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The Risk Specific and their Management in Agriculture

Author(s) Prokopchuk O.T., Candidate of Economics, , Uman National University of Horticulture, Ukraine
Category Economics
year 2019 issue Issue number 95. Part 2
pages 24-41 index UDK 368 (477)
DOI 10.31395/2415-8240-2019-95-2-24-41 (Link)
Abstract Agricultural production has a high degree of risk. This is due to the fact that it is an area of activity, the success of which is largely influenced by a variety of weather and climatic factors, which in many cases cannot be controlled. Against this background, at this stage, research into the risks inherent in agriculture, their specificities and methods for managing the latter requires more and more attention. The article examines the risks inherent in agriculture, their features and methods of managing the latter. For the scientific solution of the goal set out in the article, general scientific methods of scientific knowledge and study of economic phenomena have been used. The theoretical and methodological basis of the study is mainly the work of domestic scientists and practitioners, as well as foreign scientists engaged in the study of risks inherent in agriculture, their features and methods of managing them. The following research methods are used in the article: abstract-logical, mathematical, comparison, monographic, tabular, graphic and scientific generalization. Risks specific to agriculture have been classified, resulting in them being roughly classified into six major groups: production risks, market risks, financial risks, political risks, legal risks and human-caused risks. The study found that an important aspect of risk assessment is not only its identification, but also the development of measures to eliminate or reduce it. A number of risk management strategies aimed at reducing their negative impact on agricultural income have been identified. The latter are divided into two main groups: the first are strategies that the agro-producer directly uses to avoid, prevent and mitigate the effects of the risks, and the second are strategies for the transfer (at a fee) of risks from farmers to other entities. It has been determined that the most effective instrument of risk management in agriculture is insurance, which is a system of economic relations for the protection of property interests of individuals and legal entities when certain events occur. The paper presents a set of definitions of the category of agricultural insurance, interpreting it as a special type of insurance with certain challenges for all its participants. Since, in terms of assessing the degree of riskiness, the highest level in agriculture may be characterized by the process of cultivation of crops in the article carried out the characterization of risks in crop production.
Key words risk, agriculture, insurance, agri-insurance, insurance product
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