Where is the risk? Price, yield and cost risk in Swiss crop production
AbstractRisk management strategies are of increasing importance in agriculture. An important question is, what type of risk management strategies are required to reduce farmers’ income risks. Applying a variance decomposition approach using data of more than 3000 Swiss farms over a five year time period, this paper quantifies the direct and indirect effects of yields, prices and costs on net revenue variability at the farm‐level. We find that costs play only a minor role in determining income variability but price and yield risks are of outmost importance and very crop‐specific. For instance, price risks dominate for intensive wheat and sugar beet producer; while corn and barley producer tend to suffer more form production risks. Group comparisons and logistic regressions results show that more intensively producing farms tend to suffer more from price risk, while yield risks are dominant for less intensive producers.
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Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126758.
Date of creation: 2012
Date of revision:
variance decomposition; revenue risk; cost risk; crop production; natural hedge; Crop Production/Industries; Risk and Uncertainty; Q12; Q10;
Find related papers by JEL classification:
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-07-23 (Agricultural Economics)
- NEP-ALL-2012-07-23 (All new papers)
- NEP-RMG-2012-07-23 (Risk Management)
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