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Tools and polices for agricultural risk management

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  • Breen, Benjamin
  • Hennessy, Thia
  • Donnellan, Trevor
  • Hanrahan, Kevin

Abstract

Volatility in international agricultural commodity prices has been higher since 2000 than in the previous two decades (FAO, 2011). This fact and a movement away from excessive government intervention into agricultural markets have increased focus on the need for private risk management markets and strategies. WTO green box rules and a newly emerging holistic approach to agricultural risk management undermine the use of historically popular stabilisation tools such as price support mechanisms, border protection and public intervention. This paper reviews the market tools and government policies that currently exist for managing agricultural risk. A multi-criteria analysis is adopted to critique the various risk management tools available. Tools are assessed according to criteria such as costs (by whom they are incurred), benefits (to whom they accrue), political and budgetary acceptability, feasibility, functionality and effectiveness in controlling risk. This allows for all tools reviewed to be ranked according to the various criteria. It is argued that governments should support the development of private solutions to agricultural risk and that government risk-related policies should focus on “residual risk”.

Suggested Citation

  • Breen, Benjamin & Hennessy, Thia & Donnellan, Trevor & Hanrahan, Kevin, 2013. "Tools and polices for agricultural risk management," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158686, Agricultural Economics Society.
    • Handle: RePEc:ags:aesc13:158686
    DOI: 10.22004/ag.econ.158686
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    References listed on IDEAS

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    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 Economic Reports 34081, United States Department of Agriculture, Economic Research Service.
    2. Moschini, Giancarlo & Hennessy, David A., 2001. "Uncertainty, risk aversion, and risk management for agricultural producers," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153, Elsevier.
    3. Robert Holzmann & Steen Jørgensen, 2001. "Social Risk Management: A New Conceptual Framework for Social Protection, and Beyond," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(4), pages 529-556, August.
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    Cited by:

    1. Collins-Sowah, Peron A. & Henning, Christian H. C. A., 2019. "Risk management and its implications on household incomes," Working Papers of Agricultural Policy WP2019-05, University of Kiel, Department of Agricultural Economics, Chair of Agricultural Policy.

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