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Complex Choices: Producers Risk Management Strategies

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  • Pennings, Joost M.E.
  • Isengildina, Olga
  • Irwin, Scott H.
  • Good, Darrel L.
  • Garcia, Philip
  • Frank, Julieta
  • Kuiper, W. Erno

Abstract

Producers have a wide variety of risk management instruments available. How do producers make a choice of risk management instruments? Using the recently developed choice bracketing framework, we examine what risk management strategies producers use and identify the factors that drive their risk management decisions. Our results identify that producers use a wide variety of combinations of risk management instruments and that they bracket their choices into sets of alternative risk management instruments. Using multinomial logit models to estimate the choice process provides information about the factors that influence producers' decision making. The results show that broad bracketing producers use different risk management instruments than narrow bracketers. Policy makers and financial institutions can improve the performance of their programs and products when they are able to identify the bracketing level of segments of producers.

Suggested Citation

  • Pennings, Joost M.E. & Isengildina, Olga & Irwin, Scott H. & Good, Darrel L. & Garcia, Philip & Frank, Julieta & Kuiper, W. Erno, 2005. "Complex Choices: Producers Risk Management Strategies," 2005 Annual meeting, July 24-27, Providence, RI 19550, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19550
    DOI: 10.22004/ag.econ.19550
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    References listed on IDEAS

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    Cited by:

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    2. Zein Kallas & Teresa Serra & Jos頠 M. Gil, 2012. "Effects of policy instruments on farm investments and production decisions in the Spanish COP sector," Applied Economics, Taylor & Francis Journals, vol. 44(30), pages 3877-3886, October.

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