Farmers’ Attitudes towards Risk—An Empirical Study from Poland
Abstract
:1. Introduction
2. Farmers’ Risk Preferences—Theoretical Framework and Empirical Approaches
2.1. Risk Aversion and Methods of Eliciting Risk Preferences
- based on observed economic behaviour from secondary data, including econometric and mathematical methods. The underlying assumption of these methods is to estimate risk preferences based on “observed behaviour of agricultural producers with respect to input and output choices to behaviour predicted by theoretical models incorporating risk and risk preferences” Iyer et al. [7] (pp.6). Examples of such an approach to determine risk aversion can be found in numerous studies [53,54,55,56,57,58],
- based on elicited preferences from primary data, including multi-item scales and lottery-choices tasks. The methods based on multi-item scales specify the attitude towards risk by obtaining an answer to a series of multi-item and scale-based questions. This type of research takes the form of various types of surveys and questionnaires. It is aimed at identifying actual decisions (preferences) and actions taken by decision-makers [59,60] and presented by many researchers [3,38,61,62,63,64].
2.2. Farmers Risk Aversion
3. Materials and Methods
3.1. Case Study Area—Background Information on Polish Agriculture
3.2. Data Collection
- 4 layers due to the specialization criterion,
- 3 layers due to the economic size criterion measured by the standard output (below 25, between 25 and 100, and above 100 thousand EUR),
- 4 layers due to the localization within the FADN regions (see Figure 3).
- crop production farms—this includes farms specializing in field crops (TF1), horticultural crops (TF2), permanent crops (TF4);
- cattle farms—this includes farms specializing in rearing dairy cows (TF5) and herbivorous animals (TF6);
- pig farms—this includes units specializing in rearing animals fed with concentrated feed (mainly pigs TF 71 and poultry TF 72);
- mixed farms—this includes mixed farms (TF8).
3.3. Methods
4. Results
4.1. Farmers’ Risk Aversion and Farms’ Economic Size and Production Type
4.2. Farmers’ Risk Aversion and Their Attitudes Toward Specified Risky Situations
4.3. Farmers’ Risk Aversion and Perception of Production Risk Factors
4.4. Farmers’ Risk Aversion and Preferred Risk Management Tools
5. Discussion and Conclusions
Author Contributions
Funding
Conflicts of Interest
References
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Category | Units | Farm Population in Poland | FADN Field of Observation | FADN Field of Observation in Farm Population |
---|---|---|---|---|
Standard production | mln PLN * | 73,699 | 68,563 | 93.0% |
UAA area | th. ha | 14,447 | 12,291 | 85.1% |
Number of livestock | LU ** | 10,377,506 | 10,055,995 | 96.9% |
Labour resources | AWU *** | 2,811,622 | 1,868,527 | 66.5% |
Economic Farm Size Type of Farming | Standard Output [Thousand EUR] | Total | ||
---|---|---|---|---|
Below 25 | 25 < 100 | Above 100 | ||
