To risk or not to risk? Risk management and farm productivity

Vigani, Mauro ORCID: 0000-0003-2442-7976 and Kathage, Jonas (2019) To risk or not to risk? Risk management and farm productivity. American Journal of Agricultural Economics, 101 (5). pp. 1432-1454. doi:10.1093/ajae/aaz020

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Abstract

The impact of risk management on farm productivity is still being debated. Using survey data from French and Hungarian farms, we estimate the impacts of different risk management strategies and portfolios under varying levels of risk on total factor productivity. Results from a multinomial endogenous switching regression model show that the impacts can be positive or negative, depending on the risk management strategies adopted, the structure of the farming system and the probability of risks. The choice of risk management strategies influences the farm’s production costs and the allocation of resources. More complex risk management portfolios tend to have larger negative productivity impacts due to higher costs and the larger amount of resources subtracted from the production activity. Our results have important implications for risk management policies.

Item Type:	Article
Article Type:	Article
Uncontrolled Keywords:	Multinomial endogenous switching regression; Risk management; Risk probability; Total factor productivity; Wheat
Subjects:	H Social Sciences > HA Statistics H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management > HD61 Risk in industry. Risk management H Social Sciences > HF Commerce > HF5001 Business S Agriculture > S Agriculture (General) S Agriculture > S Agriculture (General) > S560 Farm Economics
Divisions:	Schools and Research Institutes > Countryside and Community Research Institute
Research Priority Areas:	Place, Environment and Community
Depositing User:	Imogen Young
Date Deposited:	24 May 2019 09:47
Last Modified:	04 Feb 2022 14:31
URI:	https://eprints.glos.ac.uk/id/eprint/6861

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