Farmers Coping with Market Shock : a multiple case study of Agricultural SMEs

Abstract: This research explores how agricultural SMEs are coping with the agricultural market shock mainly caused by Russian-Ukraine war outbreak in February 2022. The research paper is guided by three research questions investigating 1) the impacts of the current market shock on farms, 2) the coping strategies and decisional motivation of farmers, and 3) the planned adaptations and learnings of the farmers. A qualitative research methodology was employed, wherein semi-structured interviews were conducted with conventional crop farmers within a multiple case study design framework. Of the five cases, one farmer who farms in Poland was interviewed, while the other four are located in northern Germany. Key findings revealed that the farms are mainly affected by price volatility, scarcity and unavailability of goods, and rising machinery prices. To navigate these challenges, farmers employed strategies aimed primarily at ‘securing production’, while other strategies aimed at cushioning price volatility. They stocked up on machinery and essential input goods like plant protection chemicals, diesel, and fertilizers. Other strategies include distributed buying and selling of inputs and produce (‘salami tactics’), contractual agreements and forward pricing, and gaining market transparency through networking or contacting several agricultural traders. Farmers' planned adaptations differ among the study cases. While one of the farms plans on increasing input storage possibilities, others plan to use more ‘salami tactics’, and another case plans on constructing silos and a fermentation residue tank for future use of more organic-based fertilizer. By investigating farmers' responses to the market shock, this study enriches the discourse on organizational resilience and crisis management. It provides policymakers, crisis management researchers, and agricultural economics researchers with unique insights into risk management and adaptation to sudden exogenous market shocks while setting the stage for future research.