Managing Risk in Agriculture

Policy Assessment and Design

image of Managing Risk in Agriculture

This book examines the implications of risk management for policy in agriculture.  Opening with a chapter on risk management principles and guidelines for policy design in agriculture, the book goes on to look at quantitative analysis of risk and then at policy in various countries.

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Risk management strategies and policies at the farm level

The net impact of government policies will depend on the adjustment by farmers of their risk management strategies. This chapter uses a microeconomic model to simulate responses by farmers to different risk-related policies: intervention prices, a fixed more decoupled payment, such as the Single Farm Scheme in the European Union, and a payment triggered under exceptional circumstances. It is found that the responses of farmers have strong implications on the ability of different policy instruments to reduce farming risk and increase their well-being. Crowding-out effects on diversification and other strategies may offset initial reductions in income variability.

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