New approach to risk assessment of certain agricultural products

Keywords: agriculture, profit, margin analysis, risks, break-even point.


Purpose. The main purpose of the research is to substantiate a new approach to assessing the risk of production and sales of certain types of the agricultural products.

Methodology / approach. The abstract-and-logical method (systematization of publications on risk assessment of the risk level); the economic and statistical one (determination of root-mean-square deviation (δ), the coefficient of variation (v), and the coefficient of residual variation); the marginal analysis (determination of the break-even level of production of certain types of the products) have been used.

Results. The methodological approach that allows determining the risk level of certain types of the products has been developed and it has been proposed to determine not only with the help of the break-even point, but also to supplement the following indicators – determining the reserve of safety and the reserve of financial strength. It is proved that similar obtained assessments of the certain product type production risk level using the analysis of variation indices can be reached by examining the break-even point indices, financial safety margin and the margin of safety. Research results show that unlike variation indices, the break-even point index, the financial safety margin index and the margin of safety index show the maximum amount of possible net income reduction.

Originality / scientific novelty. The methodical approach to the assessment of the risk level of agricultural production at the given level of profitability, which is based on the comparison of the levels of production intensity of certain types of the products, that ensures their break-even point, has been substantiated.

Practical value. The application of the proposed methodological approach allows the managers to determine how much to reduce the amount of the net income or the level of production intensity, but not to fall into the zone of loss.


