A Multiperiod Risk Programming Model for Farm Planning

A risk programming method that evaluates production plans based on expected income and risk was demonstrated using representative data from Panama. Results illustrate the usefulness of the program in presenting production choices to decision makers and evaluating those choices under changing conditions. Less experienced or less financially secure farmers may select farm plans that differ quite importantly from those chosen by more experienced or more financially secure farmers. If farm survival is in doubt, more conservative farm plans will generally be adopted. Without consideration of the potential losses, it will often appear that all farmers should pursue the most intensive farm plan within their farming capabilities. However, many farmers will employ less intensive management strategies if the potential for losses associated with more intensive strategies is perceived to be excessive. The model indicated that management strategies were sensitive to changes in shrimp price and feed cost, but less sensitive to the costs of post larvae or energy. Also, shrimp farm managers should give serious consideration to not producing in the dry season due to relatively high risk and low expected returns. Farmers should be most concerned with quality and availability of post larvae, not price. If hatcheries can address these concerns, the higher price of hatchery post larvae will be justified.

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“…I). It is equally appropriate to maximize income subject to a risk constraint (Anderson et al 1977;Kaiser and Boehlje 1980…”

Section: Methodsmentioning

confidence: 99%

Demonstrating the Use of Risk Programming for Aquacultural Farm Management:

Hatch

Sindelar

Rouse

et al. 1987

J World Aquaculture Soc

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“…Very few of these methods have been implemented in a multi-period framework. However, mention should be made of the MOTAD criteria in a multi-period mathematical programming model (Boehlje and White, 1969;Barry, 1977;Kaiser and Boehlje, 1980) and the use of "Focus Loss" formulation (Alary and Boussard, 2000).…”

Section: Introductionmentioning

confidence: 99%

Decoupling Direct Payments and the Dynamics of Decisions under Price Risk in Cattle Farms

Ridier¹,

Jacquet²

2002

J Agricultural Economics

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The impact of decoupling direct payments from production on producers' decisions, taking account of price uncertainty and risk aversion, is analysed through a multi-period mathematical programming model. This model is applied to beef cattle farms in two French regions: Limousin and Pays de la Loire. The technical coefficients are represented by an engineering production function estimated for both regions. The behavioural parameters have been obtained through a survey and model calibration. Policy changes have been modelled through different simulation scenarios relating to the decoupling of direct payments. Model results show that decoupling policies produce a more homogenous response from different types of farmers. The share of cattle activities on farms decreases and the production techniques become less intensive.

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“…The analytical decis ion model is an extension of the singleperiod target MOTAD model of and Watts et al (1984) to the multiperiod case. The multiperiod linear programming model used here is similar to the multiperiod MOTAD model developed by Kaiser and Boehlje (1980) where E(Z) is the expected income of the solution, cjt is the expected return of activity j in period t, dkt is the expected return of activity k in period t, Ykt is an activity level variable which can either be 0 or 1, Tt is the target level of income fo r period t, crjt…”

Section: Analytical Modelmentioning

confidence: 99%

Two articles employing risk programming techniques to determine optimal enterprise combinations on southern Iowa farms

Herr

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A Multiperiod Risk Programming Model for Farm Planning

Cited by 5 publications

References 18 publications

Demonstrating the Use of Risk Programming for Aquacultural Farm Management:

Demonstrating the Use of Risk Programming for Aquacultural Farm Management:

Decoupling Direct Payments and the Dynamics of Decisions under Price Risk in Cattle Farms

Two articles employing risk programming techniques to determine optimal enterprise combinations on southern Iowa farms

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