Weather derivatives as an instrument to hedge against the risk of high energy cost in greenhouse production

In many areas agriculture is exposed to weather-related risks. Weather derivatives that get more and more in the focus of interest can reduce these risks. In this study we develop a temperature based weather derivative and analyse how it can reduce the weather-related energy cost risk in greenhouse production. We base this study on a temperature index whose stochastic characteristics are analysed. Finally we simulate the heating energy demand of a horticultural firm.Risk and Uncertainty,

Weather Derivatives as an Instrument to Hedge Against the Risk of High Energy Cost in Greenhouse Production

In many areas agriculture is exposed to weather related risks. Weather derivatives that get more and more in the focus of interest can reduce these risks. In this study we develop a temperature based weather derivative and analyse how it can reduce the weather-related energy cost risk in greenhouse production. We base this study on a temperature index whose stochastic characteristics are analysed. Finally we simulate the heating demand for energy of a horticultural firm.Environmental Economics and Policy, Risk and Uncertainty, C22, D8, Q14,

Digitalisation in agriculture – From the perspective of a global agricultural machinery producer

The Agriculture is faced with the great challenge of feeding more and more people while resources are running out. We are at the beginning of a paradigm shifts in Agribusiness due to digitization. Digital agriculture is seen as a key to mastering this challenge. Digital products on agricultural machinery are not an invention of recent years, but some have more than 30 years of history. The digitally supported Agricultural machines are working on the fields. By deploying sensors and mapping fields, farmers can begin to understand their crops at a micro scale, conserve resources, and reduce impacts on the environment

Wetterderivate als Instrument im Risikomanagement landwirtschaftlicher Betriebe

Die vergangenen und vermutlich zukünftigen Reformen der gemeinsamen Agrarpolitik führen bei landwirtschaftlichen Aktivitäten zu einem Anstieg der Risiken. Marktrisiken nehmen durch Marktliberalisierungen und daraus resultierenden abnehmenden Preisstützungen zu. Darüber hinaus können strengere Richtlinien bei der Anwendung von Pflanzenschutzmitteln die Ertragsvariabilität erhöhen. Daher erscheint es sinnvoll, neue oder zusätzliche Instrumente des Risikomanagements zu analysieren. In diesem Kontext stellen Wetterderivate ein neues Konzept dar, das in jüngster Vergangenheit zunehmend Interesse auf sich gezogen hat. Im Gegensatz zu klassischen Finanzderivaten wird bei solchen die Auszahlung von zukünftigen Wettereignissen wie Temperatur oder Niederschlag determiniert. Dadurch ist die Absicherung von Risiken möglich, die nicht aus der Wertänderung von gehandelten Finanztiteln sondern aus der Unsicherheit zukünftiger klimatischer Prozesse stammen. Ziel der vorliegenden Arbeit ist die einzelbetriebliche Wirkungsanalyse von Wetterderivaten, wobei drei verschiedene Modelle genutzt werden. Es sollen Möglichkeiten und Grenzen von Wetterderivaten als Instrument im Risikomanagement in landwirtschaftlichen Betrieben aufgezeigt werden. Die Arbeit beginnt mit einer Darstellung von Risiko und Risikomanagement, wobei verschiedene Methoden der Risikobeurteilung diskutiert werden. Risiko wird häufig mit Lower Partial Moments gemessen, bei denen keine Annahme der exakten Verteilung der Zufallsvariable vorausgesetzt werden muss. Im Gegensatz zu Versicherungen ist bei Wetterderivaten keine adverse Selektion oder moral hazard möglich. Jedoch zeigt eine Korrelationsanalyse zwischen den Wetterparametern Temperatur und Niederschlag und dem Ertrag von verschiedenen Kulturen an verschiedenen Kulturen keine einheitlichen Beziehungen den Parametern. In der vorliegenden Arbeit werden ein autoregressiver Prozess dritter Ordnung für die Modellierung der Temperaturentwicklung und ein Markovkettenmodell für die Niederschlagsentwicklung verwendet. Ein Gewächshausmodellbetrieb wird entwickelt, um den Einfluss eines Temperaturderivats auf das Heizenergiekostenrisiko zu überprüfen. In zwei weiteren Modellen wird der Einfluss von Niederschlagsderivaten auf das Ertragsrisiko von Stärkekartoffeln und Zwiebeln analysiert. Das Zwiebelmodell wird einer gesamtbetrieblichen Wirkungsanalyse unterzogen. Eine Risikoreduzierung der mit dem Wetterderivat abgesicherten Kultur wird erzielt, wobei sich der Effekt im diversifizierten Modellbetrieb auf gesamtbetrieblicher Ebene verringert.Weather Derivatives as Risk Management Tool in Agriculture Past and presumable future reforms of the CAP tend to increase the risk associated with farming activities. Globalisation of trade combined with declining commodity price support result in an increase of market risks. Besides this, more stringent regulations with respect to the application of agro chemicals cause an increase of yield variability. It therefore appears worthwile analysing new or additional risk management instruments. Among these are weather derivatives a fairly new concept that has recently gained a considerable amount of interest. Contrary to traditional financial derivatives their payoff is determined by future weather events such as temperature or precipitation. Thus, they allow the securitisation of risks which are not caused by changes of market value of traded finance titles but result from the uncertainty of the climatic processes. The study addresses the farm level impacts of hedging with weather derivatives using three modelling approaches. The objective is to evaluate the economic attractiveness of weather derivatives and to assess their potential and limitations as farm level instruments of risk management. The study starts with a description of risk and risk management whereby different methods of risk assessment are discussed. Risk exposure is often presented by Lower Partial Moments who do not need an exact distribution assumption of the random variable. Contrary to insurances weather derivatives do not evoke adverse selection and moral hazard. However, in this study correlation analysis between temperature, precipitation and yield of different crops on different sites show no standardised relation between these parameters. The development of weather parameters can be modelled in different ways. In this study a third order autoregressive process is used for temperature and in case of precipitation a Markov Chain model. To review the impact of a temperature derivative on the heating energy cost risk a greenhouse model firm is used. Precipitation derivatives are modelled to analyse their impact on the yield risk of starch potatoes and onions. The latter is used to evaluate the whole-farm effect of weather derivatives. A risk reduction for the hedged crop is achieved by using the weather derivative. In the diversified model farm on whole farm level the risk reducing effect diminishes

