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Where is the risk? Price, yield and cost risk in Swiss crop production

Author

Listed:
  • Nadja El Benni

    (ETH, Institute for Environmental Decisions, S-8092 Zurich, Switzerland)

  • Robert Finger

    (Wageningen University, NL-6706 Wageningen, The Netherlands)

Abstract

Risk 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 from more than 3,000 Swiss farms over a five-year 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 conventional wheat and sugar beet producers; while corn and barley producers tend to suffer more from 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.

Suggested Citation

  • Nadja El Benni & Robert Finger, 2014. "Where is the risk? Price, yield and cost risk in Swiss crop production," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 95(3), pages 299-326.
    • Handle: RePEc:rae:jourae:v:95:y:2014:i:3:p:299-326
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    Cited by:

    1. Olha Aleksandrova & Štefan Bojnec, 2025. "Impact of the adoption of chemical inputs on crop yield downside risk," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 71(10), pages 527-536.
    2. Schmitt, Jonas & Offermann, Frank & Finger, Robert, 2025. "The use of crop diversification in agricultural yield insurance products," Food Policy, Elsevier, vol. 134(C).
    3. Robert Finger & Nadja El Benni, 2012. "A Note on Price Risks in Swiss Crop Production – Empirical Results and Comparisons with other Countries," Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), Swiss Society for Agricultural Economics and Rural Sociology, vol. 5(1), pages 131-151.
    4. Zinnanti, Cinzia & Schimmenti, Emanuele & Borsellino, Valeria & Paolini, Giulio & Severini, Simone, 2019. "Economic performance and risk of farming systems specialized in perennial crops: An analysis of Italian hazelnut production," Agricultural Systems, Elsevier, vol. 176(C).
    5. Weremczuk, Arkadiusz & Malitka, Grzegorz, . "Influence of Changes in the Prices of Fertilizers and Fuels on the Profitability of Production of Selected Agricultural Crops," Problems of World Agriculture / Problemy Rolnictwa Światowego, Warsaw University of Life Sciences, vol. 22(3).

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    Keywords

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    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

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