The effects of EU agricultural policy changes on farmers' risk attitudes

This analysis utilises a model of production under risk estimatedon Finnish farm-level data to measure farmers' risk attitudesin a changing policy environment. We find evidence of heterogeneousrisk preferences among farmers, as well as notable changes overtime in farmers' degree of risk aversion. This result is dueto the increase in the non-random part of farm income generatedby the policy change after Finland's European Union accession.The analysis confirms the assertion that agricultural policiesthat are decoupled from production do affect input use and cropmix through their effect on farmers' risk attitudes.     

Supply Response under Risk: Implications for Counter-Cyclical Payments' Production Impact

This study investigates the role of risk in farmers' acreage decisions for major field crops in the North Central region by revisiting an earlier study by Chavas and Holt. The empirical model is forward-looking and reflects better variable measurement. We test the effects of wealth and revenue risk on supply response. Estimated results are also used to examine the production impact of counter-cyclical payments (CCPs). We find that the effects of risk on supply response are not strong. An increase in initial wealth would lead to greater crop acreage, consistent with decreasing absolute risk aversion. The effect of CCPs on production appears to be negligible.     

Using Consumption and Asset Return Data to Estimate Farmers' Time Preferences and Risk Attitudes

The generalized expected utility model is fitted to U.S. farm data to estimate farm operator's time preferences and risk attitudes. The estimated farmer's utility parameters are quite 'reasonable' and exhibit high accuracy. The forward-looking expected utility model is soundly rejected in favor of the generalized expected utility paradigm. Importantly, the generalized expected utility model is also found to fit the data better than the myopic model typically used to study agricultural production under risk. Finally, U.S. farmers' relative aversion to risk appears to have diminished significantly over time.     

Production risk,risk aversion and the determination of risk attitudes among Spanish rice producers

Agricultural production is subject to risk and the attitudes of producers toward risk will influence input choices insofar as these affect production risk. Risk attitudes in turn may be affected by certain socioeconomic characteristics of producers. Using 2004 survey data from a cross‐section of 130 Spanish rice farms, we estimate risk‐aversion coefficients of farmers and investigate the influence of a series of socioeconomic variables on their risk attitudes. Our results show that farmers exhibit risk‐averse behavior and that risk attitudes are related to a series of socioeconomic characteristics. In particular, the belief that the farm will continue after the producer retires is found to increase the degree of risk aversion, while age is found to have nonlinear effects on risk aversion. Off‐farm income, especially from nonagricultural activities, is found to reduce risk aversion. Neither the educational level of the producer nor the presence of dependents on the household is found to have an effect on risk preferences. Regarding the production technology, we find that land, labor, and fitosanitary products are risk‐reducing inputs, whereas capital, seeds, and fertilizer all increase risk.     

Joint Estimation of Risk Preferences and Technology: Flexible Utility or Futility?

A thought experiment is designed to investigate whether the structure of risk aversion (i.e., the changes in absolute or relative risk aversion associated with changes in wealth) can be estimated with reasonable precision from agricultural production data. Findings strongly suggest that typical production data are unlikely to allow identification of the structure of risk aversion. A flexible-utility parameterization is found to slightly worsen technology parameter estimates. Results also indicate that even under a restricted-utility specification, utility parameter estimates are biased. Further, their quality is much worse when shocks are not large or samples are small.     

Poverty, Risk Aversion, and Path Dependence in Low-Income Countries: Experimental Evidence from Ethiopia

In most low-income countries, rural households depend on mixed rain-fed agriculture/livestock production, which is very risky. Due to numerous market failures, there are few ways to shift risks to third parties. The literature has focused on what determines the responses of households in such environments. Of special concern are path dependencies in which households experiencing failure are prone to further failure and potential poverty traps. This paper estimates levels and determinants of risk aversion in the highlands of Ethiopia. We find high risk aversion and evidence that constraints have important impacts on risk-averting behavior with perhaps significant implications for long-term poverty. The results also suggest the possibility of path dependence and offer insights into links between risk aversion and poverty traps.     

Is Risk Aversion Really Correlated with Wealth? How Estimated Probabilities Introduce Spurious Correlation

Economists frequently focus on correlations between wealth and risk preferences but rarely observe the probabilities needed to test this relationship empirically. These unobserved probabilities are typically estimated via profit or production functions conditioned on wealth correlates, which may leave statistical fingerprints on subsequently-estimated risk aversion coefficients and confound correlations between wealth and risk preferences. Using data from an experiment with observable probabilities, we compare risk aversion coefficients based on true probabilities with those based on probabilities estimated using standard approaches and show how estimated probabilities can change risk aversion coefficients substantially and introduce spurious correlation between risk aversion and wealth.     

