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Price and Yield As Sources of Variability of Farm Revenues in Transition Economies: The Case of Armenia

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  • Simone Severini
  • Giuliano Di Tommaso
  • Hovhannes Harutyunyan
  • Antonella Tantari

Abstract

In transition economies, the shift to a market system has been accompanied by relevant evolutions of farm income level. Sustainability of farming depends not only on the level but also on the variability of economic results over time. Climatic changes and increasing market uncertainty make small-scale farmers particularly vulnerable to this. This paper analyses revenue variability of the five main crops in Armenia and, by using variance decomposition, it assesses what portion of it is associated with prices and yields and whether a natural hedge exists. The analysis accounts for presence of trends in yield, price and revenue - a situation commonly encountered in transition economies. Variability of revenues of single crops is high. While in some crops the variance associated with price exceeds that of yield, in other cases the opposite occurs. Policy and methodological insights regarding how to manage and to study revenue risk in transition economies are discussed.

Suggested Citation

  • Simone Severini & Giuliano Di Tommaso & Hovhannes Harutyunyan & Antonella Tantari, 2016. "Price and Yield As Sources of Variability of Farm Revenues in Transition Economies: The Case of Armenia," Applied Economics and Finance, Redfame publishing, vol. 3(4), pages 157-167, November.
    • Handle: RePEc:rfa:aefjnl:v:3:y:2016:i:4:p:157-167
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    More about this item

    Keywords

    Farm revenue risk; market and climatic uncertainty; transition economies; variance decomposition; Armenia.;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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