Transition, Vol. 26 No. 52, 2025.
Review article
FINANCE AND RISKS MANAGEMENT IN AGRICULTURE
Ismet Kalić
orcid.org/0009-0003-0218-5600
*
Nermina Kalić
orcid.org/0009-0004-0430-4623
* Corresponding author.
Abstract
Agriculture is considered one of the more sensitive and risky activities. The main specificity of
agriculture is reflected in the fact that it is subject to the strong action of a large number of
natural and economic factors, the cause-and-effect relationship of which also has a financial
character.
Agricultural enterprises cannot predict with certainty the amount of products, that is, the yield,
due to the high dependence on natural factors, such as floods, droughts, strong winds, etc.
Market risks that cause significant fluctuations in the prices of inputs and agricultural products
on the world market are becoming more and more pronounced. The war in Ukraine and sanctions
against Russia had a particular impact on the global food crisis, which ultimately led to an
imbalance in supply and demand. Agricultural producers are exposed to increasing pressures,
and it is necessary to appropriately manage risks and minimize or avoid potential financial
losses.
The paper consists of three chapters, where the first chapter presents the specifics of investing in
agricultural projects, and the main reasons why funds for financing projects are limited. The
reason is primarily the uncertainty of the return of principal due to uncertainty in production and
yield.
In the second chapter, the risks faced by agricultural producers are defined, and they can be
divided into production, market, financial and institutional risks. Unfavorable climate changes
are the main causes of the decline in agricultural yields and leave behind great damages and
financial losses.
In the third chapter, instruments for risk management in agriculture are described. Poor risk
management can significantly affect the financial position of an agricultural enterprise and lead
to liquidity problems. It is crucial for agricultural producers to recognize risks in time and
manage them effectively.
Keywords
agricultural activity, investments, food safety, sources of financing, risks
Hrčak ID:
336242
URI
Publication date:
24.3.2025.
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