THE MARKET RISK PERCEPTIONS AND MANAGEMENT OF IRISH DAIRY FARMERS

The abolition of the milk quota regime in April 2015 will provide the opportunity for many profitable Irish dairy farms to increase their production levels. Market risk will influence the decision-making process at the farm level. Dairy farmers have acquired more recent experience of market risk through highly volatile market prices. This has the potential to affect risk attitudes and the selection of tools available to manage market risk. In this paper, we examine the market risk perceptions and management of Irish dairy farmers using 2011 Teagasc National Farm Survey data. We utilise experimental data in relation to forward contracting in order to examine the risk aversion and adoption rates for this particular risk management tool. Our findings suggest that recent price history and future price expectations have significant effects on decision-making in the area of forward contracting. Within the farm-gate diversification and the number of children in particular age categories have a positive and significant association with the adoption of forward contracting