Assessment of the risks involved in corn and soybean production in the municipalities of Mato Grosso

Fernanda Aparecida Castro Pereira and Aline Fernanda Soares

Revista IPecege, 2017, vol. 3, issue 2

Abstract: Agriculture operates with production instability mainly due to unpredictable factors affecting the crop. For this reason, insurance companies have difficulty quantifying the exact risk associated with producing municipalities, especially in the state of Mato Grosso. There are no clear studies associated with the segmentation and quantification of this risk on a smaller scale. Given this fact, this work sought to quantify and segment the production risk of corn and soybeans in the state of Mato Grosso through cluster analysis. For the grouping of means, the non-hierarchical clustering methodology called K-means was adopted, resulting in seven clusters. The risk associated with each cluster was estimated based on the calculation of the coefficient of variation of the average corn and soybean productivity among the municipalities. The work showed variation in the risk rate among the clusters, mainly considering corn productivity; The municipalities in cluster number 3 (Porto Alegre do Norte, Serra Nova Dourada, Santa Terezinha, Jangada, Barra do Bugres, and Porto Estrela) presented the highest risk rates (10.2%) and can be disregarded from the insurance companies' credit portfolio; and, for soybeans, the risk rates among the clusters were similar due to the productive stability so far. In this scenario, it is suggested that insurance companies work with lower premiums and introduce subsidy programs for rural insurance in those municipalities with high individual risk.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Date: 2017
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