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Article
Publication date: 22 November 2011

Lei Xu, Qiao Zhang and Xi Zhang

The purpose of this paper is to provide an evaluation method for agricultural catastrophic risk.

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Abstract

Purpose

The purpose of this paper is to provide an evaluation method for agricultural catastrophic risk.

Design/methodology/approach

Data on agricultural disaster loss are collected based on hectares covered by natural disasters, hectares affected by natural disasters, and hectares destroyed by natural disasters using the standard process. Peak over threshold (POT) approach based on the extreme value theory is used to model the distribution of agricultural catastrophic loss, and value at risk (VaR) is used to assess agricultural catastrophic risk.

Findings

This paper provides an approach for collecting agricultural loss data and modelling probability distribution of agricultural catastrophic loss, which is promising for agricultural catastrophic risk evaluating. As the quantified measurement of agricultural catastrophic risk, VaR is observed to be appropriate and feasible. Results of empirical research demonstrate that drought catastrophe negatively affects grain‐production in the northeast region of China; in particular, the drought catastrophic risk is severe within a 100‐year scenario and thus is expected to recur.

Originality/value

To provide an accurate agricultural catastrophic risk assessment, data collection based on disaster occurrence instead of crop yield, and VaR is used in this paper.

Details

China Agricultural Economic Review, vol. 3 no. 4
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 25 May 2012

Edwin Muchapondwa and Thomas Sterner

The purpose of this paper is to investigate whether community‐based wildlife conservation can potentially be added in rural farmers’ investment portfolio to diversify and…

Abstract

Purpose

The purpose of this paper is to investigate whether community‐based wildlife conservation can potentially be added in rural farmers’ investment portfolio to diversify and consequently reduce agricultural risk.

Design/methodology/approach

The correlation coefficient is computed from national data on the rates of return on agricultural production and wildlife conservation, to find out whether wildlife conservation is a feasible hedge asset.

Findings

The correlation coefficient between the returns to agricultural production and wildlife conservation for the period 1989‐1999, for which data exist for both activities, is inferior to unity indicating that rural farmers could use wildlife conservation to reduce the risk they face by engaging in agricultural production only.

Research limitations/implications

Data on communal agricultural production and community‐based wildlife conservation potentially suffer from at least three limitations. First, wildlife is a unique resource that does not require the usual cash investment to acquire and as such the rates of return on wildlife conservation will likely be overstated. Second, some benefits from wildlife are public and non‐monetised; this results in depressed rates of return on wildlife conservation. Lastly, both the data on agricultural production and wildlife conservation are likely to understate physical and human capital investments; this potentially results in abnormally high rates of return.

Practical implications

Even though the paper makes a case for community‐based wildlife conservation at a national level, the benefits of diversification into wildlife conservation are likely to be high only in those rural areas that can sustain wildlife populations sufficient to generate adequate returns from wildlife activities such as tourism, trophy hunting, live animal sales and meat cropping.

Originality/value

This paper empirically investigates whether the risk that rural farmers face could potentially be managed through diversification into community‐based wildlife conservation and provides paramount evidence that wildlife conservation is a hedge asset in rural Zimbabwe. More investment in community‐based wildlife conservation would also help efforts to conserve wildlife.

Details

Journal of Agribusiness in Developing and Emerging Economies, vol. 2 no. 1
Type: Research Article
ISSN: 2044-0839

Keywords

Book part
Publication date: 27 August 2014

Damian Tago, Henrik Andersson and Nicolas Treich

This study contributes to the understanding of the health effects of pesticides exposure and of how pesticides have been and should be regulated.

Abstract

Purpose

This study contributes to the understanding of the health effects of pesticides exposure and of how pesticides have been and should be regulated.

Design/methodology/approach

This study presents literature reviews for the period 2000–2013 on (i) the health effects of pesticides and on (ii) preference valuation of health risks related to pesticides, as well as a discussion of the role of benefit-cost analysis applied to pesticide regulatory measures.

Findings

This study indicates that the health literature has focused on individuals with direct exposure to pesticides, i.e. farmers, while the literature on preference valuation has focused on those with indirect exposure, i.e. consumers. The discussion highlights the need to clarify the rationale for regulating pesticides, the role of risk perceptions in benefit-cost analysis, and the importance of inter-disciplinary research in this area.

Originality/value

This study relates findings of different disciplines (health, economics, public policy) regarding pesticides, and identifies gaps for future research.

