IDEAS home Printed from https://ideas.repec.org/a/gam/jagris/v7y2017i10p81-d112891.html
   My bibliography  Save this article

Establishing a Risk Profile for New Zealand Pastoral Farms

Author

Listed:
  • Miles Grafton

    (Agriculture and Horticulture, Massey University, Palmerston North 4410, New Zealand)

  • Michael Manning

    (Ravensdown Ltd., Hornby, Christchurch 8140, New Zealand)

Abstract

In this paper, the risk profile of two pastoral production systems in New Zealand are examined. All farmers must manage and mitigate a multitude of risks. Traditionally, a farm budget is solely undertaken to satisfy a lending institution. Limited variance analysis takes place, usually for output prices and inputs such as: interest rates, energy costs, and fertiliser. The authors of this paper use “@Risk”, a risk profiling plug-in tool for Microsoft Excel to demonstrate how farm budgets can be more relevant to farmers. Many risk factors that affect farm financial performance, such as climate and commodity prices, are not controlled by the farmer. Wet summers help hill country sheep and beef pastoral farmers, as more grass growth occurs, which thereby reduces the cost of production and increases revenue, as more stock is finished. Whereas in drought years income falls as stock must be sold prior to finishing, in severe droughts capital stock may also be sold. Input costs also rise as pasture weed invasion occurs; health issues such as rye grass staggers may also add cost. Monte Carlo simulations on model farm budgets for a North Island sheep and beef property and a Canterbury dairy farm help demonstrate the risk profile of each farm type.

Suggested Citation

  • Miles Grafton & Michael Manning, 2017. "Establishing a Risk Profile for New Zealand Pastoral Farms," Agriculture, MDPI, vol. 7(10), pages 1-12, September.
  • Handle: RePEc:gam:jagris:v:7:y:2017:i:10:p:81-:d:112891
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2077-0472/7/10/81/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2077-0472/7/10/81/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. H. Douglas Jose & Ram S. K. Valluru, 1997. "Insights from the Crop Insurance Reform Act of 1994," Agribusiness, John Wiley & Sons, Ltd., vol. 13(6), pages 587-598.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cabas, Juan H. & Leiva, Akssell J. & Weersink, Alfons, 2008. "Modeling Exit and Entry of Farmers in a Crop Insurance Program," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(1), pages 1-14, April.
    2. Tatyana Deryugina & Barrett Kirwan, 2018. "Does The Samaritan'S Dilemma Matter? Evidence From U.S. Agriculture," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 983-1006, April.
    3. Nguyen, Nam C. & Wegener, Malcolm K. & Russell, Iean W. & Cameron, Donald & Coventry, David & Cooper, Ian M., 2005. "Risk Management Strategies by Australian Farmers," 15th Congress, Campinas SP, Brazil, August 14-19, 2005 24295, International Farm Management Association.
    4. Kirwan, Barrett E., 2017. "The Benefits of Crop Insurance," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259162, Agricultural and Applied Economics Association.
    5. Malni Kumarathunga & Rodrigo N. Calheiros & Athula Ginige, 2022. "Smart Agricultural Futures Market: Blockchain Technology as a Trust Enabler between Smallholder Farmers and Buyers," Sustainability, MDPI, vol. 14(5), pages 1-20, March.
    6. Fabio G., Santeramo & Ilaria, Russo & Emilia, Lamonaca, 2022. "Italian subsidised crop insurance: what the role of policy changes," MPRA Paper 115299, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jagris:v:7:y:2017:i:10:p:81-:d:112891. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.