Direct Payments as a Risk Management Tool in Bulgarian Agriculture

Abstract

Тhe purpose of this article is, based on a review of existing opinions on the role of direct payments in the risk management process and assessment of the impact of these subsidies on the income of agricultural holdings in Bulgaria, to draw some conclusions about their potential as a tool for prevention of the risk faced by farmers. It is concluded that if secure revenues from direct payments do not provoke risk-balancing behavior of farmers, their role in income stabilization increases, but not to the same extent for farms with different types of specialization. In addition, the policy of direct income support puts Bulgarian farmers in a situation of relatively high risk of problems in adapting to new conditions, in case of a change in support mechanisms.