From total farm risk to total household risk: implications for farm management

Yann de Mey, Erwin Wauters, Frankwin van Winsen, Marc Vancauteren, Steven Van Passel, Ludwig Lauwers

Research output: Contribution to conferenceC3: Conference - meeting abstractpeer-review

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Abstract

Modeling the farm level impact of risk management programs, policies and instruments is traditionally been done on a farm-level basis. Hence, farm simulation models typically use the behavioural assumption of profit or utility maximization is risk aversion taken into account.
However, abundant – albeit indirect – evidence from different literature sources suggest that minimization of household risk – being the chance of falling below a certain threshold level of household cash flow – might be more realistic behavioural assumption. In this paper, we present concepts of operational, financial, total farm and household risk. Further, using a stochastic simulation model on two typical Belgian dairy farms, we illustrate possible farmers
responses in the presence or absence of farm income stabilization mechanisms. Although some limitations to the current model are mentioned, the results already suggests the usefulness of considering household risk when assessing the impact of risk management programs, policies and instruments.
Original languageEnglish
Publication statusPublished - 24-Feb-2012
Event123rd EAAE Seminar (2012). Price Volatility and Farm Income Stabilisation - Dublin, Ireland
Duration: 23-Feb-201224-Feb-2012

Seminar

Seminar123rd EAAE Seminar (2012). Price Volatility and Farm Income Stabilisation
CountryIreland
CityDublin
Period23/02/1224/02/12

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