Risk Management in Agrarian Sector

H. Bachev

Abstract: Risks management studies in agri-food sector predominately focus on technical methods and capability to perceive, prevent, mitigate, and recover from diverse risks. In most economic publications the risks is studied as other commodity regulated by market supply and demand, and farmers “willingness to pay” for an insurance contract modeled. At the same time, risk management analysis largely ignore a significant “human nature” based (bounded rationality, opportunism) risk, critical factors for the managerial choice such as the institutional environment and the transaction costs, and diversity of alternative (market, private, collective, public, hybrid) modes of risk management. This paper incorporates the interdisciplinary New Institutional Economics and presents a comprehensive framework for analyzing the risk management in agrifood sector. First, it specifies the diverse (natural, technical, behavioral, economic, policy etc.) type of agri-food risks, and the (market, private, public and hybrid) modes of their management. Second, it defines the efficiency of risk management and identifies (personal, institutional, dimensional, technological, natural) factors of governance choice. Next, it presents stages in analysis of risk management and for the improvement of public intervention in the risk governance. Finally, it identifies contemporary opportunities and challenges for risk governance in agri-food chain.

Keywords: agri-food chain; governance; risk management

Date published: 2018-03-12