(3, 4) The sources of risk and level of its severity can vary according to the farming systems, geographic location, weather conditions, supporting government policies and farm types. (35-37) The advantage of the rice pledging scheme is that farmers can obtain low-interest loans from the government when they decided to pledge their rice to the Bank of Agriculture and Agricultural Cooperatives (BAAC) at the pledging prices and the rice will be transferred to storage at the Public Warehouse Organisation. For a business, assessment and management of risks is the best way to prepare for eventualities that may come in the way of progress and growth. Farm size was positively related to the ‘diversification’ strategy. (19) Similarly, Hardaker et al. Risk Management Strategies Some of the major sources of production risks are weather, pests, diseases, technology and its interaction with farm and management characteristics, genetics, equipment and quality of factor inputs. The results reflect the heavy floods that inundated the central provinces during September 2008. They rated ‘storing feed and/or seed reserves’ as the most important production strategies and ‘having a farm reservoir for water supplies in dry season’ was ranked third with mean ratings of 3.61 and 3.47, respectively. In addition, Bartlett’s Test of Sphericity was statistically significant at the one per cent level (χ2 = 3301). Models 1-4 are statistically significant at the one per cent level. North-east farmers perceived the importance of these two production strategies higher than central region farmers. The major sources of production risks are weather, climate changes, pests, diseases, technology, genetics, machinery efficiency, and the quality of inputs. Lastly, the government should promote the benefits of crop insurance schemes that could increase farmers’ understanding and participation. This suggests that farmers who have off-farm work are very concerned about those risks that can disrupt their off-farm income. 1: List the Potential Sources of Construction Risk. Open Access is an initiative that aims to make scientific research freely available to all. In addition, risk management strategies related to ‘farm production and marketing management’ and ‘off-farm income’ were perceived as less important by the farmers who had loans. Systematic risk is related with the bank’s assets where their values are changed by the systematic factors. Establishing categories for risks provides a mechanism for collecting and organizing risks as well as ensuring appropriate scrutiny and management attention to risks that can have serious consequences on meeting project objectives. Available from: Sources of risk and risk management strategies on farm, Diseases and pests that affect plants and animals, Changes in Thailand’s economic and political situation, Changes in national government laws and policies, Natural disasters such as heat, fire, flood, storm, Changes in the world economic and political situation. Risk management is essential in any business. found that ‘cost of production’ and ‘insurance schemes’ were regarded as important risk strategies among livestock farmers in the Netherlands. (14, 15) However, large numbers of farmers in rural Thailand still live below the poverty line. We share our knowledge and peer-reveiwed research papers with libraries, scientific and engineering societies, and also work with corporate R&D departments and government entities. Evidently, the small farm business may be affected in different ways by changes in these sources of risk. (2, 5, 6) The types and severity of risks that farmers face differ from place to place. Help us write another book on this subject and reach those readers. This result indicated that the average net farm income of the central farmers was larger than for the north-east farmers. The majority of the farmers obtained short-term loans (see Table 2). Pellegrino studied rice farmers’ perceptions of the sources of risk and risk management responses in Argentina. The rotated factor loadings of risk sources for all farmers in the central and north-east regions, obtained from the principal component analysis and a varimax orthogonal rotation, are discussed in this section. Establishing categories for risks provides a mechanism for collecting and organizing risks as well as ensuring appropriate scrutiny and management attention to risks that can have serious consequences on meeting project objectives. The mean scores of each source of risk were ranked and the standard deviation (SD) was used to indicate the variation in the ratings. The results showed that marketing risk (such as change in product prices and change in input costs) was ranked as a very important source of risk by all farmers. We are a community of more than 103,000 authors and editors from 3,291 institutions spanning 160 countries, including Nobel Prize winners and some of the worldâs most-cited researchers. This reflects the imbalance problem between agricultural and industrial labour forces in Thailand. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters. There are many potential sources of project risk. Risk management is the identification, assessment, and prioritization of risks or uncertainties followed up by minimizing, monitoring, and controlling the impact of risk realities or enhancing the opportunity potential by applying coordinated and economical resources. Pure risk (Insurable risk like fire, injury due to accident etc.) How? Livestock price and weather variability and livestock diseases were perceived as important sources of risk for livestock production. In addition, eight per cent of the farmers used their own savings to operate their farm business. A nationwide mail survey was used to examine the sources of risk and the risk management strategies of New Zealand farmers by Martin(23). Resource Risk Labor risks you should become familiar with include Work that is not done, is done poorly, or not on time High indirect labor costs can be incurred Potential conflict with employees Laws and regulations Worker safety regulations/OSHA requirements. argued that the assessment of farmers’ perceptions and how they respond to risk are very important because this can describe the decision making behaviour of farmers when faced with risky situations. Only about four per cent had loans from commercial banks. Market risk can be related to any prices which are continuously traded on the financial markets. This finding is similar to that of Mustafa who argued that the more educated farmers performed better in managing their farm business compared with less educated farmers.