Overview
The sources of risk in agriculture are numerous and diverse, ranging from events related to climate and weather conditions to animal diseases; from changes in agriculture commodities prices to changes in fertilizer and other input prices; and from financial uncertainties to policy and regulatory risks. Recent turbulence in the world commodity markets, together with increasing concerns about the impact of climate change, have given risk management a central role in the agricultural policy debate.Agricultural risks are not independent, but rather are linked both to each other and as part of a system that includes all available instruments, strategies and policies designed to manage risk. A holistic approach is thus necessary. Indeed, analysing a single risk or policy measure in isolation generally leads to wrong conclusions. Governments have a role in facilitating the availability of a variety of instruments while at the same time empowering farmers to design their own business strategy. Risk policies should thus be targeted to well-identified efficiency or equity concerns, avoid the displacement of market or on-farm solutions and take into account all agricultural support policies because most have implications for risk management.
What are the current magnitude and characteristics of risk-related policies? What is known about the quantitative size of agricultural risks? What on-farm, off-farm or market instruments are available to manage agricultural risk? How does the holistic approach help to understand the role of governments? These are some of the questions addressed in this publication, the first piece of an ongoing OECD project on risk management in agriculture.
www.oecd.org/agriculture/policies/risk
Synopsis
The sources of risk in agriculture are numerous and diverse, ranging from events related to climate and weather conditions to animal diseases; from changes in agriculture commodities prices to changes in fertilizer and other input prices; and from financial uncertainties to policy and regulatory risks. Recent turbulence in the world commodity markets, together with increasing concerns about the impact of climate change, have given risk management a central role in the agricultural policy debate.
Agricultural risks are not independent, but rather are linked both to each other and as part of a system that includes all available instruments, strategies and policies designed to manage risk. A holistic approach is thus necessary. Indeed, analysing a single risk or policy measure in isolation generally leads to wrong conclusions. Governments have a role in facilitating the availability of a variety of instruments while at the same time empowering farmers to design their own business strategy. Risk policies should thus be targeted to well-identified efficiency or equity concerns, avoid the displacement of market or on-farm solutions and take into account all agricultural support policies because most have implications for risk management.
What are the current magnitude and characteristics of risk-related policies? What is known about the quantitative size of agricultural risks? What on-farm, off-farm or market instruments are available to manage agricultural risk? How does the holistic approach help to understand the role of governments? These are some of the questions addressed in this publication, the first piece of an ongoing OECD project on risk management in agriculture.
www.oecd.org/agriculture/policies/risk