Investment behavior of Canadian Egg Producers: Analyzing the Impacts of Risk Aversion and Variability of Prices and Costs of Production
Animal welfare is a major concern for consumers. This concern has not gone unnoticed by sector stakeholders, especially egg producers. One of the fundamental changes likely to affect egg producers regards modes of production, specifically changes in housing systems, ranging from conventional cages to free range. From farmers’ perspective, changing their mode of production generates a technological and economic/marketing risk. This study documents the level of risk in the Canadian egg sector (conventional and specialty eggs) using data from 2009 to 2011. Our results indicate multiple uncertainty sources (technological, cost of production, price of eggs) that vary according to the types of eggs. We use a quadratic programming approach applied to expected mean-variance models to analyze the impact of risk on decision to invest when the resources must be allocated to different types of production that have different risk levels. Overall our results show how, given risk aversion parameters, producers minimize their risk levels by devoting their resources to the least risky type of eggs. An important result of our study is that supply management, by reducing the perceived risk level, has favored the development of specialty eggs, for the benefit of consumers.
|Date of creation:||2014|
|Contact details of provider:|| Postal: Faculté des sciences de l'agriculture et de l'alimentation, Pavillon Paul-Comtois, 2425 rue de l'Agriculture, local 4424, Québec, Qc, G1V 0A6|
Phone: 418-656-2131 poste 5098
Web page: http://www.create.ulaval.ca
More information through EDIRC
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.:
- Martin, Larry J. & Kruja, Zana & Alexiou, John, 1998. "Prospects For Expanded Egg Production In Western Canada," Final Reports 18147, George Morris Center.
- Sumner, Daniel A. & Matthews, William A. & Thurman, Walter N. & Hayes, Dermot J. & Gow, Harnish & Norwood, Bailey, 2010. "Economic and Market Issues on the Sustainability of Egg Production in the United States: Analysis of Alternative Production Systems," Staff General Research Papers Archive 31542, Iowa State University, Department of Economics.
- Moawia Alghalith, 2010. "The theory of the firm under multiple uncertainties," Economics Bulletin, AccessEcon, vol. 30(3), pages 2075-2082.
- Martins, M. Belem & Marques, Carlos, 2007. "Methodological aspects of a mathematical programming model to evaluate soil tillage technologies in a risky environment," European Journal of Operational Research, Elsevier, vol. 177(1), pages 556-571, February.
- Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
- Komarek, Adam M. & MacAulay, T. Gordon, 2013. "Farmer responses to changing risk aversion, enterprise variability and resource endowments," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(3), September.
- Louis Eeckhoudt & Alban Thomas & Nicolas Treich, 2011.
"Correlated risks and the value of information,"
Journal of Economics,
Springer, vol. 102(1), pages 77-87, January.
- EECKHOUDT, Louis & THOMAS, Alban & TREICH, Nicolas, "undated". "Correlated risks and the value of information," CORE Discussion Papers RP 2358, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- L. Eeckhoudt & A. Thomas & N. Treich, 2011. "Correlated risks and the value of information," Post-Print halshs-00780314, HAL.
- Paolo Sckokai & Daniele Moro, 2006. "Modeling the Reforms of the Common Agricultural Policy for Arable Crops under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 43-56.
- P. B. R. Hazell, 1971. "A Linear Alternative to Quadratic and Semivariance Programming for Farm Planning under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(1), pages 53-62.
- Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
- Bobtcheff, Catherine & Villeneuve, Stéphane, 2010. "Technology choice under several uncertainty sources," European Journal of Operational Research, Elsevier, vol. 206(3), pages 586-600, November.
- BOBTCHEFF Catherine & VILLENEUVE Stephane, 2006. "Irreversible Investment in Competitive Projects: A New Motive for Waiting to Invest," LERNA Working Papers 06.20.213, LERNA, University of Toulouse.
- James I. Rude & Jean-Philippe Gervais, 2006. "Tariff-Rate Quota Liberalization: The Case of World Price Uncertainty and Supply Management," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(1), pages 33-54, March.
- Adam M. Komarek & T. Gordon MacAulay, 2013. "Farmer responses to changing risk aversion, enterprise variability and resource endowments," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(3), pages 379-398, July. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:lvl:creacr:2014-2. 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: (Manuel Paradis)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.