Managing the Risk in Agriculture Production: The Role of Government

Abstract

The aim of the article was to define the essence and the role of state in managing the risk in agricultural production. Nowadays risk management is one of the core priorities of reformed CAP. Wherefore it was necessary to highlight the variety of tools and essay the reason why the farmers do not implement them. The main method applied in the work was a descriptive method and a dogmatic analysis of normative acts. Reference books and international analyses and reports were also used. The weather conditions, as well as climate change have fair impact on agricultural production, its quality and quantity, as well as farmers’ income. They are infrequent but lead to severe damage to a whole region, like the droughts occurrence this year. Such events fall under the catastrophic risk layer, for which market solutions plays a less important role, mostly due to public involvement. Due to the current legislation, Member States have the authorization for granting subsidies for farmers who had loss. They set up provisions for damage recovery and compensation. It seems to be one of the main reasons why the farmers do not try to avoid the risk themselves applying some on-farm strategies.

Resilience through the Financialisation of Risks? The Case of a Dairy System in Northwest Germany

“…In Germany, for example, mentioned risk management tools have not been subsidised so far and the crowding out of private insurances, such as the popular hail insurance, is feared by economists [23]. In Poland, the government prefers a nationally designed and funded insurance scheme and in Italy, Spain (Castilla y León) and Hungary, the intended set-up of CAP-supported income stabilising tools through mutual funds have not been implemented so far [24,25].…”

How to deal with global concept of Risk in Agriculture? Comparative overview of the literature

“…Risk management can be divided into two groups. Firstly, the role of the state (government) in supporting the income of agricultural producers through the variety of tools like mutual funds, income stabilization fund, contract farming, lease contract, tax exemption and credit facilities and ad hoc support (see [5]). Secondly, the risk must be managed by the farmers on their own.…”

Factors That Influence Farmer Adaptation to Climate Change (Case of Dry Land Farmers in Cemoro Watershed in Central Java)

“…Farmers as the manager of agribusiness, of course, expect to get good harvest output, and thereby their income can be used to suffice their life. However, the fact shows that climate change impacts the decreased farming productivity and production [4].…”