Risk management in crop farming

The agricultural sector is heavily exposed to the impact of climate change and the more common extreme weather events. This exposure can have significant impacts on agricultural production. To deal with the financial impacts caused by natural hazards, crop insurance is an appropriate tool (Di Falco et al., 2014). In addition to crop insurance purchase, to maximize agriculture’s mitigation potential regarding to weather-related risks, there is a need for investments in technological innovation and agricultural intensification related to increased efficiency of input usage (Vermeulen et al., 2012). The dissertation aimed to explore the influencing factors of crop insurance take-up and evaluate the effect of crop insurance purchase on technical efficiency and farm investment, and analyse the interrelationship between these factors based on three articles. The analysis was carried out using quantitative methods, such as Moran’s I index, dynamic spatial autoregressive model, various probit models, DEA method with double bootstrap and system of simultaneous equations based on crop insurance data collected by Research Institute of Agricultural Economics (AKI), on utilised area data from the Integrated Administration and on FADN data. The main results of the dissertation: • The intensity of crop insurance take-up has a spatial pattern, as farmers’ insurance decision are influenced by the decisions of nearby producers. In addition, neighbouring farms can face similar weather-related risks which also provide an explanation for the similar insurance decision. • Crop insurance level is influenced by the rate of fruit production and vegetable production in total crop production for all types of subsidised insurance taken together. A high share of fruit production discourages participation in the subsidised insurance system, which can be explained by the typical damage scale, the relative high insurance premium for fruit crops and the low-risk appetite of insurers. However, vegetable producers are more likely to purchase for ...