Marcel van Asseldonk

Effect of yield and price risk on conversion from conventional to organic farming

Although the benefits of organic farming are already well known, the conversion to organic farming does not proceed as the Dutch government expected. In order to investigate the conversion decisions of Dutch arable farms, a discrete stochastic dynamic utility-efficient programming (DUEP) model is developed with special attention for yield and price risk of conventional, conversion and organic crops. The model maximizes the expected utility of the farmer depending on the farmer’s risk attitude. The DUEP model is an extension of a dynamic linear programming model that maximized the labour income of conversion from conventional to organic farming over a 10 year planning horizon. The DUEP model was used to model a typical farm for the central clay region in the Netherlands. The results show that for a risk-neutral farmer it is optimal to convert to organic farming. However, for a more risk-averse farmer it is only optimal to fully convert if policy incentives are applied such as taxes on pesticides or subsidies on conversion, or if the market for the organic products becomes more stable.

Alternative risk financing instruments for swine epidemics

Swine epidemics can have very large devastating financial consequences. Governments generally bear the direct losses, such as the value of destroyed animals. Consequential losses, such as the losses resulting from empty buildings and movement standstills, are completely borne by the farmers (and other participants of the production chain) involved. In the Netherlands, as a result of the 1997/1998 epidemic of classical swine fever, the government dramatically changed its risk financing policy, so that farmers now have to pay a significant amount of the direct losses themselves. The goal of this paper is to analyze how this amount can be financed most efficiently. Risk financing instruments studied include a fund, a bank guarantee and an insurance scheme. The paper also considers the opportunities for an insurance scheme for consequential losses. Risk financing instruments are evaluated on the costs and incentives for risk prevention. Costs are analyzed by using a Monte Carlo simulation model.

Importance of Whole-Farm Risk Management in Agriculture

Risk management is an increasingly important topic. At the farm level, it received little attention in Europe. Research indicates that whole-farm riskmanagement approaches, that is approaches in which multiple risks and farm activities are considered simultaneously, seem more efficient than `single risk and commodity strategies?. This chapter first gives an overview of risk management and then it discusses the results of a questionnaire survey among livestock and arable farmers in the Netherlands. The survey deals with farmers? perceptions of risk and risk-management strategies. Risk-management strategies include both `single risk? strategies as well as strategies for simultaneously covering multiple risks. The latter are restricted to the type of strategies currently available in the Netherlands. Next, opportunities for broadening the scope of risk-management strategies covering multiple risks are discussed. The paper concludes by identifying areas for further research in the field of whole-farm risk management.

Risk programming analysis with imperfect information

A Monte Carlo procedure is used to demonstrate the dangers of basing (farm) risk programming on only a few states of nature and to study the impact of applying alternative risk programming methods. Two risk programming formulations are considered, namely mean-variance (E,V) programming and utility efficient (UE) programming. For the particular example of a Norwegian mixed livestock and crop farm, the programming solution is unstable with few states, although the cost of picking a sub-optimal plan declines with increases in number of states. Comparing the E,V results with the UE results shows that there were few discrepancies between the two and the differences which do occur are mainly trivial, thus both methods gave unreliable results in cases with small samples.

Adoption and impact of index-insurance and credit for smallholder farmers in developing countries : A systematic review

Purpose – The purpose of this paper is to review the most recent scientific literature on the determinants explaining the demand for index-insurance, the impact of index-insurance and the existing links between insurance and credit. In this meta-analysis, the authors identify key discoveries on the potential of index-insurance in enhancing credit supply for smallholders and thus farm productivity. Design/methodology/approach – Following a systematic literature search in Scopus and Web of Science, relevant empirical articles were identified by using the following criteria search algorithm: “insurance” and (“weather” or “micro” or “area?based” or “rain*” or “livestock” or “index”), and ((“empiric*” or “experiment” or “trial” or “RCT” or “impact”) or (“credit” or “loan*” or “debt” or “finance”)). The authors identified 1,133 related papers, 110 of which were selected as closely matching the study criteria. After removing duplicates and analysing each document, 45 papers were included in the current analysis....

Economics of eradicating Foot-and-Mouth disease epidemics with alternative control strategies

The paper presents an economic analysis of Foot-and-Mouth Disease (FMD) control strategies for livestock herds. Alternative vaccination-to-live control strat...

Adoption and impact of credit-linked crop index insurance: a case study in Mali

Linking insurance with credit is a promising approach towards overcoming the main difficulties of scaling up crop insurance in Africa. The current research revealed that credit-linked crop insurance adopters in Mali were on average larger households than non-adopters, were living more often from subsistence agriculture, were less patient and less likely to produce maize, while operating on smaller farms. However, propensity score matching revealed that changes in terms of production decisions or wellbeing were limited compared to credit-users. To achieve scaling, linking crop insurance with credit should not only be beneficial for banks to limit their exposure (on a mandatory basis), but should become beneficial as well for smallholders (in terms of better access to credit, lower interest rates or less required collateral).

Risicobeheerinstrumenten in het GLB : bouwstenen voor de Nederlandse positie

Dit rapport analyseert op hoofdlijnen de belangrijkste bestaande en nieuwe risicobeheerinstrumenten in het GLB op eventuele toepassing in Nederland. Voor het risicobeheer zijn allerlei opties beschikbaar die vallen onder instrumenten in de eerste pijler of tweede pijler van het GLB dan wel als overige instrumenten zijn benoemd. De verordeningen van het GLB zijn slechts voor een paar instrumenten een knelpunt voor wat betreft vergroten draagvlak dan wel ontwikkelen van instrumenten. Overige knelpunten vloeien voort uit een te gering draagvlak in de lidstaat. Met name om gevolgschade via onderlinge fondsen te regelen, uitgevoerd door bijvoorbeeld Producentenorganisaties, is bereidheid van de sector en overheid noodzakelijk. Ervaringen in het verleden hebben aangetoond dat dergelijke onderlinge fondsen alleen toekomst hebben indien ze algemeen verbindend worden verklaard, dan wel wettelijk worden geregeld