Risk and economic sustainability of crop farming systems

Environmental, social and economic attributes are important for the sustainability of a farming system. Comparing farming systems by considering only expected profitability ignores differences in both sustainability and in the riskiness of system returns. Further, in choosing between farming systems, the ability to survive various risks and shocks and con-tinue in the future is important, i.e., system resilience and persistence are important aspects of sustainabil-ity. Yet resilience and persistence have seldom been directly considered in evaluations of economic sus-tainability. A whole-farm stochastic simulation model over a six-year planning horizon was used to compare organic and conventional cropping systems for a representative farm situation in Eastern Norway. The relative sustainability of alternative systems under changing assumptions about future technology and price regimes was examined in terms of terminal financial position. The risk efficiency of the same alternatives was also compared. The results illustrate possible conflicts between pursuit of risk efficiency versus sustainability. The model used could be useful in supporting farmers’ choice between farming sys-tems as well for policy makers to develop more sharply targeted policies

Comparing Risk Perceptions and Risk Management in Organic and Conventional Dairy Farming: Empirical Results From Norway

This study was conducted to explore organic and conventional dairy farmers' perceptions of risk and risk management, and to examine relationships between farm and farmer characteristics, risk perceptions, and strategies. The data originate from a survey of conventional (n=363) and organic (n=162) dairy farmers in Norway. Organic farmers had the least risk averse perceptions. Institutional and production risks were perceived as primary sources of risk, with farm support payments at the top. Compared to their conventional colleagues, organic farmers gave more weight to institutional factors related to their production systems. Conventional farmers were more concerned about costs of purchased inputs and animal welfare policy. Organic and conventional farmers' management responses were more similar than their risk perceptions. Financial measures such as liquidity and costs of production, disease prevention, and insurance were perceived as important ways to handle risk. Even though perceptions were highly farmer-specific, a number of socio-economic variables were found to be related to risk and risk management. The primary role of institutional risks implies that policy makers should be cautious about changing policy capriciously and they should consider the scope for strategic policy initiatives that give farmers some greater confidence about the longer term. Further, researchers should pay more attention to institutional risks