Wetterderivate: Ein Instrument im Risikomanagement für die Landwirtschaft?

The risks associated with farming activities are likely to increase in the future. It, therefore, appears worthwhile to analyse new risk management instruments. This paper investigates weather derivatives for which a market has already emerged in the USA. Contrary to traditional financial derivatives, their payoff is determined by future weather events, such as temperature or precipitation. Thus, they hedge risks which result from climate. Since they address production risks they are complementary to instruments that hedge price risks, such as future markets. The objective of the paper is to evaluate the economic impacts of weather derivatives and to assess their potential as farm level instruments of risk management. After outlining the main characteristics and the functioning of weather derivatives and their emergence, emphasis is placed on model calculations to quantify farm level impacts. The potato farm is used as a case study. Empirical data on yields and weather variables are taken from an experiment station of the Chamber of Agriculture at Hanover, Germany. After studying the relationship between yields and weather variables, the findings are used to design an option based on a precipitation index. Stochastic simulation is then used to assess the effects on the probability distribution of revenues. The results show that weather derivatives can be useful instruments of risk management in agriculture. Since there is still a lack of knowledge with respect to some of their economic impacts, further research is needed. This refers to the choice of suitable commodities and weather indexes, the contractual design and methodological aspects of pricing and of integrating weather derivatives into the risk management of farms. Last but not least, the question has to be answered, as to which partners would be willing to accept the risk that farmers intend to reduce by means of weather derivatives.weather derivatives, weather risk, risk management, stochastic simulation, Financial Economics, Risk and Uncertainty,

Extended Art-of-Living Coaching: An Integrative Approach to Changing Strategies and Overcoming Barriers

Die Forschung zu einem individuellen Lebenskunst-Coaching ist zwar noch in den Anfängen, aber erste Ergebnisse geben vielversprechende Hinweise darauf, dass Lebenskunst durch Coaching gefördert werden kann (Stumpp-Spies/Schmitz 2017b). Hierbei sind die Ressourcen und die Strategien der Coachees ein wichtiger Ausgangspunkt, von dem aus ein Coaching konzipiert werden kann. Darüber hinaus könnten aber noch andere Faktoren eine Rolle dabei spielen, ob ein Coachee seine Lebenskunst verbessern kann oder nicht. Die vorliegende Arbeit geht von der Vermutung aus, dass mögliche Hindernisse wie z. B. Perfektionismus, überzogene Erwartungen oder Entscheidungen eine Rolle dabei spielen könnten, wenn Coachees bestimmte Strategien nicht umsetzen können. Die Frage ist also: Warum können bestimmte Ressourcen zuweilen nicht in gute Strategien umgesetzt werden und woran liegt das? Zu diesem Zweck wurden von einem Coach mit 20 ProbandInnen in einer Experimentalgruppe qualitative Interviews durchgeführt, die wörtlich transkribiert und dann qualitativ ausgewertet wurden. Diejenigen Hindernisse, von denen sich die ProbandInnen sehr stark oder stark betroffen fühlten, wurden in den Coaching-Prozess miteinbezogen. Spezifische Interventionen zielten darauf ab, auf diese Hindernisse einzuwirken und sie abzuschwächen. Durch einen Mixed-Methods-Ansatz wurde Lebenskunst mittels einer Kombination aus qualitativen und quantitativen Verfahren umfassend abgebildet und ein Erkenntnisgewinn erzielt, den man mit einem rein quantitativen Verfahren nicht hätte erreichen können. Die Ergebnisse zeigen, dass Hindernisse bei den teilnehmenden ProbandInnen eine Rolle spielten und dass diese sich durch spezifische Interventionen abschwächen ließen.Research examining the coaching of individuals concerning their art-of-living is still in the early stages. However, there are promising findings indicating that art-of-living can be improved through coaching (Stumpp-Spies/Schmitz 2017b). Coachees’ resources and strategies influence the potential success of a coaching intervention and, thus, should form the starting point for the specific conceptualization thereof. In addition, other factors may also play a role in whether coachees successfully improve their art-of-living. The current study therefore assumes that possible barriers - such as perfectionism, exaggerated expectations, and specific decisions - potentially affect whether coachees are able to implement certain strategies. Thus, we address the following question: Why can certain resources sometimes not be translated into good strategies? With this question in mind, a coach conducted qualitative interviews with 20 participants of the experimental group. The interviews were then transcribed verbatim and examined using qualitative methods. For each participant, the barriers reported to have a strong or very strong effect on the respective person were addressed in the coaching process. Specific interventions then aimed at minimizing the effect of those barriers on the respective participant. Using a mixed-method approach, we assessed participants’ art-of-living using a combination of qualitative and quantitative measures. In doing so, we obtained findings that would not have been possible using quantitative methods alone. Our results indicate that barriers play a role in participants’ art-of-living. This effect was successfully weakened by the coaching intervention