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Determinants of the Risk Environment in Agricultural Enterprises in the Czech Republic
[Determinanty rizikového prostředí zemědělských podniků v České republice]

Author

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  • Jindřich Špička
  • Václav Vilhelm

Abstract

The income of agricultural enterprises has always been influenced by both weather and price volatility. Nevertheless, the risk environment of various farms seems not to be the same. Similarly, risk factors are not independent of each other. The aim of the paper is to assess the spatial and commodity particularities determining the risk environment of agricultural enterprises in the Czech Republic. Within the main objective, the efficiency of crop insurance depending on farm size is also considered. Using calculation of statistical indicators of variability in the panel data, as well as Monte Carlo simulation, differences in farm risk exposure and efficiency of crop insurance between small and large farms were found. It was found that the risk of crop price volatility is generally of a more systemic nature and it is more difficult to diversify than the risk of crop yield volatility. The hypothesis that smaller crop acreage increases the risk of farm crop yield fluctuation was not statistically confirmed within a set of medium and large agricultural enterprises. In the sample of typical farms with specialized crop field types of farming, it was revealed that agricultural insurance is more effective for small farms than for large agricultural enterprises. Based on the main findings, we make some recommendations for the business sector and policy makers.

Suggested Citation

  • Jindřich Špička & Václav Vilhelm, 2013. "Determinants of the Risk Environment in Agricultural Enterprises in the Czech Republic [Determinanty rizikového prostředí zemědělských podniků v České republice]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2013(2), pages 69-87.
    • Handle: RePEc:prg:jnlaop:v:2013:y:2013:i:2:id:400:p:69-87
    DOI: 10.18267/j.aop.400
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    References listed on IDEAS

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    1. Margot Rudstrom & Michael Popp & Patrick Manning & Edward Gbur, 2002. "Data Aggregation Issues for Crop Yield Risk Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 50(2), pages 185-200, July.
    2. Michael Popp & Margot Rudstrom & Patrick Manning, 2005. "Spatial Yield Risk Across Region, Crop and Aggregation Method," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(2‐3), pages 103-115, June.
    3. Coble, Keith H. & Dismukes, Robert & Thomas, Sarah E., 2007. "Policy Implications of Crop Yield and Revenue Variability at Differing Levels of Disaggregation," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9759, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. L. M. Eisgruber & L. S. Schuman, 1963. "The Usefulness of Aggregated Data in the Analysis of Farm Income Variability and Resource Allocation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 45(3), pages 587-591.
    5. Debrah, Siegfried & Hall, Harry H., 1989. "Data aggregation and farm risk analysis," Agricultural Systems, Elsevier, vol. 31(3), pages 239-245.
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    More about this item

    Keywords

    agriculture; risk management; risk environment; Monte Carlo simulation; holistic approach;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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