Farm household risk balancing : implications for policy from an EU perspective
- Author
- Erwin Wauters, Yann de Mey, Frankwin van Winsen, Steven Van Passel, Mark Vancauteren and Ludwig Lauwers (UGent)
- Organization
- Abstract
- Purpose - Building on the risk balancing theory and on recent discussions the appropriateness of using farm income maximization as behavioural assumption, this paper extends the risk balancing framework by accounting for business-household interactions. The purpose of this paper is to theoretically introduce the concept of farm household risk balancing, a theoretical framework in which the farm household sets a constraint on the total household-level risk and balances farm-level and off-farm-level risk. Design/methodology/approach - The paper argues that the risk behaviour of farmers is better understood by considering risk at the household level. Using an analytical framework, equations are derived linking the farm activities, off-farm activities, consumption and business and private liquidity. Findings - The framework shows that a farm household that wants to minimize the risk that total household cash flow falls below consumption needs, may exhibit a wide variety of behavioural responses to changes in the policy and economic environment. Social implications - The framework suggests multiple ways for policy makers and individual farmers to support risk management. Originality/value - Risk management is at the core of the agricultural policy and it is of paramount importance to be able to understand behavioural responses to market and policy instruments. This paper contributes to that by suggesting that the focus of current risk analysis and management studies may be too narrowly focused at the farm level.
- Keywords
- Business risk, Business-household interactions, Financial risk, Off-farm income
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Citation
Please use this url to cite or link to this publication: http://hdl.handle.net/1854/LU-8661407
- MLA
- Wauters, Erwin, et al. “Farm Household Risk Balancing : Implications for Policy from an EU Perspective.” AGRICULTURAL FINANCE REVIEW, vol. 75, no. 4, 2015, pp. 450–68, doi:10.1108/afr-04-2015-0017.
- APA
- Wauters, E., de Mey, Y., van Winsen, F., Van Passel, S., Vancauteren, M., & Lauwers, L. (2015). Farm household risk balancing : implications for policy from an EU perspective. AGRICULTURAL FINANCE REVIEW, 75(4), 450–468. https://doi.org/10.1108/afr-04-2015-0017
- Chicago author-date
- Wauters, Erwin, Yann de Mey, Frankwin van Winsen, Steven Van Passel, Mark Vancauteren, and Ludwig Lauwers. 2015. “Farm Household Risk Balancing : Implications for Policy from an EU Perspective.” AGRICULTURAL FINANCE REVIEW 75 (4): 450–68. https://doi.org/10.1108/afr-04-2015-0017.
- Chicago author-date (all authors)
- Wauters, Erwin, Yann de Mey, Frankwin van Winsen, Steven Van Passel, Mark Vancauteren, and Ludwig Lauwers. 2015. “Farm Household Risk Balancing : Implications for Policy from an EU Perspective.” AGRICULTURAL FINANCE REVIEW 75 (4): 450–468. doi:10.1108/afr-04-2015-0017.
- Vancouver
- 1.Wauters E, de Mey Y, van Winsen F, Van Passel S, Vancauteren M, Lauwers L. Farm household risk balancing : implications for policy from an EU perspective. AGRICULTURAL FINANCE REVIEW. 2015;75(4):450–68.
- IEEE
- [1]E. Wauters, Y. de Mey, F. van Winsen, S. Van Passel, M. Vancauteren, and L. Lauwers, “Farm household risk balancing : implications for policy from an EU perspective,” AGRICULTURAL FINANCE REVIEW, vol. 75, no. 4, pp. 450–468, 2015.
@article{8661407,
abstract = {{Purpose - Building on the risk balancing theory and on recent discussions the appropriateness of using farm income maximization as behavioural assumption, this paper extends the risk balancing framework by accounting for business-household interactions. The purpose of this paper is to theoretically introduce the concept of farm household risk balancing, a theoretical framework in which the farm household sets a constraint on the total household-level risk and balances farm-level and off-farm-level risk.
Design/methodology/approach - The paper argues that the risk behaviour of farmers is better understood by considering risk at the household level. Using an analytical framework, equations are derived linking the farm activities, off-farm activities, consumption and business and private liquidity.
Findings - The framework shows that a farm household that wants to minimize the risk that total household cash flow falls below consumption needs, may exhibit a wide variety of behavioural responses to changes in the policy and economic environment.
Social implications - The framework suggests multiple ways for policy makers and individual farmers to support risk management.
Originality/value - Risk management is at the core of the agricultural policy and it is of paramount importance to be able to understand behavioural responses to market and policy instruments. This paper contributes to that by suggesting that the focus of current risk analysis and management studies may be too narrowly focused at the farm level.}},
author = {{Wauters, Erwin and de Mey, Yann and van Winsen, Frankwin and Van Passel, Steven and Vancauteren, Mark and Lauwers, Ludwig}},
issn = {{0002-1466}},
journal = {{AGRICULTURAL FINANCE REVIEW}},
keywords = {{Business risk,Business-household interactions,Financial risk,Off-farm income}},
language = {{eng}},
number = {{4}},
pages = {{450--468}},
title = {{Farm household risk balancing : implications for policy from an EU perspective}},
url = {{http://doi.org/10.1108/afr-04-2015-0017}},
volume = {{75}},
year = {{2015}},
}
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