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

Abstract

State support for financial risk management schemes has been introduced in numerous agricultural policies to enhance farming system resilience in response to increased income fluctuations and partially reduced producer support levels in the agricultural sector. In order to better understand how financialisation of risks can contribute to an actual improvement of specific farming systems’ resilience, this study investigates its effects with regards to dairy farming. Based on an in-depth case study of a dairy system in Northwest Germany, multilayered challenges faced by the farm system are identified, resilience strategies investigated and the role of financial risk management evaluated. In doing so, the resilience assessment framework developed by Meuwissen et al. (2019) is applied in order to analyse the systems’ capacity to resist, adapt or transform in response to external challenges threatening the provision of system’ functions. The results indicate a high relevance of insurances and savings with regards to the system’s robustness against short-term shocks. However, to address the various long-term pressures, resilience-enhancing attributes that increase the system’s capacity to adapt and transform would need to be strengthened. In particular, more cooperation and knowledge transfer beyond system boundaries could contribute to a holistic risk management allowing for improved farming system resilience.

Medical economic vulnerability: a next step in expanding the farm resilience scholarship

“…Our findings have three main implications for the farm resilience literature. First the presence of medical economic vulnerability among a significant proportion of surveyed farm families (especially for the subjective measure) reinforces recent calls to expand the conceptualization of what constitutes challenges in the resilience literature (Komarek et al 2020;Popp and Nowack 2020). Our findings point to the importance of including micro-level challenges that impact the farm household.…”

“…In this article, we use the example of medical economic vulnerability among United States (U.S.) farm families to speak to the two limitations of the farm resilience literature. Our article also connects to recent calls to expand the range of challenges studied (Komarek et al 2020;Meuwissen et al 2019;Popp and Nowack 2020) and to expand our understanding of the factors that shape these challenges including through the assessment of system's features that can enable or constrain a farmers' ability to adapt (Darnhofer 2021). Medical economic vulnerability (i.e., experiencing economic and social difficulties due to health expenses) is illustrative of a micro-level challenge that is generally confined to the household and one for which institutional arrangements in the form of health insurance likely play an important role in softening the blow of a medical crisis.…”

“…By showing the individual ( ), farm household ( ), and farm operation ( ) as overlapping spheres, our conceptual framework underscores the interactions between these micro-level spheres within the agro-family system (Bennett and Kohl 1982;Doeksen and Symes 2015;Komarek et al 2020;Meuwissen et al 2019;Popp and Nowack 2020;Reinhardt and Barlett 1989). By showing the micro-level spheres embedded within the larger environments connected to meso-and macro-level spheres ( ), our framework underscores the ways in which larger environments intersect with farm families' choices and access to resources (Bennett and Kohl 1982;Meuwissen et al 2019;Popp and Nowack 2020;Smithers and Johnson 2004;Thorsøe et al 2020). We inserted the variables associated with health insurance arrangements (…”

“…One the other hand, farm resilience scholars largely focus on challenges that impact the farm operation. Seldom do they consider those faced by farm households such as a major illness, divorce, or loss of off-farm employment (Komarek et al 2020;Popp and Nowack 2020). The lack of attention to these household-level challenges and how they may affect farm resilience is surprising given the farm resilience studies that have documented the key buffering functions played by farm households within the multi-scalar farm system, as the deep interconnections and exchange of resources between the farm household and the operation help to absorb shocks to the enterprise (Doeksen and Symes 2015;Meuwissen et al 2019).…”

“…Often missing are factors outside of farmer's control that affect their decision-making and shape farm resilience. Meso and macro-level variables such as community infrastructures, rural labor markets, or government programs have received limited attention even though these institutional arrangements play an important role in amplifying or mitigating the effects of challenges that farm families face (Greenhill et al 2009;Popp and Nowack 2020;Thorsøe et al 2020). Without considering how meso and macro-level factors shape farm resilience, we limit our ability to assess the interplay and interactions between micro, meso, and macro level factors, and we constrict our ability to understand how power differentials across these different scales affect short-and long-term farm resilience.…”