Opportunities of Price Risk Limitation in Horticultural Sector in Poland

This paper reviews the possibility of price risk limitation, which is conducive to farmers’ income stabilization. The attempts to control price risk in both the agricultural and horticultural sectors started a long time ago. The price is the most important factor bounding supply and demand on the market. Prices of agri-food products are volatile and derive from many factors, which are unable to be predicted in practice. The influence of many variables is, furthermore, also volatile and emerges in varying intensity. Price risk in the farmers’ case results from the fact that the production decisions are made mostly under the influence of current prices, but products are sold at future prices. It means that the risk in agriculture is multiplied, due to the impossibility of correction of ongoing production. Effects of all risk factors, as well as their correlations, are focused on price. Price volatility, together with the negative effects it causes, is able to destabilize farmers’ incomes, and put them off investments or optimal use of resources, which in consequence may lead to a retreat from the sector. It is crucial to provide to the agriculture sector solutions supporting farmers in taking their own economic risk. The most important thing in market stabilization seems to be its organization in both a vertical and horizontal way with special attention paid to farmers’ cooperation.