Crop production | 133 | 111 | 23 | 267 |
Granivores (pigs & poultry) | 0 | 10 | 22 | 32 |
Cattle | 38 | 93 | 8 | 139 |
Mixed | 69 | 64 | 29 | 162 |
Total | 240 | 278 | 82 | 600 |
Grouping Criterion and Farm Classes | Risk Aversion | |||
---|---|---|---|---|
Low | Medium | High | ||
Share of Farmers [%] | ||||
Economic size [th. EUR SO] | below 25 | 20.8 | 57.8 | 21.5 |
25–100 | 24.9 | 47.7 | 27.4 | |
above 100 | 26.8 | 51.8 | 21.4 | |
Farm type | Cattle | 29.9 | 54.9 | 15.3 |
Mixed | 16.4 | 52.7 | 30.9 | |
Crop | 23.7 | 52.6 | 23.7 | |
Pig | 21.1 | 52.6 | 26.3 | |
Total | 23.0 | 53.2 | 23.8 |
Type of Statement | Risk Aversion | The Farmer’s Self-Assessment of the Degree of Compliance with a Given Statement | Chi2 | p-Value | ||
---|---|---|---|---|---|---|
Definitely Not or Probably Not | Neither Yes nor No | Rather Yes or Definitely Yes | ||||
Share of Answers [%] | ||||||
“I sometimes make risky decisions on the farm.” | low | 36.2 | 17.4 | 46.4 | 17.246 | 0.0017 |
medium | 48.0 | 20.7 | 29.8 | |||
high | 55.9 | 19.6 | 23.1 | |||
total | 47.2 | 19.7 | 32.0 | |||
“I have concerns about taking loans.” | low | 34.8 | 16.7 | 48.6 | 8.452 | 0.0763 |
medium | 28.5 | 14.7 | 56.7 | |||
high | 20.3 | 16.1 | 62.9 | |||
total | 28.0 | 15.5 | 56.3 | |||
“I implement new technologies and plant varieties.” | low | 21.0 | 5.8 | 73.2 | 10.961 | 0.0270 |
medium | 22.6 | 15.0 | 62.4 | |||
high | 18.2 | 17.5 | 62.9 | |||
total | 21.2 | 13.5 | 65.0 | |||
“I accept a narrow production specialization on the farm.” | low | 47.8 | 10.9 | 41.3 | 7.412 | 0.1156 |
medium | 48.9 | 17.6 | 33.2 | |||
high | 56.6 | 13.3 | 29.4 | |||
total | 50.5 | 15.0 | 34.2 |
Farmer Risk Aversion | Risk Factors | |||||
---|---|---|---|---|---|---|
Drought | Crop Pest and Diseases | Spring Frosts | Hail | Poor Overwintering | Storm | |
share of farmers indicating a frequent occurrence of the risks factors [%] | ||||||
low | 72.5 | 60.1 | 36.5 | 21.2 | 14.8 | 5.4 |
medium | 82.4 | 64.2 | 49.4 | 23.0 | 24.3 | 3.7 |
high | 83.2 | 56.0 | 54.9 | 29.6 | 24.3 | 4.0 |
total | 80.3 | 61.3 | 47.7 | 24.1 | 22.1 | 4.1 |
Chi2 | 7.062 | 3.2001 | 10.249 | 3.153 | 5.434 | 0.7471 |
p-value | 0.0292 | 0.2018 | 0.0059 | 0.2066 | 0.0660 | 0.6882 |
share of farmers indicating a substantial threat resulting from a given risk factor [%] | ||||||
low | 86.2 | 61.6 | 67.4 | 52.2 | 49.3 | 61.6 |
medium | 94.0 | 61.1 | 63.9 | 53.0 | 57.1 | 61.1 |
high | 94.4 | 60.1 | 67.1 | 57.3 | 60.8 | 60.1 |
total | 92.3 | 61.0 | 65.5 | 53.8 | 56.2 | 61.0 |
Chi2 | 9.443 | .0671 | .726 | .955 | 4.031 | 1.113 |
p-value | 0.01539 | 0.96697 | 0.69545 | 0.6202 | 0.13319 | 0.57318 |
Farmer Risk Aversion | Risk Management Method | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Improvement of Crop Protection Practices | Diversification of Production Structure | Planning the Production Based on Market Information | Technology Improvements to limit The Effects of Adverse Weather | Using Crop Insurance | Raising Qualifications, Acquiring New Knowledge | Cooperation with Other Farmers | Crop Sales Contracts | Taking Off-fArm Employment | Developing Off-Farm Business | |
