Income Stabilization Tool in Viticulture – Risk Management Innovation: the case of the Istria County

Abstract

To cope with different types of risks, farmers can implement on-farm strategies and risk-sharing strategies. Risk management tools within EU Common Agricultural Policy are subsidized crop insurance, mutual funds (MF), and income stabilization tool (IST). While subsidized crop insurance is widely applied, IST and MF are not so common. Price volatility and climate change risk significantly influence farm income. Mediterranean area is especially exposed to climate change, so Istria County as part of Mediterranean is chosen for research. IST could protect against income variability, but more research and discussions are needed prior to its commercial scale implementation. Qualitative research on the small sample was applied with the goal to explore attributes that could impact the selection of IST. Paper provides an overview of IST and previous experience of IST on the EU level, on the basis of semi structured interviews, explains the perception of climate risks and IST on wine cases in Istria. The results show that all selected cases were familiar with subsidized crop insurance; however, they were not familiar with IST. After being introduced to the IST, wine producers were ready to consider its application. Lack of experiences in business linkages could be a constraint in the development of IST and challenge for policymakers.