Variations in the weather, climate, yields, prices, government policies, global markets and other factors can cause wide swings in farm production and, in the case of commercial agriculture, in farm income. Risk management involves choosing among strategies that reduce the social and financial consequences of these variations in production and income.
Extreme weather events, and climatic anomalies have major impacts on agriculture. In both the developing and developed worlds risk characterization and management are important aspects of farming. High preparedness, prior knowledge of the timing and magnitude of weather events and climatic anomalies and effective recovery plans will do much to reduce their impact. When user-focused weather and climate information are readily available, and used wisely by farmers and others in the agriculture sector, losses resulting from adverse weather and climatic conditions can be minimized.
In recent decades major advances in short-term and seasonal weather forecasting, as well as in long-term climate modelling, have yielded major improvements in early warnings and advisories as well as in longer-term planning, ttis is resulting in increasing emphasis on proactive rather than reactive management of the risks to agriculture resulting from extreme weather events and anomalous climatic conditions on agriculture.
ttere is a well established approach to characterizing and managing risks, tte risk-based methodology makes explicit the link between weather- and climate-related risks and the actions required to reduce them to acceptable levels.
Farmers have many options for managing the risks they face, and most use a combination of strategies and tools. Some strategies deal with only one kind of risk, while others address multiple risks. Most producers use a mix of tools and strategies to manage risks. Since the willingness and ability to bear risks differ from farm to farm, there is usually variation in the risk management strategies used by producers.
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