share of farmers confirming the usefulness of given risk management methods [%] | ||||||||||
low | 61.6 | 51.4 | 53.6 | 65.9 | 67.4 | 89.1 | 73.2 | 70.3 | 55.8 | 31.2 |
medium | 62.4 | 54.2 | 52.0 | 67.1 | 67.7 | 82.1 | 63.9 | 66.1 | 59.6 | 28.5 |
high | 61.5 | 55.9 | 46.2 | 57.3 | 69.2 | 83.2 | 61.5 | 62.2 | 61.5 | 26.6 |
total | 62.0 | 54.0 | 51.0 | 64.5 | 68.0 | 84.0 | 65.5 | 66.2 | 59.2 | 28.7 |
Chi2 | 0.042 | 0.585 | 1.861 | 4.255 | 0.135 | 3.596 | 4.942 | 2.034 | 1.002 | 4.249 |
p-value | 0.9790 | 0.746 | 0.3942 | 0.1191 | 0.935 | 0.1655 | 0.0844 | 0.3616 | 0.606 | 0.1194 |
Farmer Risk Aversion | Risk Management Method | ||||||
---|---|---|---|---|---|---|---|
Crop Irrigation | Improvement of Crop Protection Practices | Developing Infrastructure Protecting Multi-Perennial Crops | New Crop Cultivation Technologies | Developing of a Crop Storage Facility | Crop Sales Contracts | Developing New Sales Channels | |
share of farmers who introduced specified risk management method in the last five years [%] | |||||||
low | 12.9 | 59.4 | 8.8 | 33.3 | 26.2 | 38.1 | 18.8 |
medium | 12.4 | 71.8 | 12.6 | 38.0 | 24.1 | 36.5 | 20.7 |
high | 6.0 | 74.8 | 7.0 | 37.2 | 23.5 | 41.3 | 14.4 |
total | 11.0 | 69.7 | 10.6 | 36.7 | 24.4 | 38.0 | 18.8 |
Chi2 | 4.562 | 9.114 | 2.071 | 0.850 | 0.2900 | 0.922 | 2.367 |
p-value | 0.1021 | 0.0104 | 0.3549 | 0.6537 | 0.8650 | 0.6305 | 0.3061 |
Farmer Risk Aversion | Possible Adaptation Measures | |||||||
---|---|---|---|---|---|---|---|---|
Increasing the Scale of Production | Giving Up Commercial Farming | Continue Present Strategy Without Changes | Taking Off-Farm Employment | Adjusting Farm Production Structure | Developing Off-Farm Business | Decreasing Investment Expenditures | Decreasing On-Farm Employment | |
% of farmers | ||||||||
low | 39.1 | 29.7 | 28.3 | 38.4 | 48.6 | 39.1 | 60.9 | 5.1 |
medium | 27.3 | 23.2 | 35.7 | 43.6 | 59.2 | 36.7 | 64.9 | 8.2 |
high | 25.9 | 21.0 | 28.7 | 38.5 | 59.4 | 32.2 | 76.2 | 10.5 |
total | 29.7 | 24.2 | 32.3 | 41.2 | 56.8 | 36.2 | 66.7 | 8.0 |
Chi2 | 7.785 | 3.270 | 3.611 | 1.629 | 5.013 | 1.551 | 8.417 | 2.820 |
p-value | 0.0203 | 0.1949 | 0.1643 | 0.4427 | 0.0815 | 0.4603 | 0.0148 | 0.2440 |
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Sulewski, P.; Wąs, A.; Kobus, P.; Pogodzińska, K.; Szymańska, M.; Sosulski, T. Farmers’ Attitudes towards Risk—An Empirical Study from Poland. Agronomy 2020, 10, 1555. https://doi.org/10.3390/agronomy10101555
Sulewski P, Wąs A, Kobus P, Pogodzińska K, Szymańska M, Sosulski T. Farmers’ Attitudes towards Risk—An Empirical Study from Poland. Agronomy. 2020; 10(10):1555. https://doi.org/10.3390/agronomy10101555
Chicago/Turabian StyleSulewski, Piotr, Adam Wąs, Paweł Kobus, Kinga Pogodzińska, Magdalena Szymańska, and Tomasz Sosulski. 2020. "Farmers’ Attitudes towards Risk—An Empirical Study from Poland" Agronomy 10, no. 10: 1555. https://doi.org/10.3390/agronomy10101555