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Determinants of downside risk exposure of dairy farms

Author

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  • Robert Finger
  • Tobias Dalhaus
  • Joseph Allendorf
  • Stefan Hirsch

Abstract

We investigate determinants of dairy producers’ risk exposure using a unique combination of foci on (i) downside risks, (ii) a holistic representation of revenues from milk and animal sales, (iii) climatic extremes and (iv) the role of animal health. A sample of German dairy farms reveals that animal health and heat stress indicators influence mean and semi-variance of revenues. For instance, heat stress exposure reduces expected milk revenues significantly. In the case of animal health-related indicators, our results show trade-offs between expected revenues and downside risks. Furthermore, variabilities in revenues from milk and animal sales are significantly interrelated.

Suggested Citation

  • Robert Finger & Tobias Dalhaus & Joseph Allendorf & Stefan Hirsch, 2018. "Determinants of downside risk exposure of dairy farms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 45(4), pages 641-674.
    • Handle: RePEc:oup:erevae:v:45:y:2018:i:4:p:641-674.
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    File URL: http://hdl.handle.net/10.1093/erae/jby012
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    Citations

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    Cited by:

    1. Christian Grovermann & Sylvain Quiédeville & Adrian Muller & Florian Leiber & Matthias Stolze & Simon Moakes, 2021. "Does organic certification make economic sense for dairy farmers in Europe?–A latent class counterfactual analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 52(6), pages 1001-1012, November.
    2. Philippe Jeanneaux & Yann Desjeux & Geoffroy Enjolras & Laure Latruffe, 2022. "Farm valuation: A comparison of methods for French farms," Agribusiness, John Wiley & Sons, Ltd., vol. 38(4), pages 786-809, October.
    3. Eric Njuki & Boris E Bravo-Ureta & Víctor E Cabrera, 2020. "Climatic effects and total factor productivity: econometric evidence for Wisconsin dairy farms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(3), pages 1276-1301.
    4. Vroege, Willemijn & Dalhaus, Tobias & Wauters, Erwin & Finger, Robert, 2023. "Effects of extreme heat on milk quantity and quality," Agricultural Systems, Elsevier, vol. 210(C).
    5. Schaub, Sergei & Buchmann, Nina & Lüscher, Andreas & Finger, Robert, 2020. "Economic benefits from plant species diversity in intensively managed grasslands," Ecological Economics, Elsevier, vol. 168(C).
    6. Dejan Živkov & Jasmina Đurašković & Marina Gajić‐Glamočlija, 2022. "Multiscale downside risk interdependence between the major agricultural commodities," Agribusiness, John Wiley & Sons, Ltd., vol. 38(4), pages 990-1011, October.
    7. Luigi Biagini & Simone Severini, 2022. "How Does the Farmer Strike a Balance between Income and Risk across Inputs? An Application in Italian Field Crop Farms," Sustainability, MDPI, vol. 14(23), pages 1-15, December.
    8. Baoling Zou & Zanjie Ren & Ashok K. Mishra & Stefan Hirsch, 2022. "The role of agricultural insurance in boosting agricultural output: An aggregate analysis from Chinese provinces," Agribusiness, John Wiley & Sons, Ltd., vol. 38(4), pages 923-945, October.
    9. Vroege, Willemijn & Dalhaus, Tobias & Finger, Robert, 2019. "Index insurances for grasslands – A review for Europe and North-America," Agricultural Systems, Elsevier, vol. 168(C), pages 101-111.
    10. Dalhaus, Tobias & Zhang, Yujie, 2022. "The Impact of Local Heat Extremes on the Performance of Dairy Processing Firms in Europe," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322126, Agricultural and Applied Economics Association.
    11. Fabian Frick & Johannes Sauer, 2021. "Technological Change in Dairy Farming with Increased Price Volatility," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(2), pages 564-588, June.
    12. Maximilian Koppenberg, 2023. "Markups, organic agriculture and downstream concentration at the example of European dairy farmers," Agricultural Economics, International Association of Agricultural Economists, vol. 54(2), pages 161-178, March.
    13. Haseeb Ahmed & Lena-Mari Tamminen & Ulf Emanuelson, 2022. "Temperature, productivity, and heat tolerance: Evidence from Swedish dairy production," Climatic Change, Springer, vol. 175(1), pages 1-18, November.
    14. Bozzola, Martina & Smale, Melinda, 2020. "The welfare effects of crop biodiversity as an adaptation to climate shocks in Kenya," World Development, Elsevier, vol. 135(C).

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