Empirical approach to risk management strategies of Mediterranean mussel farmers in Greece

Risk perception and risk responses of Greek mussel farmers are important for understanding their risk behavior and the likely success of different risk mitigation strategies. This allows policy makers and actuarial companies to decide what risk management products to offer to address specific types of risks. Results from an empirical survey showed that ex-farm prices and health/disability status of farmers are perceived as the most important sources of risk. Risk management decisions were strongly influenced by the attitudes of mussel farmers rather than their socioeconomic status or perception of risk sources. Financial reserves and an alternative source of stable income are both preferred by mussel farmers as risk management strategies, while optimizing farm management to produce at the lowest possible cost is commonly practiced to eliminate losses. Farmers recommend that for certain types of risks that lead to total losses, e.g. anoxia, tsunamis, harmful algal blooms (HABs), insurance contracts should be provided by the public sector, as in similar situations in agriculture. For other needs, customized insurance contracts should be provided by the actuarial market.

Conclusions

• The following conclusions were drawn from the empirical work on the risk management strategies of Greek mussel farmers:
• Mussel farmers are more familiar with the risks associated with their day-to-day field work in production and marketing than with the financial issues involved.
• The major risk sources are related to the stagnation of ex-farm prices, to which farmers are unable to respond, and to their personal health status (the business is still labor intensive, any physical disability or health problem has a direct impact on farm management).
• Greek mussel farmers prefer to use financial credit reserves and the certainty of income from other sources as risk mitigation strategies.
• The demand for specific insurance services in the market, although recognized, still requires product customization.
• Mussel farmers would like to purchase specific insurance policies for their operating vessels and for weather impacts.
• Unmanageable high impact/catastrophic risks such as major weather disasters, extended harvest bans due to HABs, pollution, predator attack, diseases and illegal activities should be covered by public funds.
• Mussel farmers insure their farms through good management practices under their own control.
• Risk management decisions are based on farmers’ relative risk attitudes rather than their perception of risk sources.

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