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Utilization
of farm management risk strategies at the rural/urban fringe
Edmund M. Tavernier* and Benjamin M. Onyango
Department of Agricultural Food and Resource Economics, Cook
College, and the Food Policy Institute, Rutgers University,
55 Dudley Road, New Brunswick, NJ 08901.
*Corresponding author.
E-mail:
Etavernier@aesop.rutgers.edu
Accepted 26 August, 2008. |
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Government policy-intervention programs offer U.S. farmers
protection from a variety of risk sources. However, the
utilization of farm-management risk strategies to address
those risks might differ because of location or the crop-mix
patterns. This paper utilizes principal component analysis
(PCA) and regression analysis to examine the utilization of
risk management strategies at the rural/urban fringe. The
regression results provide insights into the current
utilization of tools and risk management strategies used by
farm operators, while the PCA examines tools that are
currently utilized to manage farm risks and new tools that
may be utilized to do so. The results from the PCA suggest
that farm operators would like the addition of new tools
such as tax-deferred savings accounts that allow farm
operators to withdraw funds in a low-income year or at
retirement as a risk management strategy. The PCA results
further show that farm operators would like an incentive
payment for using various risk management tools, including
hedging, insurance, and debt and equity financing as part of
federal risk management programs. With respect to the
current tools utilized to manage farm risks, the PCA and
regression results identify three such categories –
enterprise diversification, information collection from the
internet, and off-farm income sources.
Key words: Risk, PCA, farm management. |
