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Risk Management Strategies by Australian Farmers

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  • Nguyen, Nam C.
  • Wegener, Malcolm K.
  • Russell, Iean W.
  • Cameron, Donald
  • Coventry, David
  • Cooper, Ian M.

Abstract

Australian farmers operate in one of the most risky environment in the world. They have to cope with various sources of risk in their businesses. This paper reports results of two case studies undertaken to examine the issues of farming risks and risk management strategies in Australia. The first case study found that climate variability, financial risk, marketing risk, and personal risk were regarded as the major sources of farming risk in the Upper Eyre Peninsula of South Australia. The main management strategies used by farmers included diversifying varieties, minimising tillage, minimising area of risky crops and maximising area of the least-risky crop, having high equity, having farm management deposits and other off-farm investments, and "leaving marketing to experts". The second case study revealed that climate variability was ranked as the most important source of farming risk in southwest Queensland. This was then followed by financial risks, government policy, and marketing risks. The main management strategies used were enterprise diversification (having predominantly cattle and farming cash crops), conserving moisture, using zero till planting, diversified sales (selling only part of the farm's production at any one time), and having off-farm investments. The paper then attempts to reconcile the two case studies by comparing the results with studies from the United States of America, Canada, Netherlands, and New Zealand.

Suggested Citation

  • Nguyen, Nam C. & Wegener, Malcolm K. & Russell, Iean W. & Cameron, Donald & Coventry, David & Cooper, Ian M., 2005. "Risk Management Strategies by Australian Farmers," 15th Congress, Campinas SP, Brazil, August 14-19, 2005 24295, International Farm Management Association.
  • Handle: RePEc:ags:ifma05:24295
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    File URL: http://purl.umn.edu/24295
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    References listed on IDEAS

    as
    1. Harwood, Joy L. & Heifner, Richard G. & Coble, Keith H. & Perry, Janet E. & Somwaru, Agapi, 1999. "Managing Risk in Farming: Concepts, Research, and Analysis," Agricultural Economics Reports 34081, United States Department of Agriculture, Economic Research Service.
    2. David C. Hall & Thomas O. Knight & Keith H. Coble & Alan E. Baquet & George F. Patrick, 2003. "Analysis of Beef Producers' Risk Management Perceptions and Desire for Further Risk Management Education," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(2), pages 430-448.
    3. Robinson, John R.C., 1999. "Risk Management Through Alternative Production Practices And Management Strategies: Discussion," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(02), August.
    4. Robinson, John R.C., 1999. "Risk Management through Alternative Production Practices and Management Strategies: Discussion," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(02), pages 287-289, August.
    5. Marra, Michele & Pannell, David J. & Abadi Ghadim, Amir, 2003. "The economics of risk, uncertainty and learning in the adoption of new agricultural technologies: where are we on the learning curve?," Agricultural Systems, Elsevier, vol. 75(2-3), pages 215-234.
    6. Wilson, William W. & Wagner, Robert, 2002. "Price Risk Management Strategies For Grain Importers," Staff Papers 23665, North Dakota State University, Department of Agribusiness and Applied Economics.
    7. H. Douglas Jose & Ram S. K. Valluru, 1997. "Insights from the Crop Insurance Reform Act of 1994," Agribusiness, John Wiley & Sons, Ltd., vol. 13(6), pages 587-598.
    8. Martin, Sandra, 1996. "Risk Management Strategies in New Zealand Agriculture and Horticulture," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 64(01), April.
    9. Just, David R. & Wolf, Steven & Zilberman, David, 2003. "Principles of risk management service relations in agriculture," Agricultural Systems, Elsevier, vol. 75(2-3), pages 199-213.
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