Financial risk management in agriculture: mitigation strategies and protection against economic variables

This work explores essential strategies for managing financial and operational risks in the agricultural sector, a crucial pillar of the global economy, but one that is exposed to a wide range of financial risks. These risks include fluctuations in commodity prices, access to credit, operational risks, climate change, exchange rate variations, and government policies. To ensure the sustainability and profitability of agricultural operations, it is imperative that producers adopt effective financial risk management strategies. This article addresses the main mitigation and protection strategies against economic variables in the context of agriculture. The methodology of this study is based on a systematic literature review, focused on identifying, analyzing, and synthesizing financial risk management strategies in agriculture. The review covers the analysis of advanced precision technologies, which optimize agricultural production and reduce waste, as well as sustainable agricultural practices, adequate insurance to mitigate the impacts of climate risks, and commodity hedging. Strategies for diversifying crops and agricultural activities to distribute risk and improve financial resilience are also discussed. In conclusion, effective financial risk management in agriculture requires a multifaceted approach that integrates mitigation strategies for various types of risks. The adoption of advanced technologies, sustainable agricultural practices, adequate insurance, and a thorough understanding of market and policy dynamics are fundamental to strengthening resilience and ensuring the sustainability of the agricultural sector against adverse economic variables.