1. Adams, K. F. (2008), Risk perceptio and Bayesian analysis of international contruction contract risks: The case of payment delays in a developing economy. International Journal of Project Management, vol. 26, is. 2, pp. 31–38.
2. Baquet, A., Hambleton, R. and Jose, D. (1997), Introduction to risk management,1st ed., USDA Risk Management Agency, Washington, USA.
3. Barry, P. J. ed. (1984), Risk Management in Agriculture, Iowa State University Press, Iowa, USA.
4. Bilan, Yu. V., Nitsenko, V. S. and Samoilyk, Iu. V. (2017), Conceptual modeling of agri-food market development under economy’s globalization. Scientific bulletin of Polissia, vol. 3, no. 11, part 1, pp. 54–61.
5. Blank, I. A. (2005), Financial risk management, Nika-Centre, Kyiv, Ukraine.
6. Cather, D. A. (2010), A gentle introduction to risk aversion and utility theory. Risk Management and Insurance Review, vol. 13, is. 1, pp. 127–145.
7. Dao, H. and Peduzzi, P. (2004), Global evaluation of human risk and vulnerability to natural hazards. Enviro-info, vol. 1, pp. 435–446.
8. Dimitrakopoulos, D., Kavussanos, G. M. and Spyrou, S. I. (2010), Value at risk models for volatile emerging markets equity portfolios. The Quarterly Review of Economics and Finance, vol. 50, is. 4, pp. 515–526.
9. Dubrova, O. S. (2002), Modern view on risk management as an important compound of business management system. Stratehiia ekonomichnoho rozvytku Ukrainy, vol. 1(8), pp. 446–453.
10. Gomez-Limon, J., Arriaza, M. L., Riesgo, L. (2003), An MCDM analysis of agricultural risk aversion. European Journal of Operational Research, vol. 15, pp. 569–585.
11. Hardaker, J. B., Huirne, R. B. M, Anderson, J. R. and Lien, G. (2004), Coping with risk in agriculture, 2nd ed., CABI Publishing, Wallingford, USA.
12. Harwood, J., Heifner, R. H., Coble, K., Perry, J. and Somwaru, A. (1999), Managing risk in farming: concepts, research, and analysis. Agricultural Economic Report No. 774, U.S. Department of Agriculture, Washington, USA.
13. Isik, M. and Khanna, M. (2003), Stochastic technology, risk preferences, and adoption of site-specific technologies. American Journal of Agricultural Economics, vol. 85, is. 2, pp. 305–317.
14. Johnson, T. C. (2008), Volume, liquidity, and liquidity risk. Journal of Finance Economics, vol. 87, is. 2, pp. 388–417.
15. Just, R. E. (2003), Risk research in agricultural economics: opportunities and challenges for next twenty-five years. Agricultural Systems, vol. 75, no. 2–3, pp. 123–159.
16. Khristianovskiy, A. T. and Lakhtionova, L. A. (2007), Finansovyi analiz subiektiv hospodariuvannia [Financial analysis of business entities], KNEU, Kyiv, Ukraine.
17. Kirieieva, E. А., Pryshliak, N. V., Shamanska, O. І., Salkova, I. Yu. and Kucher A. V. (2019), Strategic priorities and financial support of Ukrainian agricultural sector development. International Journal of Ecological Economics & Statistics, vol. 40, no. 2, pp. 25–37.
18. Kleiner, G. B., Tambovtsev, V. L. and Kachalov, P. M., (1997), Enterprises in an unstable economic environment: risks, strategies, security, Publishing House «Economics» Ltd., Moscow, Russia.
19. Klimenko, S. M. and Dubrova, O. S. (2005), Obgruntuvannia hospodarskykh rishen ta otsinka ryzykiv [Substantiation of business decisions and risk assessment], KNEU, Kyiv, Ukraine.
20. Knight, F. H. (2002), Risk. Uncertainty and Profit, 4 th ed., Mifflin Publishers, Houghton, UK.
21. Kravchenko, O., Kucher, A., Hełdak, M., Kucher, L. and Wysmułek, J. (2020), Socio-economic transformations in Ukraine towards the sustainable development of agriculture. Sustainability, vol. 12, no. 13, 5441.
22. Lapusta, M. and Sharshukova, L. (2008), Risks in entrepreneurial activity, Infra-M, Moscow, Russia.
23. Ma, B. (2020), Value shaping of ecological man: external standard and internal idea. Future Human Image, vol. 13, pp. 57–65.
24. Nitsenko, V., Mardani, A., Kuksa, I. and Sudarkina, L. (2018), Additional opportunities of systematization the marketing research for resource conservation practice. Management Theory and Studies for Rural Business and Infrastructure Development, vol. 40, no. 3, pp. 361–368.
25. Nitsenko, V., Mardani, A., Streimikis, J., Ishchenko, M., Chaikovsky, M., Stoyanova-Koval, S. and Arutiunian, R. (2019), Automatic information system of risk assessment for agricultural enterprises of Ukraine. Montenegrin Journal of Economics, vol. 15, no. 2, pp. 139–152.
26. Nitsenko, V., Mukoviz, V. and Sharapa, O. (2017), Accounting of transaction expenses of economic entities. Scientific Bulletin of Polissia, vol. 4, is. 12, part 2, pp. 71–78.
27. Nitsenko, V. S. and Rudenko, S. V. (2017), Risk management at the enterprises of agro-food sector. Actual problems of innovative economy, vol. 3, pp. 12–21.
28. Ostapenko, R., Herasymenko, Y., Nitsenko, V., Koliadenko, S., Balezentis, T. and Streimikiene, D. (2020), Analysis of production and sales of organic products in Ukrainian agricultural enterprises. Sustainability, vol. 12(8), 3416.
29. Pikus, R. V. (2010), Upravlinnia finansovymy ryzykamy [Financial risk management], Znannia, Kyiv, Ukraine.
30. Pisarevskiy, I. M. and Steshenko, O. D. (2008), Upravlinnia ryzykamy [Risk management], KhNUMG, Kharkiv, Ukraine.
31. Pronko, L., Furman, I., Kucher, A. and Gontaruk, Y. (2020), Formation of a state support program for agricultural producers in Ukraine considering world experience. European Journal of Sustainable Development, vol. 9, no. 1, pp. 364–379.
32. Sakhno, A., Polishchuk, N., Salkova, I. and Kucher, A. (2019), Impact of credit and investment resources on the productivity of agricultural sector. European Journal of Sustainable Development, vol. 8, no. 2, pp. 335–345.
33. Su, X., Zhao, Z., Zhang, H., Li, Z. and Deng, Y. (2011), An integrative assessment of risk in agriculture system. Journal of Computational Information Systems, vol. 7, pp. 9–16.
34. Tarasova, K. I. (2013), Methodological principles of quantitative risk assessment. Scientific notes of Ostroh Academy National University. Series «Economics», no. 23, pp. 367–372.
How to Cite
Oliynyk, O., Skoromna, O., Gorokh, O., Mishchenko, V., & Yevdokimova, M. (2021). New approach to risk assessment of certain agricultural products. Agricultural and Resource Economics: International Scientific E-Journal, 7(1), 44-57.