(30). Farmers live with risk and make decisions every day that affect their farming operations. ‘Storing feed and/or seed reserves’ and ‘have a farm reservoir for water supplies in dry season’ showed significant differences in importance between the farmers in the central and north-east regions (P<0.01). The distribution of chemical fertilizers at reduced cost was the only scheme that the government organized to assist poor rural farmers. (35) The pledging scheme persuaded farmers to increase their production, but the quality of the products was frequently ignored. Farmers in the central region perceive the ‘personal and farm business environment’, ‘natural disaster’ and ‘financial situation’ as more important risk factors than north-east farmers; north-east farmers are more concerned about ‘economic and political’ risk. (39) Some economists also suggested that the government should discontinue this highly-interventional price policy and should encourage farmers to sell their products using futures contracts to reduce the risk of price and income volatilities. They are defined by: 1. (25) In a recent study, large-scale South African sugarcane farmers perceived land reform regulations, labour legislation and crop price variability as the three most important risk factors. In order to reduce production risks, some of the risk management strategies recommended are as follow: 1. The marketplace in which a company operates is a primary source of risk if demand slows or new competitors enter the fray. Farmers who had higher annual household incomes perceived the ‘financial management’ strategy as highly important. The strategies varied among the groups of farmers depending on the nature of the product, market structure and conditions, farmer characteristics, dynamic risk adjustment considerations and the regulatory situation.(23). Off-farm work was positively related to all four risk strategy components. Staff and systems are considered to be the causes of losses, but this definition of risk does not take into account the fact that these entities are best placed to identify the sources of potential losses and to issue warnings in order to measure and manage this risk. Mustafa argued that the educational level of farmers affected their decision making capacity. The relationships between the socioeconomic variables and the perception of risk sources and risk management strategies of the smallholder farmers were also analyzed. However, the annual household income and the size of farm household exhibited a positive relationship with this source of risk. The central and north-east regions differ in terms of resources, economic development and income distribution. make rational risk management decisions. This finding supports Ahmad and Isvilanonda who argued that the rural labour force preferred to work in the industrial sector more than in the agricultural sector due to the gap in wage rates. (17) Most farmers have limited diversification potential, face resource problems, environmental variability, lack of soil fertility and water shortages especially smallholder farmers in the north-east region. who found low explanatory power of regression models between the perceptions of sources of risk and risk strategies with the farmers’ characteristics. Multivariate regression of the risk strategy components and household and farm characteristics of all sampled Thai farmers (n=800) a. Risk management strategies are the tactics for dealing with these risks and understanding their potential consequences. There is much literature on risk sources that impact farming operations and their risk management strategies. Over 80 per cent of the north-east farmers preferred ‘storing feed and/or seed reserves’ in managing their small farm operations and approximately 65 per cent of them preferred using the ‘having a farm reservoir for water supplies in dry season’ strategy on their farm. ‘Unexpected variability of yields’ was ranked the fifth most important source of risk in both regions. Our readership spans scientists, professors, researchers, librarians, and students, as well as business professionals. (19, 22, 23), The production risks related to ‘diseases and pests affecting plants and animals’, ‘excess rainfall’ and ‘natural disasters such as floods’ were ranked third, fourth and sixth, among the farmers in the central region with mean scores of 3.70, 3.59 and 3.47, respectively. compared risk perception and the risk responses of conventional and organic dairy farmers in Norway. The latent root criterion (eigenvalue > 1) was estimated to identify how many factors in each data set to extract. Farmers with larger farms perceived a diversification strategy as highly important. Ch. First, exploratory factor analysis (EFA) was used to capture the information on the interrelationships among the set of variables. After establishing the context, the next step in the process of managing risk is to identify potential risks. In contrast, farmers in the north-east had an average farm size of 14.80 rai (2.37 ha) of which 90 per cent was self owned. Exploratory factor analysis with varimax orthogonal rotation was applied to the data using SPSS version 15. For DFID, general risk management” incorporates all the activities required to identify and control the exposure to risk”, with risk being d efined as uncertainty, whether positive or negative, that will affect the outcome of an activity (DFID, 2013 – also see latest 2016 corporate risk management guidance. ) We are IntechOpen, the world's leading publisher of Open Access books. Factor AS2: this factor incorporates a number of sources of risk related to the farm business environment, including risk from being unable to meet contracting obligations, problems with hired labour, theft and changes in land prices. The number of years in farming is negatively related to the ‘economic and political’ risk perceptions. This may be a result of the rural-to-urban migration problems in Thailand. The highest educational level is positively related to the ‘personal and farm business environment’ risk, which indicates that more educated farmers perceived this source of risk as significantly more important in farming. Understanding how to manage risks in tourism is vital for tour operators. It lays foresight for returns on investments and projects all … This implies that farmers who have loans perceived this source of risk as highly important. First, the crop insurance scheme itself should not be too complicated because it could lead to high administrative costs for the scheme. Second, the appropriate insurance premiums and coverage accessibility under the scheme for each crop must be carefully considered. (20), In terms of risk management strategies, Boggess et al. and Meuwissen et al. From our experience, there are two major types of workplace culture. These strategies should be included in a risk management plan, which is a documented process of how your organization or team will identify and address risks. Our team is growing all the time, so weâre always on the lookout for smart people who want to help us reshape the world of scientific publishing. Table 4 summarizes the results of the perceptions of risk management strategies elicited from the farmers in the central and north-east regions. The undesired event and/or condition 2. 9 - What is the role of the Q adjustment factor in the... Ch. Factor two (AR2): this factor is described as ‘diversification’ because there were significant loadings of risk strategy variables related to ‘having diversified crop, animal or other enterprises’, ‘planting several varieties of crops’ and ‘selection of crop and/or animal varieties with low price variability’. (10-12) Thai farmers typically grow their crops in rain-fed conditions due to poor irrigation systems. Boggess, Anaman, and Hanson examined farmers’ awareness of risk in crop and livestock production in northern Florida and southern Alabama. Higher product prices and lower input prices can then be achieved more easily due to economies of scale.(1). and Patrick et al. Risks are about events that, when triggered, will cause problems. capital market theory. 9 - Discuss the reasons why top-management commitment... Ch. The development of the plan should follow a clear process, to ensure that all tourism stakeholders know what it involves. Identifying risks is a key step in a proactive risk management process. This finding may have resulted from the instability of Thailand political situation since September 2006. Crop insurance is, theoretically, an efficient instrument in managing risks and can facilitate efforts to protect farmers from either the loss of their crops or farm income caused by natural disasters or drops in commodity prices. A good example is a hot tub or swimming pool … Strengthening the role of farmer groups or cooperatives should be considered as part of agricultural risk reduction policies in Thailand. The highest educational level was positively related to the ‘farm production and marketing management’, ‘diversification’ and ‘off-farm income’ risk strategies. The Cronbach’s Alpha values for factors AS1‐5 ranged from 0.671 to 0.899, which exceeded the minimum requirement of 0.6. Factors AS1‐6 can be labelled in accordance with the significant loading variables that were obtained for each factor and explained as follows: Factor AS1: this factor is named ‘economic and political’ because of the relatively high loadings on the sources of risk variables with the changes in Thailand and the world economic and political situations and changes in the government laws and policies that affected the small farm operations. In addition, agricultural commodity prices rise and fall annually depending on the demand and supply in both local and international markets, which are out of the farmer’s control. Table 3 summarizes the results of the most important perceived sources of risk for the farmers in the central and north-east regions. The lack of relevant information on farmers’ risk perceptions and their risk behaviour present a challenging task for policy makers and researchers who want to create a proper risk management system to help farmers. The KMO measure of data sufficiency was 0.887. (24), Ranking of perceptions of sources of risk by sampled farmers in central and north-east Thailand, The survey results showed that the uncertainty of input prices and product prices have become increasingly worrying among smallholder farmers in the central and north-east regions. Risk identification requires knowledge of the organization, the market in which it operates, the legal, social, economic, political, and climatic environment in which it does its business, its financial strengths and weaknesses, its vulnerability to un… security, safety, environment), Phases of the projectâs lifecycle model (e.g., requirements, design, manufacturing, test and evaluation, delivery, disposal), Project management risks (e.g., contract risks, budget risks, schedule risks, resource risks), Technical performance risks (e.g., quality attribute related risks, supportability risks). However, the alpha value was somewhat lower (0.426) for factor AS6. Livestock price and weather variability and livestock diseases were perceived as important sources of risk for livestock production. (13, 18) Approximately 45 per cent of the total farming area in Thailand is located in this region. of farmland in the central region were damaged.(32). Only 10 per cent of the farmers in both regions had used this strategy to manage risk. sources of total risk, such as interest rate risk and market risk, which are explained. Changes in family situation such as marital status, inheritances, etc. (43) In addition, there are some obstacles that policy makers should consider for the successful implementation of the crop insurance schemes. Factor AS3 is labelled ‘natural disaster’. Being unable to meet contracting obligations, Purchase farm machinery to replace labour, Having diversified crop, animal or other enterprises, Selection of crop and/or animal varieties with low price variability, Able to adjust quickly to weather, price and other adverse factors, Problems with hired labour and contractors, Cumulative per cent of the variance explained, Have a farm reservoir for water supplies in dry season, Obtaining market information on prices forecast and trends, Investing in non-farm investment/business, Working off farm to supplement net farm income, Leasing farm machinery rather than owning them, Holding cash and easily converted cash assets, Department of Agricultural Economics, Faculty of Agriculture, Khon Kaen University, Thailand, Department of Accounting, Economics and Finance, Faculty of Commerce, Lincoln University, Christchurch, New Zealand. 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