Bio-economic modelling of decisions under yield and price risk for suckler cow farms
AbstractApplying a bio-economic whole farm model we assess the impact of price and weather risk as well as different risk management strategies on the variability of the income in Swiss suckler cow production. We consider different on-farm risk management strategies such as the flexible adjustment of herd size, fodder composition and feed stocks, as well as an income insurance. Our results show that without any risk-management income variability is rather high, with coefficient of variation (CV) of income ranging from 26% to 31%. Taking on-farm risk management strategies into account it is possible to reduce income variability significantly (CV 12-15%), but causes only low reductions of mean income levels. Our results also indicate that income insurance is not attractive for farmers Our results thus suggest that in particular promoting better access to markets for feed stuff provides an valuable opportunities for farmers to manage income risks.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 123rd Seminar, February 23-24, 2012, Dublin, Ireland with number 122547.
Date of creation: 23 Feb 2012
Date of revision:
Weather risk; Bio-economic whole farm model; Suckler cow; Income insurance; Farm Management; Risk and Uncertainty; Q12; Q18;
Find related papers by JEL classification:
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
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-IAS-2012-05-15 (Insurance Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Flaten, O. & Lien, G., 2007. "Stochastic utility-efficient programming of organic dairy farms," European Journal of Operational Research, Elsevier, vol. 181(3), pages 1574-1583, September.
- Finger, Robert, 2012. "How strong is the “natural hedge”? The effects of crop acreage and aggregation levels," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122538, European Association of Agricultural Economists.
- Moschini, Giancarlo & Hennessy, David A., 2001.
"Uncertainty, risk aversion, and risk management for agricultural producers,"
Handbook of Agricultural Economics,
in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153
- Moschini, GianCarlo & Hennessy, David A., 2001. "Uncertainty, Risk Aversion, and Risk Management for Agricultural Producers," Staff General Research Papers 5323, Iowa State University, Department of Economics.
- Finger, Robert & Lazzarotto, Patrick & Calanca, Pierluigi, 2010. "Bio-economic assessment of climate change impacts on managed grassland production," Agricultural Systems, Elsevier, vol. 103(9), pages 666-674, November.
- Mosnier, Claire & Agabriel, Jacques & Lherm, Michel & Reynaud, Arnaud, 2011. "On-farm weather risk management in suckler cow farms: A recursive discrete stochastic programming approach," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114645, European Association of Agricultural Economists.
- Brandon Schaufele & James R. Unterschultz & Tomas Nilsson, 2010. "AgriStability with Catastrophic Price Risk for Cow-Calf Producers," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(3), pages 361-380, 09.
- K. D. Cocks, 1968. "Discrete Stochastic Programming," Management Science, INFORMS, vol. 15(1), pages 72-79, September.
- Apland, Jeffrey & Hauer, Grant, 1993. "Discrete Stochastic Programming: Concepts, Examples And A Review Of Empirical Applications," Staff Papers 13793, University of Minnesota, Department of Applied Economics.
- John P. Ritten & W. Marshall Frasier & Christopher T. Bastian & Stephen T. Gray, 2010. "Optimal Rangeland Stocking Decisions Under Stochastic and Climate-Impacted Weather," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1242-1255.
- David Bigman, 1996. "Safety-First Criteria and Their Measures of Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 225-235.
- Herrero, M. & Fawcett, R. H. & Dent, J. B., 1999. "Bio-economic evaluation of dairy farm management scenarios using integrated simulation and multiple-criteria models," Agricultural Systems, Elsevier, vol. 62(3), pages 169-188, December.
- Levy, Haim & Levy, Moshe, 2009. "The safety first expected utility model: Experimental evidence and economic implications," Journal of Banking & Finance, Elsevier, vol. 33(8), pages 1494-1506, August.
- M. Ryan Haley, 2012. "Generalized safety first and the planting of crops," Applied Economics Letters, Taylor & Francis Journals, vol. 19(6), pages 511-515, April.
- Lehmann, Niklaus & Finger, Robert, 2012. "Optimizing whole-farm management considering price and climate risks," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122533, European Association of Agricultural Economists.
- Ritten, John P. & Frasier, W. Marshall & Bastian, Christopher T. & Paisley, Steven I. & Smith, Michael A. & Mooney, Sian, 2010. "A Multi-Period Analysis of Two Common Livestock Management Strategies Given Fluctuating Precipitation and Variable Prices," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 42(02), May.
- Robert Finger & Niklaus Lehmann, 2012. "The influence of direct payments on farmers’ hail insurance decisions," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 343-354, 05.
- Arriaza, M. & Gomez-Limon, J. A., 2003. "Comparative performance of selected mathematical programming models," Agricultural Systems, Elsevier, vol. 77(2), pages 155-171, August.
- Emilio A. Laca, 2007. "Stochastic Rangeland Use under Capital Constraints," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 805-817.
- Kobayashi, Mimako & Howitt, Richard E. & Jarvis, Lovell S. & Laca, Emilio A., 2007. "AJAE Appendix: Stochastic Rangeland Use Under Capital Constraints," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 89(3), August.
- Simon Briner & Michael Hartmann & Robert Finger & Bernard Lehmann, 2012. "Greenhouse gas mitigation and offset options for suckler cow farms: an economic comparison for the Swiss case," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(4), pages 337-355, April.
- Domptail, Stéphanie & Nuppenau, Ernst-August, 2010. "The role of uncertainty and expectations in modeling (range)land use strategies: An application of dynamic optimization modeling with recursion," Ecological Economics, Elsevier, vol. 69(12), pages 2475-2485, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.