Journal of Rural Development
A Decomposition of Income Variability: A Case Study on Rice and Spicy Vegetables Farms
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AuthorJeon, Jiyeon
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Publication Date2016.09.21
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Original
This study aims at disclosing factors affecting farm income taking into account crop- and farm-specific characteristics. The variance decomposition method is employed to conduct an analysis using 2008-2012 farm-level panel data on Korean rice and spicy vegetables farms. Key findings go as follows. First, the most influential factors on farm income variability vary across crops, as expected. For instance, pepper and garlic producers’ farm income variability most largely depends on, among others, price changes meanwhile rice and onion farms are relatively more vulnerable to yield fluctuation. Besides, rice farms’ income instability is more dependent on management cost changes relative to other types of farms. Second, in case of rice farms, a significantly different level of income variation is observed based on planted acre sizes. It implies that more-tailored policy mixes are required to serve as more effective and efficient risk management measures.
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