Abstract
State support for financial risk management schemes has been introduced in numerous agricultural policies to enhance farming system resilience in response to increased income fluctuations and partially reduced producer support levels in the agricultural sector. In order to better understand how financialisation of risks can contribute to an actual improvement of specific farming systems’ resilience, this study investigates its effects with regards to dairy farming. Based on an in-depth case study of a dairy system in Northwest Germany, multilayered challenges faced by the farm system are identified, resilience strategies investigated and the role of financial risk management evaluated. In doing so, the resilience assessment framework developed by Meuwissen et al. (2019) is applied in order to analyse the systems’ capacity to resist, adapt or transform in response to external challenges threatening the provision of system’ functions. The results indicate a high relevance of insurances and savings with regards to the system’s robustness against short-term shocks. However, to address the various long-term pressures, resilience-enhancing attributes that increase the system’s capacity to adapt and transform would need to be strengthened. In particular, more cooperation and knowledge transfer beyond system boundaries could contribute to a holistic risk management allowing for improved farming system resilience.
Highlights
Multilayered challenges have increased the vulnerability of Europe’s farming systems in the recent past
This study focused on the challenges of dairy systems in Northwest Germany and the effects of financial risk management tools to enhance their resilience capacities
This study identified challenges of a dairy system in Northwest Germany and analysed whether related risks can be transferred to financial markets to increase resilience
Summary
Multilayered challenges have increased the vulnerability of Europe’s farming systems in the recent past. Within the European Union (EU), in particular, environmental production standards and consumers’ expectations regarding animal welfare have increased and further contributed to rising production costs and public pressure [2]. Most recently in 2018, a drought caused crop losses in many countries of the EU [4]. In reaction to such events, various ad hoc state interventions took place and sparked a debate on the subsidisation of financial risk management tools in the agricultural context [5].
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