Details

Preference Measurement in Health
Type: Book
ISBN: 978-1-78441-029-2

Keywords

Article
Publication date: 26 August 2014

Marianne Lefebvre, Dimitre Nikolov, Sergio Gomez-y-Paloma and Minka Chopeva

The purpose of this paper is to analyze the determinants of agricultural insurance adoption in Bulgaria, using a purpose-built survey of 224 farmers interviewed in 2011…

Abstract

Purpose

The purpose of this paper is to analyze the determinants of agricultural insurance adoption in Bulgaria, using a purpose-built survey of 224 farmers interviewed in 2011. The insurance decision is analyzed conjointly with other risk management decisions on the farm such as having contracts with retailers or processors, diversifying farm activities and using irrigation.

Design/methodology/approach

The agricultural insurance sector in Bulgaria is presented in the broader context of the transition to a market-oriented economy and integration of Bulgarian agriculture into the EU Common Agricultural Policy. The recent developments on the determinants of farm insurance adoption in the agricultural economics and finance literature are discussed. A multivariate probit model is used in order to determine the factors explaining the adoption or non-adoption of various risk management tools by the surveyed farmers, including farm insurance.

Findings

The authors find that farmers with diversified activities, using irrigation or having contracts with retailers or processors, are more likely to adopt insurance, after controlling for farms and farmers’ structural characteristics. Additionally, the authors find that the main characteristics distinguishing farmers who purchase agricultural insurance from non-users are farm size and farm location. The existence of strong regional effect suggests the importance of adapting the insurance products to the different regional contexts in Bulgaria.

Originality/value

This paper contributes to the (limited) literature on agricultural insurance adoption in transition countries, currently shifting from a system where compensation against natural hazards tended to come from a State damage mitigation fund, inherited from the centrally planned governments to private and voluntary agricultural insurance. This research provides a unique data source on the Bulgarian case study.

Details

Agricultural Finance Review, vol. 74 no. 3
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 2 November 2012

Nadja El Benni, Robert Finger and Stefan Mann

The purpose of this study is to examine the effects of agricultural policy reform – specifically the change from market to direct payment support – on income variability…

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Abstract

Purpose

The purpose of this study is to examine the effects of agricultural policy reform – specifically the change from market to direct payment support – on income variability of Swiss farming households. In addition, the observed heterogeneity in income risks across farms and time is explained in terms of farm and regional characteristics.

Design/methodology/approach

Unbalanced farm‐level panel data of the Swiss farm accountancy network (FADN) are used to construct coefficients of variation of five‐year overlapping time intervals for total household income and gross farm revenues over the period 1992 to 2009. Linear fixed effect models are applied to measure the effect of specialization, off‐farm income, direct payments, farm size, and liquidity on the variability of gross farm revenues and household income in the valley, hill, and mountain regions.

Findings

The switch from market‐based support to direct payments has decreased the variability of farm revenues and household income. The strong reliance on direct payments serves as insurance for most farmers and reduces both household income and revenue risk. Off‐farm income can be used by farmers to reduce household income risk but it increases revenue risk in the valley regions. In all of the regions considered, farm size has a positive effect on household income risk and a negative effect on revenue risk. A high degree of specialization increases both gross revenue and household income risk. Potential revenue insurance contracts should specify farmers' off‐farm employment, the degree of specialization, farm size, and regional specific risk profiles.

Originality/value

This paper assesses the complementary effects of specific farm characteristics and risk management strategies with regard to both farm revenue and household income risk. Influences of agricultural policy changes on income risks are also empirically assessed at different spatial scales.

Details

Agricultural Finance Review, vol. 72 no. 3
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 30 April 2020

Leonard Onyiriuba, E.U. Okoro Okoro and Godwin Imo Ibe

The purpose of this study is to identify and review strategic government policies on agricultural financing in Egypt, Morocco, Nigeria and South Africa. Four factors…

Abstract

Purpose

The purpose of this study is to identify and review strategic government policies on agricultural financing in Egypt, Morocco, Nigeria and South Africa. Four factors dictated the choice of these countries. In the first place, the study is set in African emerging markets – and the four countries are the widely acknowledged emerging markets in Africa (Onyiriuba, 2015). Secondly, the spread of the countries, to a large extent, mirrors Africa in general – Egypt and Morocco are in North Africa; Nigeria is a West African country; and, of course, South Africa. Thirdly, other countries in Africa tend to look up to the four countries, apparently as the largest economies in their respective regions. Needless to say, Nigeria alternates with South Africa as the largest economy in Africa. In this capacity, the two countries influence – indeed, mirror – continental Africa's emerging economic progress. Fourthly, lessons from agricultural policy and financing experiences of the four countries will certainly be useful to the other African countries. The specific objective of this paper is to determine how the government seeks to address the financing issues attendant on the risk-laden nature of agriculture through policy interventions. With this end in view, the paper analyses the strategic goals, objectives and beneficiaries of the agriculture financing policies of the government, as well as the constraints on access to finance by the farmers and the policy response.

