Simulating risk management strategies for specialized farming systems: the potential impact of the EU income stabilization tool

IF 1.5 Q3 AGRICULTURAL ECONOMICS & POLICY

Agricultural Finance Review Pub Date : 2022-11-01 DOI:10.1108/afr-11-2021-0146

C. Zinnanti, A. Coletta, Michele Torrigiani, S. Severini

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引用次数: 1

Abstract

PurposeThis study assesses the potential impact of the European Income Stabilization Tool (IST – a whole farm income risk management [RM] tool) within a farm cooperative specializing in vineyards and operating in a small area of production. The authors assess the conditions under which IST could improve the well-being of the associated farmers and, at the same time, improve financial sustainability. Financial aspects are of particular relevance since the characteristics of the cooperative cause the management of the tool to become potentially risky.Design/methodology/approachThe analysis relies on a balanced panel dataset to report the production and economic characteristics of individual associated farms. This is the basis for simulating the implementation of the IST as described in the current European regulation. The expected utility approach is then used to assess the potential impact on farmers' well-being under different levels of risk aversion and premiums. The analysis of the IST annual cash flow allows for an accurate assessment of its financial sustainability.FindingsThe results suggest that the IST can improve farmers' well-being under plausible levels of risk aversion and premiums, making most farmers willing to support its implementation. Furthermore, the tool could be financially sustainable even if implemented in a specialized and geographically concentrated group of farms. In addition, the results suggest that the use of strategies such as the IST could help cope with negative annual balances by treating the financial sustainability of the fund.Originality/valueThe analysis adds to previous research on the IST by accounting for farmers' risk aversion. Furthermore, it is the first analysis that simulates the implementation of this tool in a sector-specific and concentrated group of farms. The results provide useful evidence for those subjects planning to implement the IST in small and specialized farming systems.

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模拟专业化农业系统的风险管理策略:欧盟收入稳定工具的潜在影响

目的本研究评估了欧洲收入稳定工具（IST——一种全农场收入风险管理[RM]工具）在一家专门从事葡萄园和小面积生产的农场合作社内的潜在影响。作者评估了IST可以改善相关农民福祉的条件，同时提高财政可持续性。财务方面特别重要，因为合作社的特点导致工具的管理具有潜在风险。设计/方法论/方法分析依赖于平衡的面板数据集来报告单个相关农场的生产和经济特征。这是模拟当前欧洲法规中描述的IST实施的基础。然后使用预期效用方法来评估在不同风险厌恶和保费水平下对农民福祉的潜在影响。对IST年度现金流的分析可以准确评估其财务可持续性。研究结果表明，在合理的风险规避和保费水平下，IST可以改善农民的福祉，使大多数农民愿意支持其实施。此外，即使在专业化和地理集中的农场群中实施，该工具在财务上也是可持续的。此外，研究结果表明，使用IST等策略可以通过处理基金的财务可持续性来帮助应对负年度余额。独创性/价值该分析通过考虑农民的风险厌恶，增加了之前对IST的研究。此外，这是第一次模拟该工具在特定部门和集中农场群中的实施情况的分析。研究结果为那些计划在小型和专业化农业系统中实施IST的受试者提供了有用的证据。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Agricultural Finance Review AGRICULTURAL ECONOMICS & POLICY-

CiteScore

3.70

自引率

18.80%

发文量

期刊介绍： Agricultural Finance Review provides a rigorous forum for the publication of theory and empirical work related solely to issues in agricultural and agribusiness finance. Contributions come from academic and industry experts across the world and address a wide range of topics including: Agricultural finance, Agricultural policy related to agricultural finance and risk issues, Agricultural lending and credit issues, Farm credit, Businesses and financial risks affecting agriculture and agribusiness, Agricultural policies affecting farm or agribusiness risks and profitability, Risk management strategies including the use of futures and options, Rural credit in developing economies, Microfinance and microcredit applied to agriculture and rural development, Financial efficiency, Agriculture insurance and reinsurance. Agricultural Finance Review is committed to research addressing (1) factors affecting or influencing the financing of agriculture and agribusiness in both developed and developing nations; (2) the broadest aspect of risk assessment and risk management strategies affecting agriculture; and (3) government policies affecting farm profitability, liquidity, and access to credit.