engleski

Farmers’ acceptance of income stabilization tool scheme: A discrete choice experiment

Farmers are exposed to different risks. Besides extreme weather events, increasingly important becomes income risks. Income risks represent changes in farm income due to production, market, and financial risks. To cope with mentioned, European Commission, through Common Agricultural Policy (CAP), introduced a risk management toolkit (RMT). RMT consists of three measures, subsidized agricultural insurance, mutual funds (MF), and income stabilization tool (IST). In all EU member states, subsidized insurance is applied, while MF and IST, for now, are applied only in Italy. The income stabilization tool (IST) is the latest action proposed by the EU to manage agricultural risks. The main limitations of the application of IST are the lack of national legislation for establishing IST, the lack of clear guidelines, and the lack of practical examples from the EU. The IST aims to stabilize farm income by compensating income losses due to various risks: production, price, market, and financial. Previous literature stated that IST is also known as whole-farm insurance. This paper investigates farmers' acceptability of the IST scheme in Croatia, where farmers’ demand for standard risk management tools, such as private insurance and mutual funds, is low. The primary method used in the paper is a discrete choice experiment (DCE). Additionally, the paper explores behavioral drivers (risk preferences, probability weighting, and subjective beliefs about future farm income) and their impact on farmers’ acceptability of the IST, a new tool. The main findings will discuss farmers’ preferences over IST. Additionally, research will discuss how subjective beliefs and risk preferences impact the IST choice. The main findings can help policy makers design the framework for implementing IST among member states and introduce a new risk management tool among EU farmers.

income stabilization tool ; discrete choice experiment ; risk preferences ; subjective beliefs ; grape growers ; wine producers

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