AN APPROACH TO THE ECONOMETRIC ESTIMATION OF ATTITUDES TO RISK IN AGRICULTURE*

A simple model is developed relating the debt and asset portfolio of the farm to the production decision, which leads to a small non-linear system of equations. The system is estimated with time-series cross-sectional data from Australian broadacre agriculture using non-linear three-stage least squares. This gives a new method of estimating risk aversion coefficients by using actual behaviour of farmers in a realistic economic environment, rather than games played in artificial situations. Australian farmers are found to be risk averse, and the partial coefficient of risk aversion decreases with wealth and increases with income. The results are consistent with the results of studies by Binswanger in India and elsewhere using a completely different method. This consistency suggests that the partial risk aversion coefficient is a relatively robust measure of attitudes to risk.     

Impacts of risk aversion on whole-farm management in Syria

This article reports on a study of the impact of risk on farm management practices in northern Syria, focusing particularly on how these are affected by risk aversion and farm size. The study is based on production data from an eight-year field trial and on prices from market surveys. A large linear programming model is built, representing the eight years as observations from a discrete probability distribution. Risk aversion is modelled by inclusion of a utility function with constant relative risk aversion, represented using the DEMP/UEP approach.     

THE EFFECT OF FERTILISER ON RISK: A HETEROSCEDASTIC PRODUCTION FUNCTION WITH MEASURABLE STOCHASTIC INPUTS

The sources of production risk are many and diverse in nature. Estimating risk as a black box, without explicit recognition of its sources, can lead to inferior estimates of optimal inputs under risk aversion. In this paper, a method is presented for estimating production functions with measurable stochastic inputs and for generating the parameters of the probability distributions of yield for various environments and input levels. Based on this method, it appears that moderate risk aversion can account for a 6.7 per cent to 16.7 per cent reduction in nitrogen use (relative to the risk-neutral solution) for selected rice producing areas of the Philippines. Estimating optimal inputs without environment specific information about the sources of risk leads to large errors. This underscores the value of collecting information about the sources of risk and of exercising caution when such information is not available.     

社会资本对桃农生产技术效率的影响及对策研究——基于陕西省铜川市桃业的调查

利用铜川地区桃农调研数据,构建随机前沿生产函数模型,将社会资本各维度加入技术效率损失项,测算桃农生产技术效率水平,分析社会资本对桃农生产技术效率的影响。结果表明:桃农的平均生产技术效率为79.38%,存在着一定程度的技术无效率;在社会资本各维度中,关系网络,集体行动以及信息交流的改善能够显著提高桃农生产技术效率,而干群关系、信任与团结对桃农生产技术效率的影响未通过显著性检验。因此,改善桃农关系网络,集体行动,信息交流状况,是提高桃农生产技术效率的有效途径。     

资源禀赋、经营方式与农户林地流入行为

基于2016年7~8月南方集体林区福建省三明、南平、龙岩地区512个样本农户的微观抽样调查数据,运用Probit模型分析林地转入户资源禀赋、经营方式对其林地流入行为的影响,并通过平均边际效应测其影响程度。结果表明:第一,资源禀赋中林地面积、林业劳动力数量、社会关系均正向显著影响农户林地流入行为,家庭总收入负向显著影响农户林地流入行为;第二,经营方式中营林形式、单位面积资金投入对其林地流入行为均有显著正向影响。鉴于此,为了更好地实现"森林资源增长"和"农户增收"双重目标,在集体林权制度改革中,政府应通过加快林地流转交易平台建设、鼓励"联户经营+集约化"经营方式、培育中青年林业经营主体及引导木材市场价格健康有序发展等方式来推进林地流转进程。     

Farm bankruptcy risk as a link between direct payments and agricultural investment

The European Union is increasingly relying on direct paymentsto support farm incomes. Recent research has shown that a directpayment may increase production and investment by risk-aversefarmers via a link between wealth, risk aversion and decisionmaking. This paper shows that, even in the absence of risk aversion,a direct payment may stimulate farm investment. With lendersusing a standard insolvency rule for determining bankruptcy,the direct payment raises the expected value of marginal investmentbecause it reduces the risk of bankruptcy over the farmer'soperating time horizon. The investment response to the directpayment is larger for a farmer with an intermediate versus lowor high level of equity, and for a farmer with a long versusshort-time horizon.     

