Determinants of downside risk exposure of dairy farms

Robert Finger, Tobias Dalhaus, Joseph Allendorf and Stefan Hirsch

European Review of Agricultural Economics, 2018, vol. 45, issue 4, 641-674

Abstract: We investigate determinants of dairy producers’ risk exposure using a unique combination of foci on (i) downside risks, (ii) a holistic representation of revenues from milk and animal sales, (iii) climatic extremes and (iv) the role of animal health. A sample of German dairy farms reveals that animal health and heat stress indicators influence mean and semi-variance of revenues. For instance, heat stress exposure reduces expected milk revenues significantly. In the case of animal health-related indicators, our results show trade-offs between expected revenues and downside risks. Furthermore, variabilities in revenues from milk and animal sales are significantly interrelated.

Keywords: production risk; animal health; climate extremes; stochastic multi-output production; dairy sector (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (16)

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