Answer:
Although much theoretical research on risk in agriculture and its management has been done, useful practical insight for policymakers, advisers, and developers and sellers of risk management strategies is generally very limited.
A interesting study against this background is Meuwissen, Huirne, and Hardaker (2001). The authors collected survey data relating to farmers’ perceptions of risk and risk management, and analyse whether characteristics of a farm and/or farmer can be identified that relate to these perceptions. Relationships with the perceptions were explored by (multiple and logistic) multivariate regressions. Before the regressions were carried out, the number of variables was reduced; for risk attitude by means of aggregation, for sources of risk and risk management strategies by factor analyses.
The application is for Dutch livestock farmers. With regard to sources of risks these farmers perceive policy uncertainty as very relevant and of the same importance as the uncertainty from production and markets. The respondents in this survey associated regulatory risks with environmental policy, animal welfare policy, and the value of production rights, in particular.
The analysis revealed interesting differences with regard to risk management strategies by farmer categories. Dutch dairy farmers perceived ‘a certain income’ as an important risk management strategy. Advisers could anticipate on this by providing the needed education and infrastructure in this area. Pig farmers perceived diversification as a relevant risk management strategy; a helpful insight to policymakers in combating environmental problems in the pig sector (see also Wossink and Gardebroek, 2006).
The results also indicated a mismatch between farmers’ perceptions of price risks and the perceived importance of risk management strategies to deal with price risks. In particular, futures markets were not perceived to be relevant.
Explanation:
HOPE IT HELPS!
