Institutional Instruments and Risk Management Capabilities: Evidence from Potato Farmers in Shishtavec, Albania - Economicus

By Elona KOTARJA, Klea ELEZI

Abstract
This study investigates the impact of institutional support mechanisms—specifically agricultural insurance, government subsidies, and technical training—on the ability of potato farmers to manage production risks in the Shishtavec Administrative Unit, Kukës, Albania. Primary data were collected through a structured survey administered to 30 active potato farmers. Likert-scale items (1–5) were employed to measure the perception of risk and the availability of institutional support. Ordinary Least Squares (OLS) regression analysis was used to test the research hypothesis. The results reveal a critical “institutional void”: 0% of respondents possess agricultural insurance, 83% cite the lack of subsidies and insurance as a primary constraint, and only 15% receive regular technical training. The OLS regression confirms a statistically significant positive relationship between the availability of subsidies (β = 0.42, p < .001) and technical training (β = 0.38, p < .01) and the farmers’
risk management capacity (R² = 0.68), thus validating Hypothesis H₁. The findings underscore the urgent need for policy interventions, including the establishment of subsidised agricultural insurance schemes, the revitalisation of extension services,
and the redesign of subsidy programmes to prioritise risk-reducing infrastructure. This study addresses a notable gap in the literature by providing crop-specific, empirical evidence on the role of institutional instruments as determinants of risk management capacity in a remote Albanian agricultural context, where such mechanisms are effectively absent.

Keywords: agricultural insurance, subsidies, extension services, risk management, institutional instruments, Shishtavec, Albania