Determinants of the Risk Environment in Agricultural Enterprises in the Czech Republic

Determinanty rizikového prostředí zemědělských podniků v České republice

Jindřich Špička and Václav Vilhelm

Acta Oeconomica Pragensia, 2013, vol. 2013, issue 2, 69-87

Abstract: The income of agricultural enterprises has always been influenced by both weather and price volatility. Nevertheless, the risk environment of various farms seems not to be the same. Similarly, risk factors are not independent of each other. The aim of the paper is to assess the spatial and commodity particularities determining the risk environment of agricultural enterprises in the Czech Republic. Within the main objective, the efficiency of crop insurance depending on farm size is also considered. Using calculation of statistical indicators of variability in the panel data, as well as Monte Carlo simulation, differences in farm risk exposure and efficiency of crop insurance between small and large farms were found. It was found that the risk of crop price volatility is generally of a more systemic nature and it is more difficult to diversify than the risk of crop yield volatility. The hypothesis that smaller crop acreage increases the risk of farm crop yield fluctuation was not statistically confirmed within a set of medium and large agricultural enterprises. In the sample of typical farms with specialized crop field types of farming, it was revealed that agricultural insurance is more effective for small farms than for large agricultural enterprises. Based on the main findings, we make some recommendations for the business sector and policy makers.

Keywords: agriculture; risk management; risk environment; Monte Carlo simulation; holistic approach (search for similar items in EconPapers)
JEL-codes: D81 M11 Q18 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.18267/j.aop.400

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