Projects / Programmes
Development of an integrated system for coping with production and income risks in agriculture and fisheries in Slovenia
| Code |
Science |
Field |
Subfield |
| 4.03.08 |
Biotechnical sciences |
Plant production |
Economics of agro-food processing and rural development |
| Code |
Science |
Field |
| S187 |
Social sciences |
Agricultural economics |
| Code |
Science |
Field |
| 4.01 |
Agricultural and Veterinary Sciences |
Agriculture, Forestry and Fisheries |
Risk management, public support, indemnity and income insurance, mutual insurance schemes, simulatio
Researchers (14)
Organisations (3)
Abstract
PROBLEM:
Agriculture and fisheries are the economic activities with pronounced fluctuations in prices and production. Fluctuations are a complex phenomenon and the result of sudden or long-term changes in natural, health and climatic conditions change, and by the changes in institutional or macroeconomic environment. With the liberalization of agricultural markets and policies, the risks have increased significantly, resulting in a growing need for more complex risk management strategies. Risks can be managed with a combination of private strategies and planning, and public support. Strategies of group risk management can take forms of risk diversification and economic integration and the various forms of insurance. Disaster relief in agriculture and income insurance are subject to public policies in different countries and economic systems. The public role is expanding and will also take over a part of the role that was previously allocated to market-price and structural support in the agriculture and fisheries. In its proposals for the post-2014 CAP, inclusion of risk management schemes is proposed in the form of specific rural development measures , therefore co-financed by the EU budget. Slovenia has a tradition of (subsidised) indemnity insurance, the support and the support in emergency situations. Furthermore, there is a pronounced need for reflection and conception of public schemes of insurance income, primarily in form of public-private mutual funds and various forms of reinsurance. The project intends to explore the possibility of such support, their effects and potential acceptance by beneficiaries and construction of a new institutional framework for managing risk are important issues in Slovenian agricultural policy. New approaches will have to deal with the risk aversion of the potential beneficiaries and institutional barriers to definition of income insurance. Risk management is a challenge and a new area of agri-economic research, which can support decision making in this area.
OBJECTIVES:
The project aims to contribute necessary theoretical and analytical basis, and above all practical proposals that would have decision-makers can use in establishing a systematic approach of risk management in Slovenian agriculture and fisheries. There will be a systematic review of relevant sources of risk and describe risk management strategies with special emphasis on the role of government (especially for the 27 EU countries and selected OECD countries). the assessment of effectiveness of risk management in Slovenian agriculture and fisheries will be conducted. Possibilities for their improvement will be explored by the design and testing of proposals with simulation models and by the assessment of budgetary implications. The project concludes with recommendations to decision makers.
METHOD:
The project is structured by the following workpackages:
1) Sources of risk in agriculture and fisheries and the management systems of these (review of resources and risk management systems and possibilities for active state interference).
2) The comparative political-economic and legal overview of risk management in Slovenia, EU and selected OECD countries.
3) Assessment of the effectiveness of risk management in agriculture and fishing in Slovenia (interviews with key stakeholders, surveys, scenario building).
4) the scenario modeling assessment of various risk management policies.
5) Final proposals and recommendations to decision-makers (evaluation of the pros and cons of potential solutions to risk management, preparation of the concept of public-private insurance scheme, a draft implementation plan).
Apart from literature study and structured development of logic and conception of solutions, the key methods are in-depth interviews with key stakeholders and the survey of agricultural and fishery producers. Simulation models will be constructed of to verify the effects of various public schemes at farm level and national level
Significance for science
The research project is the first in Slovenia, which deals with issues of risk management in agriculture and fisheries. The importance of the research project for the scientific and research work in Slovenia is underlined by the fact that the production and economic risks in agriculture and fisheries production are gaining in importance. Value for the Slovenian scientific community is mirrored also by the fact that the presentation of the results of this research project was selected for invited lecture at the 6th Slovenian Conference of Agricultural Economists (Reference No. 2, Sc.8).
In an international context, one can highlight the originality and complexity of the simulation model for estimation of income risks in Slovenian agriculture. The model tackles the problem of lack of reliable data on the economic indicators of agriculture in terms of risk at the individual farm level. Original approach was developed, combininig a variety of data sources in order to optimize the simulation of the income situation of the holdings. A key source of individual farm level data are applications submitted for direct payments, which reconstructs the actual production of the agricultural holding. The essential advantage of this approach is to cover the majority of holdings within agriculture. The developed approach can also be used in other countries. Using various scenario assumptions, we estimate income fluctuations at individual farm level, and group these into farm type groups, size groups or regions. From the methodological point of view approach based on Monte Carlo simulations and the analytical defined random distributions of key random variables allows the reconstruction of a detailed analysis and studying income fluctuations. From a scientific perspective, the model presents an additional challenge, as it integrates various data sources at the level of the individual farmer for more precise estimation of economic performance of farms exposed to various sources of risk. Building on this, we believe that the model represents an original and methodologically correct approach to obtaining results of great practical value. The plan is to post one to two articles in scientific journals with an impact factor in the field of economic modeling and economics of agriculture.
Significance for the country
The main importance of the research project can be seen in the fact that operators in the agriculture and fisheries, decision-makers in agricultural policy and other interested stakeholders are provided with an insight into the sources of risk in Slovenian agriculture and fisheries, and management strategies with them. In addition to theoretical and analytical bases, results of the project provide the decision-makers with practical proposals for development of an integrated and effective risk management system in Slovenian agriculture and fisheries in the period after 2014. Alternative proposals include information on the type of risk management, legal basis and organizational structure, implementation plan, calculate the economic performance indicators and assess the level of participation in budget
Among the recommendations for the regulation of risk management in Slovenian agriculture in the next EU budget perspective (2014-2020) proposals were drafted according to the criteria of relevance of proposed solutions for Slovenia, their practical feasibility and possibility of co-financing from the Rural Development Programme 2014-20.
In the part of the results dealing with the issue of income risk in agriculture, the project touches on questions of organization of long-term risk management in agriculture and fisheries. The results of the project provide information on the magnitude of income risk in agriculture and how risks vary by individual types of agricultural production, size classes and / or regions. It provides the basis for the planners in agricultural policy-making in the segment of agricultural policy measures, which refers to the problem of agriculture income. Income insurance in agriculture is an obvious measure tackljing this problem. As was already indicated in a brief presentation of project results, this is a mechanism, most likely gain in importance in Europe, and consequentially also in Slovenia. The results of this project open this issue. Together with concrete recommendations regarding preparatory activities, the project results provide data and model base for the development of mechanisms to manage income risk in longer-term time perspective, most likely after 2020.
Most important scientific results
Annual report
2011,
final report,
complete report on dLib.si
Most important socioeconomically and culturally relevant results
Annual report
2011,
final report,
complete report on dLib.si
