Efficiency of Selected Risk Management Instruments - An Empirical Analysis of Risk Reduction in Kazakhstani Crop Production

Recent academic discussion regarding crop insurance in developing and transition countries has focused on weather index insurance. But empirical analyses of such schemes based on farm level data cannot be found in the literature, though this insurance type shows clear advantages compared to multiple-peril crop insurance and revenue insurance. Recent empirical applications of risk and stochastic programming models focus on the optimisation of production planning, while literature on the effects of crop insurance on the farm level mainly focuses on the empirical investigation of reductions in farm income variance. The novelty of this paper is that it integrates regionally-adapted insurance products and expert-evaluated technology choices into a programming model that analyses activities with regard to their utility-efficiency. Thus, the objective of this paper is to analyse the effects of different risk management instruments on the certainty equivalent of case study farms in three different regions. Specifically, the applied Expected Utility Model analyses on-farm risk management instruments and crop insurance products with regard to their capability of stabilising farm income. Results indicate that only a combination of on-farm and financial risk management measures increases income and efficiently reduces risk. Weather-based insurance, in combination with intensive technology, stabilises income most efficiently in a specialised grain region in Northern Kazakhstan whereas farm-yield insurance combined with an extensive technology is the preferred risk management option in East Kazakhstan, where diversification with oilproducing crops is possible.Risk, risk management, insurance, agriculture, Kazakhstan, Crop Production/Industries, Risk and Uncertainty, Q12, Q14, G22, D82,

PRODUCTION AND TRADE OF ANIMAL PRODUCTS IN SELECTED ECO COUNTRIES

The Economic Cooperation Organization (ECO) is an inter-governmental organization comprising Afghanistan, Azerbaijan, Iran, Pakistan, Turkey and several countries of the Commonwealth of Independent states (CIS) including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The agricultural sector has remained a major contributor to the national economies of the ECO member countries. According to FAO estimates, in 2002 agriculture generated 25.2 percent of GDP and employed 42 percent of the economically-active population in the ECO region. Livestock production in the ECO countries is predominately based on traditional systems. The amount of livestock products in ECO was about 6,000,000 metric tons (Mt) during the study period. Most of this production belonged to Turkey, Iran and Pakistan, but most red meat, skins and honey is produced by CIS countries. This paper looks at the performance of livestock production and export of Iran and CIS countries within the ECO region and examines the comparative advantage indices for these countries. The data from 1992-2002 is supplied by the FAO (2004). Changes in Iran's production and export structure were compared with CIS producers. The objectives of this paper are: (1) to identify the comparative advantage of Iranian livestock production and export in comparison with CIS countries; (2) to discuss the reasons for changes in comparative advantage over time. The research results show that past trade and production policies, and the economic behavior of producers and exporters, have been such that they could manage neither appropriate and timely responses to world demand, nor proper adaptation to market niches.Comparative advantage indices, livestock production and export, Iran, CIS countries, ECO region

Efficiency of selected risk management instruments: An empirical analysis of risk reduction in Kazakhstani crop production

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Measurement and Comparison of Risk Reduction by Means of Farm Yield, Area Yield, and Weather Index Crop Insurance Schemes - The Case of Kazakhstani Wheat Farms

We analyse area yield insurance contracts and weather index insurance contracts in terms of risk reduction for wheat farms in Kazakhstan over the period 1980-2002. We combine the common mean-variance approach with a stochastic dominance approach to ensure the consistency of the empirical results with expected utility theory. Results indicate (1) the need for combining both approaches, because for some insurance schemes, the mean-variance results of one-third of the farmers are not necessarily consistent with EU theory. (2) Bootstrapping shows that an expected positive variance reduction is not statistically significant for up to one-third of the farms. Both results indicate that previous methods probably overestimate the effectiveness of crop yield and weather index insurance schemes, in particular for insurance schemes with basis risk. From a practical point of view, (3) area yield insurance based on the county (rayon) yield provides substantially higher variance reduction than reported in the literature, indicating that area yield insurance contracts might be more appropriate in Kazakhstan because of the high systemic yield risk there - an effect of exposure to drought. (4) There are no substantial differences in the results generated by means of different weather indexes. (5) However, compared to farm yield insurance with a low strike yield in order to reduce moral hazard, weather index insurance can be a reasonable alternative for farmers.Crop Production/Industries, Risk and Uncertainty,

