MATHEMATICAL RISK ASSESSMENT MODEL FOR BIODIESEL PRODUCTION PROJECTS IN UKRAINE AGRICULTURE

One of the trends in the development of the market of alternative motor fuels is the production and use of biofuels, biodiesel in particular. Biodiesel which is used by domestic farmers is mainly self-produced. The current situation is related, first of all, to the lack of a single standard (regulation) for biodiesel production technology and is not enshrined in any legal act in Ukraine. In the conditions of the market functioning, agricultural producers face various risk factors, in particular, instability of prices for fuels and lubricants, monopolization of certain regions or market segments by traders, low quality of fuel, etc. Conditions of biodiesel production, as well as other economic activities, usually require the creation or involvement of labor, financial and material resources, which also affects the change in the level of risk. These problems can be solved by adapting and improving the existing mathematical apparatus to risk assessment for biodiesel production projects by agricultural enterprises. The main legal act that allows to determine and assess the level of risk is the state standard of Ukraine «Risk Management. Methods of general risk assessment», which served as the methodological foundation of the study. We propose to use three main technological schemes of biodiesel production, namely: cyclic scheme of production with the use of catalysts; non-catalytic cyclic circuit and multi-reactor continuous circuit scheme. In order to analyze each of these schemes, it is proposed to analyze the feasibility of investment in terms of their effectiveness and tie-in to the risks of introducing innovative technologies. The developed methodology provides a substantiation for the choice of technological option for biodiesel production. An algorithm for calculating risks has been proposed for the introduction of biodiesel production, the preparation of business plans and the assessment of criticality of possible losses for the production. The use of methods of vector algebra and fuzzy logic in the formation of the mathematical model makes it possible to estimate the probability indicators of each risk. Keywords: biodiesel, risks, mathematical model, agriculture, risk assessment, risk assessment methods. JEL Classification C60, Q42 Formulas: 8; fig.: 0; tabl.: 0; bibl.: 18.

Comparison of climatic indices with landslide occurrences in Calabria (Southern Italy)

<p>The most frequent and widespread landslides all over the world are induced by prolonged or heavy rainfall events. These phenomena often cause casualties and damages. Recent research on climate change has evidencing the link between the rainfall tendencies and the increase of damaging geohydrological events. This study has been carried out in the ambit of the EC Project INDECIS, whose aim is to develop an integrated approach to produce a series of climate indicators aimed at the high priority sectors of the Global Framework for Climate Services of the World Meteorological Organization (agriculture, risk reduction, energy, health, water), with the addition of tourism. The study area is Calabria, a region of Southern Italy frequently affected by mass movements and characterized by a highly variable climate. In this study, landslide occurrences in the period 1990-2018 have been collected for the whole territory of Calabria, and clustered according to the five provinces of the region. Moreover, 13 rainfall-based climatic indexes, among those proposed in the INDECIS project, have been calculated for each of the 79 rain gauges presenting complete and homogeneous databases. For each province and for the whole Calabria, the average and the maximum values of the climatic indices have been compared with the landslide occurrences in each year. The comparisons showed the best agreements with the following climatic indices: a) the total annual precipitation (RTA), the annual count of days when daily precipitation amount ≥ 10mm (R10mm), the annual count of days when daily precipitation amount ≥ 20mm (R20mm), the annual total precipitation when daily rainfall is greater than 95<sup>th</sup>-percentile (R95TOT) and, secondarily, the annual count of days with daily rainfall >= 50 mm (D50mm). For the best matches, the curves interpolating the two databases have been also drawn. The obtained results can be useful to predict the impacts that tendencies of rainfall indices patterns can have on slope stabilities of the territory.</p><p>Acknowledgments:</p><p>The Project INDECIS is part of ERA4CS, an ERA-NET initiated by JPI Climate, and funded by FORMAS (SE), DLR (DE), BMWFW (AT), IFD (DK), MINECO (ES), ANR (FR) with co-funding by the European Union (Grant 690462)</p>

How to deal with global concept of Risk in Agriculture? Comparative overview of the literature

Research background: Risk is an important aspect of the agriculture business. The uncertainties inherent in the changes in input and output prices, climate and biological variables, agricultural policies and government decisions, global markets and the volatility, sales, world trends in the consumption, environmental legislation and other factors that impact agriculture can cause big differences in farm production and in general in farm income. Purpose of the article: The aim of the paper is twofold. The first task is to survey and classify the main types of risks in agriculture, risk evaluation methods, approaches for estimation and to present the applications of these methods across the literature. The second aim is to point out how to measure the risk in agriculture enterprises. Methods: In the recent years, there was an increase in the number of risk studies with potential to further deepen and develop the previous studies. This study provides a literature overview of risk studies in agriculture. More specifically, this paper discusses the sources of risk in agriculture, summarizes the literature and methods of measuring the risk and comments the problems with risk evaluation in agriculture. Findings & Value added: The objective of this paper is to provide the methodological conclusions for further research about risks in agriculture and opportunities of risk evaluation. This review is expected to prompt researchers to perform new theoretical studies and stimulate to analyse and measure risks in agriculture.

