Institute of

BW Farm Economics

Risk Management

Active risk management instead of passive reaction!

Farms are confronted with a multitude of uncertainties and risks. In particular, extreme weather events and strong price fluctuations present major challenges. Climate change and increasing interdependencies with other economic sectors and policy areas pose the threat that income fluctuations and economic risks for agricultural businesses will increase significantly.

Our aim is to develop information and decision-making tools for farmers and agricultural policy makers to further improve risk management in agriculture and to adapt it to future challenges, thus making it more "crisis-proof". Against this background, we analyse the significance and development of important risk factors and research farmers' behaviour in dealing with specific risks. We investigate the effectiveness and efficiency of measures to deal with risks, such as crop diversification, insurance, and hail protection nets. One focus of our work is on the possibilities and limits of state support for risk management. We are also working on improving the methodological prerequisites for comprehensive impact analyses. For economic analyses of risk management on farms, the farm accountancy data network represents one of the most important foundations for our work.

Risk management is a cross-sectional task that affects all areas and levels of agricultural enterprises and has close links to many research fields of the Thünen Institute. In addition, we cooperate with universities and research institutions nationally and internationally.

Our Topics

Risk exposition

The basis of agricultural risk management is the identification of the risks to which farmers are exposed. It is important that this identification is based on facts and figures and is not biased (i. e. overweighted or underweighted) by feelings and emotions.

Risk behaviour

Have you ever thought about insurance against natural hazards such as floods and storms? - Most certainly, if you or people around you have been victims of such a disaster! But without your personal experience? With a view to politically relevant issues in agriculture, we investigate how farms deal with the risks they encounter. Using our research, we suggest options for actions by policymakers to promote effective risk management and reduce public costs.

Risk management instruments

How do farmers effectively protect themselves against risks and the consequences of damaging events? What can agricultural policy makers contribute to improve preparedness, management and adaptation to changing risks?

Risk modelling

What does projected climate change mean for the risk of farm income losses in Germany? Will new trade agreements lead to greater or smaller price fluctuations?

Direct contacts

Dr. Frank Offermann co-ordinates the work on Risk Management.

Dr. Christoph Duden focuses on risk management in agriculture. In his scientific work he has dealt with the "measurement" of risk exposure, index insurance, farmers' risk behaviour and the modelling of risk behaviour in economic models.

Dr. Yaser Feizabadi is investigating how crop diversity can be optimised to make farms more resilient to extreme weather events, while increasing their contribution to climate change mitigation.

M. Sc. Mesud Heydarli is investigating how climate change affects yield variability and how fertilisation strategies can be further improved under these conditions.

Dr. Michel Danne Dr. Michel Danne untersucht, wie sich wirtschaftliche Rahmenbedingungen und die Zunahme von Ertragsschwankungen auf das Düngeverhalten landwirtschaftlicher UnternehmerInnen auswirkt und wie mit optimierten Düngestrategien das Risiko von hohen Stickstoffüberschüssen reduziert werden kann.

Alumni

Dr. Jonas Schmitt examines the limits of on-farm risk management to cope with extreme weather events and the challenges for government support for off-farm risk management instruments such as weather insurance.

Ongoing Projects

Agricultural policy instruments to support farm level risk management

Both climate change and increasing liberalisation of EU agricultural policy involve the danger of increasing volatility and economic risk at the farm level.

Crop yield and optimized N fertilization in a changing climate

Reducing nitrogen (N) surpluses offers substantial reduction potential for greenhouse gas emissions in agriculture. How does climate change influence the potential for increasing N efficiency?

Optimising crop production for climate protection

Der menschengemachte Klimawandel bedroht langfristig die Stabilität der Ökosysteme des Planeten, und damit auch die Stabilität der menschlichen Gesellschaft durch Verknappung von Wasser, Nahrung und Lebensraum.

Finished Projects

MIND STEP - Modelling INdividual Decisions to Support The European Policies related to agriculture

MIND STEP addresses the Work Programme Topic RUR-04-2018-2019, contributing to Rural Renaissance by further developing analytical tools and models to support policies related to agriculture and food. Agricultural policies like the EU CAP are widening the scope to contribute to the Paris climate agreement and the Sustainability Development Goals. From the Commission's legislative proposals (June 2018) it is expected that the European Union (EU) Common Agricultural Policy (CAP) will be redesigned in line with this. Consequences are among others a move of the CAP to farm specific measures and ...

Support of weather insurances - is this the answer to extreme weather events?

Droughts, floods, hail and heavy rainfalls: extreme weather events can lead to severe damages in the agricultural sector. It is therefore important for farmers to protect themselves against weather damage that could endanger their livelihood.

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