Subjective preferences, liquidity constraints and price risk management under large-scale farm management

IF 4.4 2区经济学 Q1 AGRICULTURAL ECONOMICS & POLICY

China Agricultural Economic Review Pub Date : 2023-12-26 DOI:10.1108/caer-12-2022-0287

Peng Peng, Zhigang Xu

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引用次数: 0

Abstract

PurposeLarge-scale farm management in China has developed rapidly in recent years. Large-scale farmers face substantial operating risks, requiring extensive price risk management. However, the agricultural insurance and futures markets in China are incomplete. This study aims to analyze the price-risk-management behaviors of large-scale farmers under incomplete market conditions, with a focus on the interconnections between large scale farmers' subjective preferences (risk preferences, time preferences), liquidity constraints and their price risk management.Design/methodology/approachThe authors construct an analysis framework to reveal the impact of large-scale farmers' risk preferences, time preferences and liquidity conditions on their price-risk-management behaviors under incomplete market conditions. Using data from field surveys and subjective preference experiments involving 409 large-scale grain farmers in China, an empirical analysis was conducted using the bivariate probit model.FindingsThe results show that risk-averse farmers will use risk transfer (such as contract farming) and risk diversification (such as multi-period sales) to avoid price risk. However, farmers subject to liquidity constraints and strong time preferences will not choose risk diversification, and the interaction between time preferences and liquidity constraints will strengthen this decision. The larger the farm-management scale, the greater the impact.Originality/valueThe authors focus on rapidly developed large-scale farm management in China. Appropriate price risk management is required by large-scale farmers due to their substantial operating risks. Considering the incomplete conditions of agricultural insurance and futures markets, the results of this study will help identify behavioral characteristics of large-scale farmers and optimize their price-risk-management strategies, further stabilizing large-scale farm management.

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规模化农场管理下的主观偏好、流动性约束和价格风险管理

目的近年来，中国的大规模农场管理发展迅速。规模经营农户面临着巨大的经营风险，需要进行广泛的价格风险管理。然而，中国的农业保险市场和期货市场并不完善。本研究旨在分析不完全市场条件下规模化农户的价格风险管理行为，重点研究规模化农户的主观偏好（风险偏好、时间偏好）、流动性约束与其价格风险管理之间的相互关系。研究结果表明，风险规避型农户会利用风险转移（如订单农业）和风险分散（如多期销售）来规避价格风险。然而，受流动性约束和强烈时间偏好影响的农民不会选择风险分散，而时间偏好和流动性约束之间的相互作用会加强这种决策。农场管理规模越大，影响就越大。由于规模化经营风险巨大，规模化农户需要适当的价格风险管理。考虑到农业保险和期货市场的不完备性，本研究的结果将有助于识别规模化农户的行为特征，优化其价格风险管理战略，进一步稳定规模化农场管理。

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来源期刊

China Agricultural Economic Review AGRICULTURAL ECONOMICS & POLICY-

CiteScore

9.80

自引率

5.90%

发文量

审稿时长

>12 weeks

期刊介绍： Published in association with China Agricultural University and the Chinese Association for Agricultural Economics, China Agricultural Economic Review publishes academic writings by international scholars, and particularly encourages empirical work that can be replicated and extended by others; and research articles that employ econometric and statistical hypothesis testing, optimization and simulation models. The journal aims to publish research which can be applied to China’s agricultural and rural policy-making process, the development of the agricultural economics discipline and to developing countries hoping to learn from China’s agricultural and rural development.