Risk management in small family farms in Poland

Abstract

Small farms play an important role in the sustainable development of rural areas. However, the data indicate that their number has been gradually decreasing. The reason for this reduction is the low profitability of production, combined with the uncertainty created by the high risk of agricultural production. In this context, it is important to create an appropriate risk management strategy that will ensure stable income and allow continuing agricultural production. The aim of the publication is to assess the activities of small farms in terms of price and production risk management. The paper also presents a relationship between the range of instruments used and the basic characteristics of farms. Finally, the agricultural households are assessed from the point of view of the methods of production planning. The article uses unpublished data from a questionnaire survey conducted on a group of 710 small farms in Poland at the turn of 2017/2018. The results of the analysis indicate that the level of risk management in the studied group is very small. The only commonly used instrument included obligatory insurance of production facility. Every third producer insured crops, and every fourth diversified production. The remaining methods were used very rarely. In addition, most farms used only one or two risk management instruments. A positive correlation was found between the number of the management tools used and the level of manager's education, the size of agricultural area, the level of estimated income and the share of goods sold on the market.