Farmers' Production Management Risk Control

At present, particularly in China, agriculture is of a sort of fundamental business which is subject to high risks. Given the agricultural economy is playing an essential part in the course of the agricultural production, and risks with which agricultural producers to confront is mainly concerning those in the scope of production and marketing, this essay not only focuses on those risks, agricultural producers should deal with, but also stress on what educational approaches shall be adopted to avoid being influenced by thus. Regarding to the main goal of this paper, and what the author strives to achieve is to depict how to disperse and transfer the risks and what necessary methods to take in order that the ultimate return to agricultural producer's efforts can be realized. Afterwards, the development of rural economy and social life will follow suit.In this paper, such theories and analysis concept as modern micro-economics, industrial economics, development economics, contracting economics, insurance and natural disaster management as well are to be used, so as to perform a preliminary probing into those major risks, to which Chinese agricultural producers are subjected. By thus, three aspects as laws founded in the study are revealed as follows: Natural Risks and Control over Agricultural Production and Management: The distinct aspect that differs agricultural production from other types of industries is the highly dependency to the nature, and such dependency inevitably result in the enormous natural risks with which agricultural producer to deal. And of these natural risks, the initial power of which comes from the natural evolution, anyway, the very nature of such is based upon the cross-interferences between human society and nature world. To compare with other industry, those risks exerting upon the agricultural production and marketing, possesses specific specialties that utterly distinguish from others. It includes the accidental and random natures of natural disaster that are depending on specific region and different seasons which make the agricultural producers suffer so much. So that to invest more capital to agricultural infrastructure, optimize natural disaster relief mechanism and agricultural insurance system in rural area will benefit the long strife to prevent and mitigate natural risks and balance production and agricultural business, as a result, the continuous development of agriculture can be accomplished.Pricing Risks and Control over Agricultural Production and Management: There are such a quick and flourishing development of agricultural commodity production and reconstruction of rural economy that agricultural producers are more and more leaning themselves against the marketing mechanism to realize their production and management. Due to firstly agricultural products market are approaching towards that of utterly permitting free competition, and secondly bad flexibility of demands and supplies of agricultural products, lastly lacking of capital investment deposit, know-how for production and market information as well as supply structure, so that agricultural producers will face with a big challenge in the price fluctuation. Being compared with the other field, there are three importancefeatures, which make the pricing risk coming from agriculture very much special: firstly, the price fluctuation of agricultural products is much more obvious; secondly, the continuation period of price dropping is much more longer; lastly, in terms of different seasons and regions, the fluctuation of the agricultural production has a very close connection with them. The major concern herewith to express is how to effectively diversify and transfer pricing risk and how. agricultural producers can get rewarded for their efforts in fanning. Now solutions are available, as I will state:To implement a price protection mechanism,Cultivate and hatch futures market,Carry on research and development of contracting agricultureAnd improve the scale of production consistency as well.Contracting Risk and Control over Agricultural Production and Marketing:In such a process of production, during which a new concept as we named Company + Farmers which plays a key role in the industrialized agricultural production, in order to maximize their profit, those companies possessing mighty power (including agricultural products processing entrepreneurs, trading company and any other organization and individuals involving in agricultural activities), without any alternatives, will take any approaches deemed necessary to overwhelm grass root agricultural producers, in another word, by taking their prevailing statue, they can sign contract with agricultural producers for their own sake, or to violate the contract agreement for self interest with ignoring what agricultural producers. Then agricultural producers will suffer so much economic loss. As long as contractual agreement reached between them was broken, the losses thus incurred will be borne by agricultural producers. Firstly the contracting risks are closely related with the incompleteness of trading contract of agricultural products. Yet the main reasons why the trading contract lacks of completeness are:Limited reasoning ability of both farmers and counterpart companies to which the farmers' relates;High cost of transactionsFarmers and companies are not equally informed of any useful data.Unbalanced market share of companies and farmers.So far, farmers are the first element to build up the economic structure in rural area and essential carrier to assist the successful innovation from traditional agriculture to modernized one. For the purpose of guaranteeing more income to agricultural producers and stimulating the economic growth and social development in rural area, the effective and practical way to realize our goals as above, is to explore the laws of occurrence of production and management risks, and then sum up those successful experiences which farmers can take as references to guideline them in order that risks concerned can be transferred and diversified. All the new theoretical system developed by the author really has intermediate significance to the rural areas.