Risk in the food economy – theory and practice INSTITUTE OF AGRICULTURAL AND FOOD ECONOMICS NATIONAL RESEARCH INSTITUTE Risk in the food economy – theory and practice Editors: dr Justyna Góral dr Marek Wigier THE POLISH AND THE EU AGRICULTURES 2020+ CHALLENGES, CHANCES, THREATS, PROPOSALS Warsaw 2017 This monograph has been prepared under the Multi-Annual Programme 2015-2019 “The Polish and the EU agricultures 2020+. Challenges, chances, threats, proposals”. The work aimed at analysis of different types of risk and its valuation in the food economy. Additionally, the authors presented the possibilities within the field of risk management. An active part of the state and the European Union in the field was shown in the background. Reviewers: PhD Gabriel Popescu, Professor, The Bucharest University of Economic Studies, Bucharest, Romania PhD Dimitre Nikolov, Professor, Director of the Institute of Agricultural Economics, Sofia, Bulgaria Proofreaders : Joanna Gozdera Katarzyna Mikulska Technical editor Joanna Gozdera Translated by Summa Linguae S.A. Cover Project IERiGŻ-PIB ISBN 978-83-7658-681-6 Instytut Ekonomiki Rolnictwa i Gospodarki Żywnościowej – Państwowy Instytut Badawczy ul. Świętokrzyska 20, 00-002 Warszawa tel.: (22) 50 54 444 faks: (22) 50 54 636 e-mail: [email protected] http://www.ierigz.waw.pl Contents 1 Introduction ....................................................................................................................... 11 Dr Marek Wigier 2 The role of public policy in risk management: the case of the Hungarian Risk Management System ................................................................................................................ 15 Prof. Anikó Juhász, prof. Gábor Kemény, PhD András Molnár, PhD Ivett Illés, MSc Anna Zubor-Nemes 2.1. Introduction ............................................................................................................... 15 2.2. Evolution and operation of risk management scheme in Hungary ............................ 16 2.3. Materials and methods ............................................................................................... 21 2.4. Results of the 1st pillar ............................................................................................... 21 2.5. Results of the 2nd pillar .............................................................................................. 24 2.6. Conclusions ............................................................................................................... 28 References ............................................................................................................................ 29 3 Price prediction tool for risk management and policy-making purposes in agriculture .. 31 Prof. Doucha Tomáš, PhD Pechrová Marie, MSc Chaloupka OndĜej 3.1. Introduction ............................................................................................................... 31 3.2. Methodology .............................................................................................................. 33 3.3. Results ....................................................................................................................... 34 3.4. Conclusions ................................................................................................................. 39 References ............................................................................................................................ 39 4 Risk management practices of agricultural enterprises – evidence from Estonia ........... 41 PhD Merilin Ratas, PhD Maire Nurmet 4.1. Introduction ............................................................................................................... 41 4.2. Risk classification and risk management in agriculture ............................................ 43 4.3. Materials and method of risk questionnaire survey ................................................... 46 4.4. Empirical results and discussion ................................................................................ 46 4.5. Conclusions ............................................................................................................... 51 References ............................................................................................................................ 51 5 An index-based margin insurance for agriculture – the example of wheat production in Austria .................................................................................................................................. 53 Dr hab. Franz Sinabell, PhD Karin Heinschink, PhD Thomas Url 5.1. Motivation and problem statement ............................................................................ 53 5.2. The state of agricultural production risk management in Austria ............................. 54 5.3. Weaknesses of agricultural risk management in Austria – state of affairs and remedies ................................................................................................................................ 55 5.4. Necessary conditions for an income insurance scheme in agriculture to work ......... 57 5.5. The concept of an index-based income insurance ..................................................... 58 5.6. A prototype of a margin insurance scheme for wheat producers in Austria ............. 59 5.7. Discussion and outlook .............................................................................................. 61 References ............................................................................................................................ 62 6 Demand and supply in delivering public goods in agriculture: South Central Planning Region in Bulgaria case study .................................................................................................. 65 Prof. Dimitre Nikolov, prof. Adriana Mihnea, dr hab. Ivan Boevsky, PhD Petar Borisov, PhD Teodor Radev 6.1. Introduction ............................................................................................................... 65 6.2. The main public goods in the South Central Planning Region .................................. 67 6.3. Method of study to analyse PGs in the region ........................................................... 70 6.4. Results ....................................................................................................................... 72 6.5. Conclusions ............................................................................................................... 75 References ............................................................................................................................ 76 7 Analysis of the competitiveness of Serbia in terms of attracting investments in agriculture and rural development ............................................................................................................. 77 Prof. Drago V. Cvijanovic, PhD Željko M. Vojinoviü, Vojin Cvijanovic 7.1. Introduction ............................................................................................................... 78 7.2. Expected trends .......................................................................................................... 79 7.3. The significance of agriculture in the economy of Serbia ......................................... 81 7.4. Competitiveness of the Serbian agriculture ............................................................... 84 7.5. Some advantages of Serbia in attracting foreign investments ................................... 86 7.6. Conclusion...............................................................................................................ss .. 87 References ............................................................................................................................ 88 8 An approach based on state-space models for the agricultural production risk assessment ......................................................................................................................... 89 PhD Cristian Kevorchian, PhD Camelia Gavrilescu 8.1. Introduction ............................................................................................................... 90 8.2. Material and method .................................................................................................. 92 8.3. Results and discussions ............................................................................................. 99 8.4. Conclusions ............................................................................................................. 103 References .......................................................................................................................... 104 9 Price transmission in dairy industry in Bulgaria ............................................................. 105 PhD Bozhidar Ivanov 9.1. Introduction ............................................................................................................. 105 9.2. Methodology ............................................................................................................ 108 9.3. Results ..................................................................................................................... 111 9.4. Conclusions ............................................................................................................. 115 References .........................................................................................................................