| In Austrian agriculture, there is currently no established insurance instrument for hedging price risks on the procurement and sales markets. The challenge of increasing volatility on the agricultural markets in Europe has not yet been solved on a sustainable basis. However, experience from other countries provides approaches for innovative problem solutions.
In 2008, the LGM dairy program was established in the USA, which was further developed into the Dairy Margin Protection Program (DMPP) in 2014. This established income insurance models for milk producers that take into account both volatility in the procurement markets and in the sales markets. The introduction of state-subsidised revenue and income insurance based on the American model has already been discussed several times at the European level. Within the scope of a feasibility study, the transferability of the U.S.-American income insurance to Austrian milk production was examined on the basis of an abstract model (Scharner and Pöchtrager, 2016). The results show a stabilising effect on operating income. Similar insurance solutions for corn, rice, soybeans and wheat are also available in some US states (USDA, 2017). Against this background, the development of instruments to manage price risks for Austrian farms has particular priority. Taking these experiences into account, this project aims to develop sustainable solutions for the increasing price risks under the specific Austrian conditions. |