АКТУАЛЬНЫЕ АСПЕКТЫ СТРАХОВАНИЯ В СЕЛЬСКОМ ХОЗЯЙСТВЕ

Эта публикация является нашим ответом на многочисленные вопросы и желание коллег из стран СНГ получить больше информации об актуальных тенденциях раз- вития рынка страхования в сельском хозяйстве. В ней мы попытались осветить основные аспекты страхования как одного из инструментов регулирования риска в сельском хозяйстве. Одной из главных наших задач при этом является предоставление читателю информации о сущности и потенциале страхования, проблемах и их возмож- ных решениях, известных на настоящий момент. Для более осведомленного читателя публикация может быть интересной с позиции сравнения отдельных страховых продуктов (схем), наиболее распространённых на сегодняшний день в мире. -- E N G L I S H V E R S I O N: This discussion paper is our response to numerous questions and the desire of our counterparts from the CIS countries to receive more up-to-date information about insurance in agriculture. Accordingly, we have tried to shed light on the main aspects of insurance as one tool of risk management in agriculture. Thus, our purpose is to give the reader information on principles and potential of insurance, its main problems and possible solutions. Additionally, this paper provides a comparative overview of the presently most widespread insurance schemes.риск,страхование,страховые схемы,сельское хозяйство,Risk,Insurance,Insurance schemes,Agriculture

Страхование посевов в Казахстане. Анализ возможностей эффективного управления рисками

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PRODUCTION AND TRADE OF ANIMAL PRODUCTS IN SELECTED ECO COUNTRIES

The Economic Cooperation Organization (ECO) is an inter-governmental organization comprising Afghanistan, Azerbaijan, Iran, Pakistan, Turkey and several countries of the Commonwealth of Independent states (CIS) including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The agricultural sector has remained a major contributor to the national economies of the ECO member countries. According to FAO estimates, in 2002 agriculture generated 25.2 percent of GDP and employed 42 percent of the economically-active population in the ECO region. Livestock production in the ECO countries is predominately based on traditional systems. The amount of livestock products in ECO was about 6,000,000 metric tons (Mt) during the study period. Most of this production belonged to Turkey, Iran and Pakistan, but most red meat, skins and honey is produced by CIS countries. This paper looks at the performance of livestock production and export of Iran and CIS countries within the ECO region and examines the comparative advantage indices for these countries. The data from 1992-2002 is supplied by the FAO (2004). Changes in Iran's production and export structure were compared with CIS producers. The objectives of this paper are: (1) to identify the comparative advantage of Iranian livestock production and export in comparison with CIS countries; (2) to discuss the reasons for changes in comparative advantage over time. The research results show that past trade and production policies, and the economic behavior of producers and exporters, have been such that they could manage neither appropriate and timely responses to world demand, nor proper adaptation to market niches

PRODUCTION AND TRADE OF ANIMAL PRODUCTS IN SELECTED ECO COUNTRIES

The Economic Cooperation Organization (ECO) is an inter-governmental organization comprising Afghanistan, Azerbaijan, Iran, Pakistan, Turkey and several countries of the Commonwealth of Independent states (CIS) including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The agricultural sector has remained a major contributor to the national economies of the ECO member countries. According to FAO estimates, in 2002 agriculture generated 25.2 percent of GDP and employed 42 percent of the economically-active population in the ECO region. Livestock production in the ECO countries is predominately based on traditional systems. The amount of livestock products in ECO was about 6,000,000 metric tons (Mt) during the study period. Most of this production belonged to Turkey, Iran and Pakistan, but most red meat, skins and honey is produced by CIS countries. This paper looks at the performance of livestock production and export of Iran and CIS countries within the ECO region and examines the comparative advantage indices for these countries. The data from 1992-2002 is supplied by the FAO (2004). Changes in Iran's production and export structure were compared with CIS producers. The objectives of this paper are: (1) to identify the comparative advantage of Iranian livestock production and export in comparison with CIS countries; (2) to discuss the reasons for changes in comparative advantage over time. The research results show that past trade and production policies, and the economic behavior of producers and exporters, have been such that they could manage neither appropriate and timely responses to world demand, nor proper adaptation to market niches

