Financial Risk in Hungarian Agro-Food Economy

This paper aims to investigate the financial risk in Hungarian agricultural and food production to shed light to which extent are exposed to risk these two sub-sectors of the food value chain. The exposure to risks is varying in different sub-sectors of the agriculture and food industry. The last financial and economic crisis revealed that the risks play a more important role in production decisions and production performance than is considered in the literature. The examination of financial risk is based on theoretical and empirical literature published by Morgen et al. (2012), Chambers and Quiggin (2004), Shankar (2012). The exposure of agricultural producers to financial risk is investigated by using a complete Disclosure Statement database of National Tax and Customs Administration (NAV) containing records of all Hungarian agricultural and food industry enterprises. The calculations of Mean Absolute Deviations, semi-variance and variance indicators reveal a higher exposure to financial risk of Hungarian food producers comparative to agricultural producers. We observed a decreasing exposure to risk after EU accession in both agriculture and food industry.