The adoption of innovative cropping systems under price and production risks: a dynamic model of crop rotation choice
AbstractIn the paper we investigate the role played by both production and market risks on farmer’s decision to adopt long rotations (over 2 years), considered as innovative cropping systems. We build a multiperiod dynamic farm model (run under GAMS) that arbitrates each year between traditional and innovative rotations. With discrete stochastic programming, the production risk is accounted as an intra-year risk; yearly farming operations are declined according to a decision tree where probabilities are assigned. Subjective yield and cost distributions linked to this decision tree are elicited among a sample of 13 farmers that are experiencing this innovation in South-western France. The price risk is randomly distributed with a given market trend. The crop acreage can be revised according to the market situation. The simulations show that substantive sunk costs are incentive to remain in the long rotation when the farmer is already engaged and when he is supported for this engagement. They also show that both a high risk aversion and a highly positive market trend tend to slow down the conversion towards innovative systems.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 123rd Seminar, February 23-24, 2012, Dublin, Ireland with number 122440.
Date of creation: 23 Feb 2012
Date of revision:
innovative cropping systems; dynamic model; crop rotation decision; risk; subjective probabilities; Risk and Uncertainty; C61; D0; Q12; Q55;
Other versions of this item:
- Aude RIDIER & Karim Chaib & Caroline Roussy, 2012. "The adoption of innovative cropping systems under price and production risks: a dynamic model of crop rotation choice," Working Papers 170109, Institut National de la Recherche Agronomique, France.
- Aude Ridier & Karim Chaib & Caroline Roussy, 2012. "The adoption of innovative cropping systems under price and production risks: a dynamic model of crop rotation choice," Working Papers SMART - LERECO 12-07, INRA UMR SMART.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D0 - Microeconomics - - General
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-05-15 (Agricultural Economics)
- NEP-ALL-2012-05-15 (All new papers)
- NEP-INO-2012-05-15 (Innovation)
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