A domain-based network analysis of agricultural risk management

Abstract Agricultural risk management is increasingly a portfolio decision: farms combine several instruments to address production and market risks. Existing studies have mainly analyzed individual instruments or classified farms into risk management types, but provide limited evidence on how broader categories of risk management strategies are structurally combined within farm-level portfolios. This study examines these co-adoption patterns using survey data from 228 farms in Saxony, Germany. Twenty individual instruments are aggregated into nine functional risk management domains covering insurance-based, market-based, financial, operational, and technical strategies. We describe pairwise co-adoption patterns and estimate network models that identify which domain associations remain after accounting for the wider portfolio structure. The results show that risk management portfolios are sparse rather than densely interconnected. While simultaneous adoption across domains is common, only six direct conditional associations remain. Price risk management is the most connected domain in the observed network and forms the strongest conditional association with crop insurance. No negative dependencies are retained, suggesting that strong substitutive co-adoption patterns are not visible at the binary domain level. The findings indicate that strategic differentiation among the surveyed farms occurs mainly along a market-orientation axis. This suggests that policy and advisory programs should not assume broad spillover effects across risk management domains, but should pay particular attention to the interaction between price risk management, crop insurance, and marketing flexibility.