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Whole-farm planning under uncertainty: impacts of subsidy scheme and utility function on portfolio choice in Norwegian agriculture

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  • G Lien
  • JB Hardaker
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    Abstract

    This paper addresses the impacts of degree of risk aversion, subsidy scheme and choice of utility function on optimal farm plans in Norwegian agriculture. Data from a farm business survey (1991-1997) are combined with subjective judgements to formulate a two-stage utility-efficient programming model. Under existing policy and market conditions, the ex ante expectation was that farmers' risk attitudes are unlikely to have a large effect on choice of enterprise mix. The results tend to confirm this view, and a farmer who is hardly risk averse at all would choose the same farm plan as a very risk averse farmer. Factors such as subsidy schemes, market conditions for the products and available labour on the farm are found to be more important determinants of the optimal plans than farmers' risk attitude or the form of the utility function. Copyright 2001, Oxford University Press.

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    Bibliographic Info

    Article provided by Foundation for the European Review of Agricultural Economics in its journal European Review of Agricultural Economics.

    Volume (Year): 28 (2001)
    Issue (Month): 1 (March)
    Pages: 17-36

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    Handle: RePEc:oup:erevae:v:28:y:2001:i:1:p:17-36

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    Cited by:
    1. Gürlük, Serkan & Ward, Frank A., 2009. "Integrated basin management: Water and food policy options for Turkey," Ecological Economics, Elsevier, vol. 68(10), pages 2666-2678, August.
    2. Ekman, Sone, 2002. "Cost-Effective Farm-Level Nitrogen Abatement in the Presence of Environmental and Economic Risk," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24860, European Association of Agricultural Economists.
    3. Ahumada, Omar & Villalobos, J. Rene, 2009. "Application of planning models in the agri-food supply chain: A review," European Journal of Operational Research, Elsevier, vol. 196(1), pages 1-20, July.
    4. Lien, Gudbrand D., 2002. "Assisting Whole-Farm Decision-Making Through Stochastic Budgeting," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24903, European Association of Agricultural Economists.
    5. Acs, Szvetlana & Berentsen, Paul & Huirne, Ruud & van Asseldonk, Marcel, 2009. "Effect of yield and price risk on conversion from conventional to organic farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(3), September.
    6. Antoine Leblois & Philippe Quirion & Benjamin Sultan, 2014. "Price vs. weather shock hedging for cash crops: ex ante evaluation for cotton producers in Cameroon," Post-Print halshs-00967313, HAL.
    7. Hardaker, J. Brian & Lien, Gudbrand D. & Van Asseldonk, Marcel A.P.M. & Richardson, James W. & Hegrenes, Agnar, 2008. "Risk programming and sparse data: how to get more reliable results," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44051, European Association of Agricultural Economists.
    8. Rosa, Franco, 2011. "Strategies for the Agro-food Sector," 2011 International European Forum, February 14-18, 2011, Innsbruck-Igls, Austria 122023, International European Forum on Innovation and System Dynamics in Food Networks.
    9. repec:hal:wpaper:hal-00796528 is not listed on IDEAS
    10. Flaten, Ola & Lien, Gudbrand D., 2005. "Stochastic Utility-Efficient Programming of Organic Dairy Farms," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24743, European Association of Agricultural Economists.
    11. Heidelbach, Olaf, 2007. "Efficiency of selected risk management instruments: An empirical analysis of risk reduction in Kazakhstani crop production," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 40, number 92323.
    12. Hardaker, J. Brian & Lien, Gudbrand D., 2007. "Rationalising Risk Assessment: Applications to Agricultural Business," Australasian Agribusiness Review, University of Melbourne, Melbourne School of Land and Environment, vol. 15.
    13. de Mey, Yann & Wauters, Erwin & van Winsen, Frankwin & Vancauteren, Mark & Van Passel, Steven & Lauwers, Ludwig H., 2012. "From total farm to household risk: implication for risk management," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122470, European Association of Agricultural Economists.
    14. Heidelbach, Olaf & Bokusheva, Raushan, 2009. "Crop insurance market development in a transition economy: The case of Kazakhstan," 2009 Conference, August 16-22, 2009, Beijing, China 51614, International Association of Agricultural Economists.
    15. Flaten, Ola & Lien, Gudbrand D., 2005. "Organic Dairy Farming in Norway Under the 100% Organically Produced Feed Requirement," 15th Congress, Campinas SP, Brazil, August 14-19, 2005 24245, International Farm Management Association.
    16. Rosa, Franco, 2012. "Planning the Sustainable Agro-fuel Supply Chain," Congress Papers 124130, Italian Association of Agricultural and Applied Economics (AIEAA).
    17. Lien, Gudbrand D., 2002. "Assisting Whole-Farm Decision-Making through Stochastic Budgeting," 13th Congress, Wageningen, The Netherlands, July 7-12, 2002 6950, International Farm Management Association.

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