Purpose
The purpose of this paper is to investigate the role of crop insurance among Hungarian crop farmers and the responses to the introduction of the two-scheme risk management system. Specifically, first, it examines the economic and environmental factors affecting the willingness of farmers to contract crop insurance. Second, it reveals the relationship between having crop insurance and technical efficiency of crop producing farms.
Design/methodology/approach
Probit models of panel data are applied to explore the factors of insurance decisions. The relationship between efficiency and insurance is investigated with two-stage data envelopment analysis (DEA) model with double bootstrap using panel data for the 2001 to 2014 period.
Findings
The results of Probit model estimations show that the education, the size, the indebtedness of crop producing farms and the new two-scheme risk management system are in positive correlation, while the concentration of farming activity are in negative correlation with the crop insurance contracting. The estimations of two-stage DEA model reveal that crop producing farms with an agricultural insurance contract are more efficient than the farmers without using this risk management tool.
Originality/value
Empirical investigation of the influencing factors of agricultural insurance demand in Hungary and the examination of the relationship between insurance and technical efficiency may contribute to the development of Hungarian risk management system.
Abstract:The changes in rate and pattern of wind erosion sensitivity due to climate change were investigated for 2021-2050 and 2071-2100 compared to the reference period in Hungary. The sensitivities of the main influencing factors (soil texture, vegetation cover and climate factor) were evaluated by fuzzy method and a combined wind erosion sensitivity map was compiled. The climate factor, as the driving factor of the changes, was assessed based on observed data for the reference period, while REMO and ALADIN regional climate model simulation data for the future periods. The changes in wind erosion sensitivity were evaluated on potentially affected agricultural land use types, and hot spot areas were allocated. Based on the results, 5-6% of the total agricultural areas were high sensitive areas in the reference period. In the 21st century slight or moderate changes of wind erosion sensitivity can be expected, and mostly 'pastures', 'complex cultivation patterns', and 'land principally occupied by agriculture with significant areas of natural vegetation' are affected. The applied combination of multi-indicator approach and fuzzy analysis provides novelty in the field of land sensitivity assessment. The method is suitable for regional scale analysis of wind erosion sensitivity changes and supports regional planning by allocating priority areas where changes in agro-technics or land use have to be considered.
This paper examines the effects of territorial differentiation of damage to wheat, maize, barley, sunfl ower and rapeseed production caused by drought and heavy rain. Our study evaluated the differences between LAU1 micro-regions in Hungary in the effects of the weather on agricultural production and found that there are extremely high differences in the probabilities of damage occurring. Therefore the design of agricultural insurance products should be based on different absolute deductibles and different insurance premiums for micro-regions. Furthermore, we found that within a micro-region individual producers face a very high diversity of risks which implies that in the long term only a bonus-malus system developed for individual agricultural producers can mitigate different risks, and that this can be the basis of a well performing risk management system that is suitable for a wide risk community.
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