IDEAS home Printed from https://ideas.repec.org/p/ags/aaea06/21306.html
   My bibliography  Save this paper

Farm-level Acreage Allocation under Risk

Author

Listed:
  • Polome, Philippe
  • Harmignie, Olivier
  • Frahan, Bruno Henry de

Abstract

We model the area allocation decision problem for a fixed size crop farm under random yields and prices for a risk-averse farmer. We assume that in the short run, the variable input expenses are fixed per hectare and per crop (an assumption that is motivated by our data). Therefore the cost function depends only on the non-stochastic area allocation. The first order conditions of the model involve integrals across functions of random variables that do not in general have closed form solutions. Numerical simulation techniques are used to calibrate the parameters of the cost function. The two sources of randomness, price and yield, are combined into a single random variable, the yield-in-value. Based on examination of panels of yield-in-value data, we assume independence across the yield-in-value distributions and that the farmers know these distributions. We have modeled the sugar quota constraint, the Common Agricultural Policy subsidies and set-aside, and one Agri-Environmental Measure called "buffer zone".

Suggested Citation

  • Polome, Philippe & Harmignie, Olivier & Frahan, Bruno Henry de, 2006. "Farm-level Acreage Allocation under Risk," 2006 Annual meeting, July 23-26, Long Beach, CA 21306, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea06:21306
    as

    Download full text from publisher

    File URL: http://purl.umn.edu/21306
    Download Restriction: no

    References listed on IDEAS

    as
    1. 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 Elsevier.
    2. Rulon D. Pope, 2003. "Agricultural Risk Analysis: Adequacy of Models, Data, and Issues," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1249-1256.
    3. Moschini, GianCarlo, 2001. "Production risk and the estimation of ex-ante cost functions," Journal of Econometrics, Elsevier, vol. 100(2), pages 357-380, February.
    4. Guyomard, Herve & Baudry, Marc & Carpentier, Alain, 1996. "Estimating Crop Supply Response in the Presence of Farm Programmes: Application to the CAP," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 23(4), pages 401-420.
    5. repec:feb:artefa:0008 is not listed on IDEAS
    6. Binswanger, Hans P, 1981. "Attitudes toward Risk: Theoretical Implications of an Experiment in Rural India," Economic Journal, Royal Economic Society, vol. 91(364), pages 867-890, December.
    7. Pope, Rulon D. & Just, Richard E., 1996. "Empirical implementation of ex ante cost functions," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 231-249.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Benjamin Dequiedt & Emmanuel Servonnat, 2016. "Risk as a limit or an opportunity to mitigate GHG emissions? The case of fertilisation in agriculture," Working Papers 1606, Chaire Economie du climat.

    More about this item

    Keywords

    Risk and Uncertainty;

    Statistics

    Access and download statistics

    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:ags:aaea06:21306. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/aaeaaea.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.