The impact of risk management practices on wheat productivity in France and Hungary

Wheat is a key staple crop for global food security, but its production is strongly concentrated in a few regions, among which the EU is the first producer. EU farmers are struggling to keep high productivity levels due to global market and climate challenges. Risk management practices (RMP) are often advocated as viable tools to cope against these uncertainties, but their adoption can also subtract resources to the production activity, resulting in a controversial impact on the overall farm productivity. This paper analysis whether and how much four RMP contribute to wheat farming efficiency in France and Hungary using i) a stochastic frontier model to obtain a measure of farms efficiency; ii) an endogenous switching regression model to quantify the RMP impact. Results show that RMP can benefit farm efficiency, but not all the RMP have the same effect. While insurance, diversification and contract farming can positively affect farm efficiency, cultivating different varieties can reduce farm efficiency of about 10% depending on the production conditions.

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JEL Codes:
J43; G22; G32; Q12; Q18

 Record created 2017-04-01, last modified 2020-10-28

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