Risk and Uncertainty in Agriculture: Theory, Tool Boundaries, and Public Role

The main objective of this work is to outline a theoretical framework for effectively managing income risk in agriculture. This is based on establishing clear boundaries among several private tools and promoting the concept of a public strategy a public intervention strategy that considers the necessary synergy between individual instruments (e.g., insurance, funds, credit). Farmers are currently facing notable structural challenges as they adapt to evolving global scenarios. These challenges are compounded by uncertainties about the future role of public policy, which could significantly influence the economic sustainability of agricultural revenue sustainability. Both market volatility and extreme weather events have severely affected farmers’ incomes in recent years, raising concerns about their long-term resilience. In this article, we propose a theoretical framework to analyze how public support has been utilized in risk management within the primary sector over recent decades. A secondary objective of this work is to emphasize the critical distinction between risk and uncertainty. Recognizing this difference is essential for devising new tools and policies aimed at enhancing farmers survive. This distinction is particularly important for institutional interventions, which play a pivotal role in managing risk within the agricultural sector.