Gross revenue risk in Swiss dairy farming

Abstract

This study investigated how agricultural policy reforms, including market liberalization and market deregulation, have influenced gross revenue risk of Swiss dairy producers using farm-level panel data between 1990 and 2009. Based on detrended data, variance decomposition was applied to assess how output prices and yields contributed to revenue risk over 3 different periods: the whole period (1990-2009), the first decade (1990-1999), and the second decade (1999-2009). In addition, the effect of expected changes in animal-based support for roughage-consuming cattle and price volatility on revenue risk was evaluated using a simulation model. Prices were the main contributor to revenue risk, even if the importance of yield risk increased over time. Swiss dairy producers can profit from natural hedge but market deregulation and market liberalization have reduced the natural hedge at the farm level. An increase in price volatility would substantially increase revenue risk and would, together with the abandonment of direct payments, reduce the comparative advantage of dairy production for risk-averse decision makers. Depending on other available risk management strategies, price risk management instruments might be a valuable solution for Swiss dairy producers in the future.

Do CAP direct payments stabilise farm income? Empirical evidences from a constant sample of Italian farms

“…First, estimating the presence of a trend over short series (10 years, in the considered case) can be misleading because a single data can strongly affect the estimation. Furthermore, improvements of agricultural technologies leading to relevant trends are expected to happen over a long period of time (El Benni and Finger 2013). Second, using detrended data in the variance decomposition analysis has been shown to lead to biased results (Offutt and Blandford 1986).…”

“…The three direct effects sum to unity and an increase of the variance of anyone of these increases the variability of FI. A negative (positive) covariance between two components show that they move in the opposite (same) direction over time (El Benni and Finger 2013). This allows for a reduction (increase) of the variability of FI.…”

“…The role of the three components of (1) on income variability is assessed by applying the variance decomposition by income sources that relies on multiplicative or additive identities (Burt and Finley 1968;Hadrich 2013;El Benni and Finger 2013;Mishra et al 2002).…”

Kainų kaitos kaip rizikos veiksnio vertinimas Lietuvos augalininkystėje

“…Pagal atskirus kriterijus įvertinti Lietuvos au galininkystės produktų kainų kaitos riziką. (Benni, Finger, 2013). S. Sehgal, N. Rajput, F. Deisting (2013), naudo dami dispersijos dekompozicijos metodą, tyrė žemės ūkio, metalo ir energetikos produktų kai nas svarbiose pasaulio prekių būsimųjų sandorių rinkose.…”

“…Esant įprastai pasiūlos ir paklausos priklausomybei, t. y. kai mažėjant derlingumui didėja kainos, pastarųjų ir derlingumo koreliacija yra neigiama, o jos absoliutus dydis didesnis, kai mažesnė kitų veiksnių, veikiančių kainų lygį, įtaka (Benni, Finger, 2013). Koreliacija buvo skaičiuojama pagal formulę:…”