of the farmers’ income and extending the farmers’ decision-making possibilities. Furthermore, the current subsidies reduce the variability of the farmers’ income. The current subsidies are a suitable complement to other commonly used risk management tools primarily designed to reduce the farmers’ and farm income variability.

scholarly journals How does crop insurance influence pesticide use? Evidence from French farms

2020 ◽  
Author(s):  
Geoffroy Enjolras ◽  
Magali Aubert
Keyword(s):  
Risk Management ◽  
Strategic Change ◽  
Crop Insurance ◽  
Pesticide Use ◽  
Management Tools ◽  
Private Companies ◽  
Field Crops ◽  
Farm Accountancy Data Network ◽  
Farm Scale ◽  
Using Data

AbstractThe purpose of this paper is to examine how crop insurance influences pesticide use, the two decisions being strategic for risk management at the farm scale. To that aim, the paper implements propensity score matching, difference-in-differences models, and a combination of these two methods in order to compare two similar populations of insured and non-insured farmers. Using data from the Farm Accountancy Data Network (FADN), we consider French farms which cultivate field crops and quality wine-growing, the two main productions that participate the most to crop insurance and that use intensively pesticides. The analysis is performed between 2008 and 2012 given a strategic change in the crop insurance system in 2010 that strongly incites farmers to purchase crop insurance with private companies. At the same time, pesticide use was progressively discouraged through public policies. Estimations show that while pesticide use decreases for all crops, the purchase of crop insurance policies has no impact for field crops and quality wine-growing. Meanwhile, the land allocated to each crop within the farm changes. These results question a possible substitutability, for some productions, between crop insurance and pesticides as risk management tools.

scholarly journals Special Issue on Crop Insurance and Risk Management

2008 ◽  
Vol 37 (1) ◽  
pp. iii-iv
Author(s):  
Calum G. Turvey
Keyword(s):  
Risk Management ◽  
Crop Insurance ◽  
Special Issue ◽  
Management Tools ◽  
Market Risks ◽  
The World ◽  
Mutual Interest ◽  
Management Workshop ◽  
The U.S

The role of crop insurance and new risk management tools for agriculture is evolving at an almost dizzying pace. One needs only to examine recent postings on the Risk Management Agency's website to see how expansive this is. Moreover, throughout the world we are witness to a host of new programs available in both developed and developing countries that are largely based on the U.S. experience. It is necessary that academics first recognize the scope of issues facing production and market risks in agriculture and then respond with new and creative ways to address the problems. To these needs, the Crop Insurance and Risk Management Workshop—the provenance of the papers in this volume—was designed to bring academics with research and extension responsibilities together with industry to explore this ever-changing landscape and discuss research and outreach of mutual interest.

scholarly journals Directions of U.S. Farm Programmes under a Freer Trade Environment

2001 ◽  
Vol 40 (2) ◽  
pp. 89-105
Author(s):  
Luther G Tweeten
Keyword(s):  
Crop Insurance ◽  
Commodity Prices ◽  
Commodity Price ◽  
Farm Income ◽  
Price Support ◽  
Agricultural Improvement ◽  
Export Subsidies ◽  
Direct Payments ◽  
Year 2000 ◽  
The U.S

For the new round of WTO multilateral trade liberalisation negotiations to be successful, the world will need to be more enthusiastic and flexible about opening markets. Partisans will need to submerge their self-interests, and the U.S. will need to take the initiative for more open markets. This paper makes the case that only modest changes in the U.S. domestic grain, oilseed, and cotton programmes are needed for compatibility with global free trade. The Federal Agricultural Improvement and Reform (FAIR) Act of 1996 and related policy changes in the 1990s brought fundamental reforms compatible with freer domestic and foreign markets. Chief among these were a shift from coupled deficiency payments to decoupled direct payments, an end to supply management, and less engagement of government in commodity stock accumulation and export subsidies. Converting commodity price support to recourse loans while ending all but administrative cost subsidies to crop insurance would go far to liberalise grain, oilseed, and cotton policies. Unilateral termination of commodity programmes including direct payments totalling 42 percent of net cash farm income in year 2000 would appear to be traumatic to producers. However, reduction of direct payments could be offset (for farm income) by rising farm commodity prices and receipts resulting from (1) less farm output attending lower loan rates and crop insurance subsidies, and (2) world farm commodity price-enhancement from freer global trade.

scholarly journals Weather based crop insurance for risk management in agriculture

2021 ◽  
Vol 22 (2) ◽  
pp. 101-108
Author(s):  
LATA VISHNOI ◽  
ANUPAM KUMAR ◽  
SUNIL KUMAR ◽  
GAURAV SHARMA ◽  
A.K. BAXLA ◽  
...  
Keyword(s):  
Risk Management ◽  
Crop Insurance ◽  
Secondary Data ◽  
Weather Data ◽  
Farm Income ◽  
Insurance Scheme ◽  
Agricultural Insurance ◽  
Income Insurance ◽  
Critical Issues ◽  
The Government

In recent years, in many parts of the country, indebtedness, crop failures, unpaid prices and poor returns have resulted in agrarian distress. The government has identified and introduced several programs to address these critical issues viz. crop insurance, lending waivers etc. among them. Crop insurance as a concept for risk management in agriculture has emerged in India since the turn of the twentieth century and government has launched various insurance schemes in last three decades like Comprehensive Crop Insurance Scheme (CCIS), National Agricultural Insurance Scheme (NAIS) and Modified NAIS (MNAIS) etc. Apart from these schemes, several other pilot projects such as Seed Crop Insurance, Farm Income Insurance Scheme and Weather Based Crop Insurance Scheme (WBCIS) were implemented from time to time. At present, two most important schemes are functional i.e. Pradhan Mantri Fasal BimaYojna (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS) are in operation. This study focused on the performance of the Restructured Weather based Crop Insurance Scheme (RWBCIS) from historical and analytical perspectives and presents recommendation for future scenarios. RWBCIS scheme having two most important challenges. Firstly, weather data related issues by designing a modern scientific approach to develop high resolution secondary data and secondly, modifying the existing design of RWBCIS Products, based on sound agronomic principles.

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