DIRECTIONS OF DEVELOPMENT OF MECHANISMS FOR STATE SUPPORT OF REGIONAL INNOVATIVE PROJECTS

The article is devoted to the study and development of mechanisms of state support for innovative projects in the region's agriculture. Risk management methods for risk reduction by agricultural enterprises are indicated. Measures are proposed to improve the innovation policy of the agricultural sector.

Impact of Credit and Investment Resources on the Productivity of Agricultural Sector

The current state of financial provision of agriculture in Ukraine is generally unsatisfactory; therefore, the problem of financing the agrarian sector of the economy in the form of lending and investing appears. The purpose of the article is to assess the impact of external financial support of enterprises in the form of lending and investing on agricultural productivity, as well as an assessment of the risk of overdue loans in the regional section of the agrarian sector of the Ukrainian economy. It is investigated the dependence of income (proceeds) on sales of products, proceeding from the needs of agricultural lending in ensuring the efficiency of its economic activity. Thus, lending and investing in agriculture contributes to increasing sales volumes and revenue (sales) growth from sales, as well as stimulating the development of agrarian enterprises, but the correlation between the analyzed indicators is insignificant. The evaluation results indicate a significant risk of overdue loans to agrarian enterprises for all regions of Ukraine, due to low technical efficiency and high level of delinquency. Significant differentiation of regions according to the level of technical efficiency has been revealed, which may indicate significant reserves of its increase. At the same time, it was found that the interest rates on agricultural loans are not a decisive factor for delays in loans granted to enterprises. In order to improve the situation, it is necessary to increase the volume of external financing and the link density between the parameters: lending – investment – the growth of production and sales, which will allow the formation of a functioning environment, taking into account the possibilities of optimizing costs in each region of the state. Key words: risks, lending, investment, agriculture, risk assessment, agrarian enterprises.

Implications of Commodity Programs and Crop Insurance Policies for Wheat Producers

We analyze the effects of Price Loss Coverage (PLC), Agriculture Risk Coverage (ARC), individual revenue protection insurance (RP), and Supplemental Coverage Option (SCO) on the RP coverage level, certainty equivalent, and program payments. The model is calibrated to a representative wheat farm in Mitchell County in Kansas to analyze the effects of various policies. The result highlights that when insurance is framed as an investment, cumulative prospect theory predicts farmers’ coverage decisions accurately at 70%. ARC or PLC program increases the RP coverage level to 75%, but PLC and SCO jointly decrease the RP coverage level to 70%.

Transformation of agriculture risk management

Purpose The purpose of this paper is to investigate the balanced role of internal and external compliance in risk evaluation process of specialized agriculture financing. The authors examine the adaptive behavior of risk managers to determine the role of proposed transformation for risk monitoring (RM) and control process in risk mitigation and avoidance of agriculture credit failure. Design/methodology/approach A self-administered survey was conducted to collect data from 353 risk-related officers and managers in Zarai Taraqiati Bank Limited (ZTBL) Pakistan. The authors used a previously tested scale for the main constructs. The descriptive analyses were used to gauge the model capacity for determining the strength of proposed risk patterns in agriculture risk management. Findings The results reveal that risk evaluation process in ZTBL is reasonably efficient in mitigating risks. Given the sensitive nature of farm credit, there is a need of fundamental reforms in risk policy manuals in line with central bank’s agriculture prudential regulations and Basel-III standards. The results fully support H1 and H2, while H3 is partially validated. The result patterns indicate serious issues in risk evaluation process in agriculture finance that is causing higher delinquency in farm credit. Research limitations/implications Based on highlighted issues, the authors recommend valuable guidelines in the RM review system for agriculture financing products at ZTBL. Practical implications The authors propose remodeling of agriculture risk management and offer valuable insights to the agriculture financial regulators and government in taking policy initiatives in the pre-and-post agriculture risk evaluation process. The proposed model enables RM process to improve farm credit delinquency, particularly in ZTBL and other agriculture banking networks in commercial banks. Originality/value This is the first study to empirically investigate RM evaluation process in agriculture risk management of ZTBL in Pakistan, thus, offers new horizon of farm credit regulatory compliance in agricultural sector of Pakistan.