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Market risk management and the demand for forward contracts among Irish dairy farmers

Author

Listed:
  • Loughrey, J.
  • Thorne, F.
  • Kinsella, A.
  • Hennessy, T.
  • O'Donoghue, C.
  • Vollenweider, X.

Abstract

Irish dairy farmers have entered into a period of significant change with the European-wide abolition of the milk quota regime in April 2015. This abolition provides the opportunity for many profitable Irish dairy farms to increase their production levels. Market risk will influence decision-making at the farm level. Dairy farmers have recently acquired more experience of market risk through highly volatile market prices. This has the potential to affect risk attitudes and the farmers' selection of tools available to manage market risk. In this paper, we utilise econometric methods to examine the demand for the forward contracting risk management tool among Irish dairy farmers. Our findings suggest that recency effects are significantly associated with such demand as the recent price history appears to have significant effects on decision-making. ‘Within the farm-gate diversification’ and the ‘number of children’ in particular age categories have a positive and significant association with the adoption of forward contracting.

Suggested Citation

  • Loughrey, J. & Thorne, F. & Kinsella, A. & Hennessy, T. & O'Donoghue, C. & Vollenweider, X., 2015. "Market risk management and the demand for forward contracts among Irish dairy farmers," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 4(4), July.
    • Handle: RePEc:ags:ijameu:262382
    DOI: 10.22004/ag.econ.262382
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    1. Pardeshi, Shefali & Loughrey, Jason & O’Connor, Declan, 2024. "Farm Investment and Adoption of Fixed Milk Price Contracts on Irish Dairy Farms," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344291, International Association of Agricultural Economists (IAAE).
    2. Edward Knapp & Jason Loughrey, 2017. "The single farm payment and income risk in Irish farms 2005–2013," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-15, December.
    3. Hayuni, M & Lukman, Z.M. & Norshahira, O, 2023. "Management Practices and Perceived Training needs of Small Ruminant Farmers in Terengganu, Malaysia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 812-822, September.
    4. O’Donoghue, Cathal & McKinstry, Alistair & Green, Stuart & Fealy, Reamonn & Heanue, Kevin & Ryan, Mary & Connolly, Kevin & Desplat, J.C. & Horan, Brendan, 2016. "A Blueprint for a Big Data Analytical Solution to Low Farmer Engagement with Financial Management," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(A), pages 1-24, June.
    5. Sinabell, Franz & Url, Thomas & Heinschink, Karin, 2017. "Margin Insurance In Agriculture – A Micro Simulation Approach Of Wheat And Hog Production In Austria," 57th Annual Conference, Weihenstephan, Germany, September 13-15, 2017 262154, German Association of Agricultural Economists (GEWISOLA).

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