Design/methodology/approach

The study involves a review of empirical literature and government policies on agricultural financing in Egypt, Morocco, Nigeria and South Africa. The high risks in agriculture (Onyiriuba, 2015; Mordi, 1988), risk aversion behaviour of banks towards agricultural financing (Onyiriuba, 2015, 1990), and the reluctance of insurers to take on agricultural risks (World Bank, 2018; Federal Republic of Nigeria, 2016; Onyiriuba, 1990; Mordi, 1988) underpin this methodology. There are two other considerations: the needs to find out how government seeks to address the financing issues in agriculture through policy intervention, and to avoid unwieldy research, one that combines government and institutional policy perspectives on agriculture financing. Thus the study is not approached from the perspective of banks and other lending institutions; neither does it combine government and institutional policy perspectives. It rather focuses on government policy in order to properly situate implications of the findings.

Findings

The authorities seek to get rid of bottlenecks, ease participation and redress constraints on access to finance in agriculture through policy interventions as a means of sustainable economic growth. The findings are characteristic of emerging markets, rooted in the transitional challenge of opening economies, economic reforms and the March of progress. However, with agriculture and natural resources – rather than industrialisation – as the main stay of their economies, the African emerging markets face an uphill task in their development efforts. This is evident in the divergent and gloomy pictures in which the literature paints their agricultural economies.

Practical implications

Government should gear financing policies to boost output as a means of ensuring food security. It should address risk aversion tendencies among the lenders and feeble credit guarantee, subsidies and budgetary allocations to agriculture. This will ensure effective commitment of the lenders to agriculture and underpin agricultural insurance. However, it demands strengthening links in the chain of access to, and monitoring of, credit for agricultural production. A realistic policy response should target the rural economy – with youth, women and smallholder farmers as ultimate beneficiaries. These actions should be intensified as measures to boost farming and the rural economy.

Originality/value

Current literature fails to situate the empirical findings in emerging markets context, reflecting economies in transition. Besides, in its current state, the literature does not explicitly clarify that agriculture, like most other sectors in such economies, is bound to experience the observed financing constraints. Neither does it clearly reflect how and why the findings should be seen as fleeting realities of the March of progress in transitional economies. This study will help to fill the gap.

Details

Agricultural Finance Review, vol. 80 no. 4
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 12 April 2019

Morteza Yazdani, Ernesto D.R.S. Gonzalez and Prasenjit Chatterjee

The implementation of circular economy strategies is one of the central objectives of several governments seeking a transition toward a sustainable development. Circular…

1954

Abstract

Purpose

The implementation of circular economy strategies is one of the central objectives of several governments seeking a transition toward a sustainable development. Circular economy in agriculture deals with the production of agricultural commodities making an efficient use of resources and avoiding unnecessary waste and carbon emission generation. Disruptions in the production and supply of critical agricultural products can have serious negative repercussions for firms and consumers of the food supply chain. In recent decades, disruptions generated by natural disasters such as hurricanes, thunderstorms and floods have greatly impacted social communities and industrial sectors. Supply chain risks approaches are seen to contribute key elements to address the impacts of natural disaster toward the implementation of circular economy in agriculture, helping to prevent collapses in the production and supply of food. The purpose of this paper is to study and identify flood risk drivers and their effects on the sustainability of an agriculture supply chain in connection with a circular economy strategy. By using an extended Step-wise Weight Assessment Ratio Analysis method combined with a multi-criteria decision analysis, the most essential flood drivers with a degree of importance are reported here. Then, the authors propose an Evaluation of Data based on average ASsessment method, to rank different agricultural projects that pretend to mitigate the flood risks and its impacts on crop areas. The application of this research lies within the framework of a real agricultural project founded by the European Commission Scientific Section, called RUC-APS.

Design/methodology/approach

The authors use management science-based tools to address circular economy in agriculture. The authors propose a multi-criteria-based methodology to assess the risks of flooding in crops areas. To validate the proposed methodology, a case example from Spain is discussed to rank different agricultural projects that pretend to mitigate the flood risks and its impacts on crop areas.

Findings

The proposed multi-criteria methodology confirmed a successful application to rank different agricultural projects that pretend to mitigate the flood risks and its impacts on crop areas. Organizations and firms in the agricultural business can use the methodology to identify risks drivers and to detect the best projects to mitigate the highest impacts of flooding risks in crops areas.

Originality/value

The authors use supply chain risks approaches to address the impacts of natural disaster on the implementation of circular economy in agriculture. The authors propose a robust multi-criteria-based methodology to assess the risks of flooding in crops areas and we used to determine the best mitigating projects to face flooding risks on crop areas.

