Relationship between the agricultural diversification and the market risks

Abstract

In the Brazilian agriculture, there is a great diversity and heterogeneity of production systems that are subject to wide number of risk factors. Although the risks cannot be completely eliminated, they can be minimized by adopting some strategies, as the diversification with agricultural and cattle activities. Based on historical research results of Paraná’s agriculture and using two risk coefficients (means of the simple correlation and relative variance) as main measurements, this study aimed to analyze, comparatively, the contribution of each agricultural activity for the reduction, or not, of the market risks in two diversified production systems: integrated crop-beef cattle and grain crops cultivation. It was observed that, in the short-term, the integrated crop-livestock system is the alternative that can bring interesting advantages in the reduction of the sensibility of the economic returns due to the oscillations in the agricultural market.