Agriculture in the Face of Changing Markets, Institutions and Policies: Challenges and Strategies

Since the late 1980s, agriculture in Central and Eastern European Countries (CEECs) has been under considerable adjustment pressure due to changing political, economic and institutional environments. These changes have been linked to the transition process, as well as the ongoing integration into the European Union and the world market. Reduced subsidies, increased environmental and food quality demands, as well as structural changes in the supply, processing and food retailing sector call for major structural adjustments and the improvement of farmersâ managerial abilities. Though such changes always carry significant threats to farms, they also offer new opportunities for the farms' entrepreneurial engagement. Upcoming changes in the agricultural environment and their possible consequences for farm structures across Europe are thus still timely subjects. The objective of the IAMO Forum 2006 is to contribute to the success of agriculture in the CEECs, as well as their neighboring countries, in todayâs increasingly competitive environment. Concrete questions the conference focuses on are: What are the most suitable farm organizations, cooperative arrangements and contractual forms? How to improve efficiency and productivity? Where do market niches lie and what are the new product demands? This book contains 33 invited and selected contributions. These papers will be presented at the IAMO Forum 2006 in order to offer a platform for scientists, practitioners and policy-makers to discuss challenges and potential strategies at the farm, value chain, rural society and policy levels in order to cope with the upcoming challenges. IAMO Forum 2006, as well as this book, would not have been possible without the engagement of many people and institutions. We thank the authors of the submitted abstracts and papers, as well as the referees, for their evaluation of the abstracts from which the papers were selected. In particular, we would like to express our thanks to OLIVER JUNGKLAUS, GABRIELE MEWES, KLAUS REINSBERG and ANGELA SCHOLZ, who significantly contributed to the organization of the Forum. Furthermore, our thanks goes to SILKE SCHARF for her work on the layout and editing support of this book, and to JIM CURTISS, JAMIE BULLOCH, and DÃNALL Ã MEARÃIN for their English proof-reading. As experience from previous years documents, the course of the IAMO Forum continues to profit from the support and engagement of the IAMO administration, which we gratefully acknowledge. Last but not least, we are very grateful to the Robert Bosch Foundation, the Federal Ministry of Nutrition, Agriculture and Consumer Protection (BMELV), the German Research Foundation (DFG), the Haniel Foundation and the Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO) for their respective financial support.Agribusiness, Community/Rural/Urban Development, Farm Management, Industrial Organization, International Development, Labor and Human Capital, Land Economics/Use, Productivity Analysis,

Efficiency of Selected Risk Management Instruments - An Empirical Analysis of Risk Reduction in Kazakhstani Crop Production

Recent academic discussion regarding crop insurance in developing and transition countries has focused on weather index insurance. But empirical analyses of such schemes based on farm level data cannot be found in the literature, though this insurance type shows clear advantages compared to multiple-peril crop insurance and revenue insurance. Recent empirical applications of risk and stochastic programming models focus on the optimisation of production planning, while literature on the effects of crop insurance on the farm level mainly focuses on the empirical investigation of reductions in farm income variance. The novelty of this paper is that it integrates regionally-adapted insurance products and expert-evaluated technology choices into a programming model that analyses activities with regard to their utility-efficiency. Thus, the objective of this paper is to analyse the effects of different risk management instruments on the certainty equivalent of case study farms in three different regions. Specifically, the applied Expected Utility Model analyses on-farm risk management instruments and crop insurance products with regard to their capability of stabilising farm income. Results indicate that only a combination of on-farm and financial risk management measures increases income and efficiently reduces risk. Weather-based insurance, in combination with intensive technology, stabilises income most efficiently in a specialised grain region in Northern Kazakhstan whereas farm-yield insurance combined with an extensive technology is the preferred risk management option in East Kazakhstan, where diversification with oilproducing crops is possible