Article
Publication date: 3 August 2010

Abdoul G. Sam

While the extant literature is replete with theoretical and empirical studies of value at risk (VaR) methods, only a few papers have applied the concept of VaR to quantify…

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Abstract

Purpose

While the extant literature is replete with theoretical and empirical studies of value at risk (VaR) methods, only a few papers have applied the concept of VaR to quantify market risk in the context of agricultural finance. Furthermore, papers that have done so have largely relied on parametric methods to recover estimates of the VaR. The purpose of this paper is to assess extreme market risk on investment in three actively traded agricultural commodity futures.

Design/methodology/approach

A nonparametric Kernel method was implemented which accommodates fat tails and asymmetry of the portfolio return density as well as serial correlation of the data, to estimate market risk for investments in three actively traded agricultural futures contracts: corn, soybeans, and wheat. As a futures contract is a zero‐sum game, the VaR for both short and long sides of the market was computed.

Findings

It was found that wheat futures are riskier than either corn or soybeans futures over both periods considered in the study (2000‐2008 and 2006‐2008) and that all three commodities have experienced a sharp increase in market risk over the 2006‐2008 period, with VaR estimates 10‐43 percent higher than the long‐run estimates.

Research limitations/implications

Research is based on cross‐sectional data and does not allow for dynamic assessment of expenditure elasticities.

Originality/value

This paper differs methodologically from previous applications of VaR in agricultural finance in that a nonparametric Kernel estimator was implemented which is exempt of misspecification risk, in the context of risk management of investment in agricultural futures contracts. The application is particularly relevant to grain elevator businesses which purchase grain from farmers on a forward contract basis and then turn to the futures markets to insure against falling prices.

Details

Agricultural Finance Review, vol. 70 no. 2
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 26 June 2019

Yingmei Tang, Yue Yang, Jihong Ge and Jian Chen

The purpose of this paper is to empirically investigate the impact of weather index insurance on agricultural technology adoption in rural China.

Abstract

Purpose

The purpose of this paper is to empirically investigate the impact of weather index insurance on agricultural technology adoption in rural China.

Design/methodology/approach

A field experiment was conducted with 344 rural households/farmers in Heilongjiang and Jiangsu Provinces, China. DID model was used to evaluate farmers’ technology adoption with and without index insurance.

Findings

The results show that weather index insurance has a significant effect on the technology adoption of rural households; there is a regional difference in this effect between Heilongjiang and Jiangsu. Weather index insurance promotes technology adoption of rural households in Heilongjiang, while has limited impact on those in Jiangsu. Weather, planting scale and risk preference are also important factors influencing the technology adoption of rural households.

Research limitations/implications

This research is subject to some limitations. First, the experimental parameters are designed according to the actual situation to simulate reality, but the willingness in the experiment does not mean it will be put into action in reality. Second, due to the diversity of China’s climate, geography and economic environment, rural households are heterogeneous in rural China. Whether the conclusion can be generalized beyond the study area is naturally questionable. A study with more diverse samples is needed to gain a fuller understanding of index insurance’s effects on farmers in China.

Originality/value

This research provides a rigorous empirical analysis on the impact of weather index insurance on farmers’ agricultural technology adoption through a carefully designed field experiment.

Details

China Agricultural Economic Review, vol. 11 no. 4
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 30 October 2018

Bo Yan, Jiwen Wu and Fengling Wang

The purpose of this paper is to establish an effective risk assessment approach based on the conditional value-at-risk (CVaR) in the agricultural supply chain.

Abstract

Purpose

The purpose of this paper is to establish an effective risk assessment approach based on the conditional value-at-risk (CVaR) in the agricultural supply chain.

Design/methodology/approach

This study analyzes and assesses the risks of breeding, processing, transportation and warehousing in the agricultural supply chain. The ordered weighted averaging operator is used to sort risk control factors according to their importance and determine the main risk indicators of an enterprise. The CVaR model is utilized to establish the risk loss function, and an improved genetic algorithm is employed to identify the optimal risk control portfolios in the case of the smallest risk loss.

Findings

Based on the approach, the optimal combination of risk control to minimize risk losses is determined. Results show that the proportion of capital investment in risk control differs at three confidence levels, and a large amount of money needs to be invested in the production process at the source. Thus, any attempt to control the risks inherent in the agricultural supply chain must begin with the production process at the source.

Originality/value

Supply chain risk management has become increasingly important and significant to the operation and production of enterprises in recent years. The proposed method to assess the risk in the agricultural supply chain can benefit managers in making smart decisions to control total risk.

Details

Management Decision, vol. 57 no. 7
Type: Research Article
ISSN: 0025-1747

Keywords

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