Economic Analysis of Farm and Market Risk

Agriculture today is a business proposition and no more it is regarded as a way of life. Therefore, any decision pertaining to resource organization, allocation, production planning and enterprise selection are all-important areas of farm decision making. Risk is inherent in every form of enterprise, but its intensity in input-output relation in agricultural production is comparatively high.Agricultural activities are exposed to controllable and uncontrollable risks. Controllable risks are typically pests, diseases, weeds, and seed material. Uncontrollable risks are rainfall and its deficit and excess distribution, extreme temperature conditions, hail incidences, extreme wind speeds, humidity variations. Agricultural risk is associated with negative outcomes that stem from imperfectly predictable biological, climatic, and price variables. hence analysis of farm and market risk is an important aspect to minimize losses and maximize profit.