Risk Averters that Love Risk? Marginal Risk Aversion in Comparison to a Reference Gamble

We propose an analytical distinction between standard risk aversion based on the valuation of a single gamble and marginal risk aversion based on the change in valuation between two gambles. We measure marginal risk aversion in two dimensions—mean and variance. Data from a field experiment is used to study marginal risk aversion. Our results suggest that individuals rely on a reference gamble when assessing marginal risk. Individual responses to marginal changes in mean and variance are nearly identical in direction and magnitude—suggesting that information on both standard and marginal risk aversion is needed to accurately model behavior.     

农户退耕意愿影响因素的贫困尺度差异分析——基于新疆阿克苏地区的调研数据

以新疆阿克苏地区为例,应用多元有序Logit模型,对比分析贫困农户与非贫困农户的退耕意愿及其影响因素,为强化新一轮退耕还林工程的精准扶贫效用提供信息支持。研究结果表明:第一,林业生产经营技能、退耕补偿满意度等是影响农户退耕意愿的重要因素,且不存在显著的贫困尺度差异;第二,亲戚中是否有乡(村)干部、同村人的退耕效果、退耕风险感知、退耕预期收入等对贫困农户与非贫困农户退耕意愿的影响存在较大差异。因此,应规范并强化乡(村)干部的引导作用,建立退耕还林的典型经验推介机制,提升退耕农户的林业生产能力与非农就业技能,以切实增强工程区贫困农户的退耕意愿,有效凸显退耕还林工程的扶贫减贫效用。     

Resource Management under Production and Output Price Uncertainty: Implications for Environmental Policy

Various environmental policies have been proposed to control agricultural runoff of nutrients and pesticides. The impacts of these policies on input use are complicated because of the various sources of uncertainty farmers face and the precise nature of farmers' risk attitude. A risk–averse farmer's response to changed profit , input , and output taxes under output price and production uncertainty is examined. The impact of these policies on input use depends on the form of production uncertainty, risk–input relationships, risk attitudes, and degrees of output price and production uncertainty. These results have implications for the design and implementation of environmental and other production–related policies.     

Farmers’ risk preferences and pesticide use decisions: evidence from field experiments in China

China faces health and environmental problems associated with the use of agricultural chemicals, including pesticides. While previous studies have found that risk aversion affects pesticide use in China, they have focused primarily on commercial cotton farmers. In this study, we consider the case of smaller, semisubsistence and subsistence farmers in a poor and landlocked province of China (Yunnan). We use a field experiment to measure risk aversion and collect detailed data on farm production and input use to specifically ask whether risk aversion affects pesticide use, and whether this effect differs for subsistence farmers producing exclusively for home consumption versus semisubsistence farmers who produce both for home and the market. We find that risk aversion significantly increases pesticide use, particularly for subsistence farmers and for market plots by semisubsistence farmers. Further, this effect of risk aversion significantly decreases with farm size for subsistence farmers, but not for semisubsistence farmers, implying that pesticide use may be used to ensure sufficient food supply for home consumption. Finally, we find barriers to the use of pesticides for subsistence farmers, both in terms of financial constraints and economies of scale. This finding implies that risk‐mitigation strategies, such as crop insurance, may not target food security concerns of subsistence farmers. Given these different motivations for pesticide use, policymakers may wish to consider effective tools to support rural food security for farmers in the poorer regions of China in order to decrease pesticide use.     

PRODUCER RISK,PRODUCT COMPLEMENTARITY AND PRODUCT DIVERSIFICATION

In this paper, a model is presented of the product diversification problem which features both producer risk aversion and product complementarity as determinants of product diversification. Although both risk aversion and product complementarity are, in the absence of the other, incentives to diversity production, when the two are present their joint influence may create a disincentive to diversification. In particular, an increase in the value of product complementarity may result in reduced product diversification for a risk-averse producer.     

Are we risking too much? Perspectives on risk in farm modeling

Risk and uncertainty have been extensively studied by agricultural economists. In this paper we question (a) the predominant use of static frameworks to formally analyse risk; (b) the predominant focus on risk aversion as the motivation for considering risk and (c) the notion that explicitly probabilistic models are likely to be helpful to farmers in their decision making. We pose the question: for a risk‐averse farmer, what is the extra value of a recommendation derived from a model that represents risk aversion, compared to a model based on risk neutrality? The conclusion reached is that for the types of the decision problems most commonly modelled by agricultural economists, the extra value of representing risk aversion is commonly very little.     

A Simple Duality Model of Production Incorporatin Risk Aversion and Price Uncertainty

Proceeding within the framework of a linear mean-variance utility function, this paper outlines a duality model of production that incorporates risk aversion and price uncertainty. In contrast to risk models based on an expected utility function, this model provides a practical alternative to standard duality models for econometric research.