Analysis of the Factors used by Farmers to Manage Risk. A Case Study on Italian Farms

Abstract

The study analyses the strategies Italian farmers use to cope with the risks that face their production. We develop cross-sectional and longitudinal analyses as well as analyses of correlation that underline the main differences between the way farms adapt their structure and management towards risk. The expected output is an analysis of farms’ approach to risk management in relation to the risk exposure. The present study is the result of research conducted by INEA “Research and technical support on natural disasters, climatic and phytosanitary risks in agriculture and related policies”, funded by the Italian Ministry of Agricultural Food and Forestry Policies. The main aim of this analysis is to explore the potential and the limitations of economic tools for climatic risk management in agriculture of new CAP 2013-2020 in relation to farms’ needs, possible or necessary policies and future directions in the context of the Italian experience (National Solidarity Fund for natural disasters in agriculture, legislative decree n. 102/2004). The chosen approach for the analysis of demand considers the climatic risk at the level of farms’ approach to hedging risks in terms of the use of technical tools (agricultural practices, pesticides, fertilizers, irrigation) and economic/financial instruments (insurances, etc.). The results show a preference of technical tools and a strong need of a more integrated policy scheme, arising also from a new system and the potential synergies between risk management tools and other rural development measures of a more structural and management nature. The latter can contribute to a reduction of risk exposure and of the farms’ vulnerability, first and foremost through agro-climatic-environmental measures, production diversification, irrigation infrastructures, technological and management innovations and formation-information-consultancy.