 Farm Level Risk Assessment Using Downside Risk MeasuresErnst Berg and Michael Starp No 25400, 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia from International Association of Agricultural Economists Abstract: Recent and presumable future developments tend to increase the risk associated with farming activities. This causes an increasing importance of risk management. Farmers have a wide variety of possibilities to influence the risk exposure of their operations. Among them are the choice of the production program as well as marketing activities including forward pricing and hedging with futures and options. In total all these opportunities comprise a portfolio of activities which must be selected as to match the resources of the farm as well as the farmer's attitudes towards risk. The paper addresses this issue using a whole farm stochastic optimisation approach based on a risk-value framework. The paper starts with a discussion of risk-value models and the relationship between them and the expected utility hypothesis. In the second part the approach is incorporated in a whole farm model that optimizes a portfolio of production activities and risk management instruments. A case study is used to analyse the possibilities and limitations of the approach and to illustrate the effects of yield and production risk on decision making. Keywords: Risk; and; Uncertainty (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae06:25400 Access Statistics for this paper More papers in 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia from International Association of Agricultural Economists Contact information at EDIRC. |
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