AND CONFLICT

Farming is, by its own nature, a risky enterprise. Farmers are subject to many exogenous risks, for instance, price and production volatility, and credit default risk. Although there exists insurance products that help mitigate these types of risks, most of them are offered in developed countries. Farmers in developing countries, in general, lack the financial instruments to cope with production uncertainty. Mexican farmers are no exception. Mexican farmers face multiple risks that have been largely understudied. Some of these risks are common to farmers in developed as well as in other developing countries, but a few of them are unique to Mexico due to its current state of events. The overall objective of this dissertation is to investigate risks faced by Mexican farmers. The specific objectives are: to provide a basic understanding of Mexican agriculture and the risks they face from production and markets; to investigate mechanisms for price risk management for Mexican farmers; to investigate the relationship between risk rationing and credit demand; and to investigate the impact of narcoterrorism on agriculture and rural life. This dissertation provides alternatives for risk management and new insights for understanding Mexican farmers ’ risks. These alternative solutions and analysis are based on financial engineering theory; on a novel approach to risk rationing; on the dual process and the ecological psychology theories to understand fear and risk perception. ii