Risk and risk management in agriculture: an overview and empirical results

Abstract

The paper gives an overview of sources of risk and risk management strategies in agriculture. As risk is an inescapable fact of life, in particular in agriculture, farmers must try to manage risk effectively. Risk management is an integral part of good management of a farm, being a way to avoid losses and exploit opportunities. Results of a field survey with 731 Dutch livestock farmers are presented which indicate that contagious animal diseases and the death of the farm operator are the major sources of risk for livestock farmers. Furthermore, producing at the lowest costs and buying insurance are the most important risk management strategies.