Establishing a Risk Profile for New Zealand Pastoral Farms

Abstract

Abstract:In this paper, the risk profile of two pastoral production systems in New Zealand are examined. All farmers must manage and mitigate a multitude of risks. Traditionally, a farm budget is solely undertaken to satisfy a lending institution. Limited variance analysis takes place, usually for output prices and inputs such as: interest rates, energy costs, and fertiliser. The authors of this paper use "@Risk", a risk profiling plug-in tool for Microsoft Excel to demonstrate how farm budgets can be more relevant to farmers. Many risk factors that affect farm financial performance, such as climate and commodity prices, are not controlled by the farmer. Wet summers help hill country sheep and beef pastoral farmers, as more grass growth occurs, which thereby reduces the cost of production and increases revenue, as more stock is finished. Whereas in drought years income falls as stock must be sold prior to finishing, in severe droughts capital stock may also be sold. Input costs also rise as pasture weed invasion occurs; health issues such as rye grass staggers may also add cost. Monte Carlo simulations on model farm budgets for a North Island sheep and beef property and a Canterbury dairy farm help demonstrate the risk profile of each farm type.

Forecasting costs and risk of corn and soybean crops through Monte Carlo simulation

“…According to current projections, it is likely that the high prices of soybeans and corn will continue during the marketing period of the 2022/2023 crops [6]. Given this scenario, analyses, comparisons, and forecasts of production costs in agribusiness have been utilized as tools for decision-makers [7][8][9]. Pitrova et al (2020) [10] and Amorim et al (2020) [11] mentioned that computational simulation has proven to be an appropriate support tool for decision-making on rural properties.…”

Developing a Landscape Design Approach for the Sustainable Land Management of Hill Country Farms in New Zealand

“…Climate change may also directly affect pastoral production, because the seasonal variation of pasture growth is influenced by rising temperatures, CO 2 fertilization and changes in rainfall patterns [119]. Thus, climate change may result in greater variation in sheep and cattle growth and productivity [124]. Adaptation solutions have been developed to reduce risks and build resilience to climate change impacts in NZ.…”

Technical Note: Regression Analysis of Proximal Hyperspectral Data to Predict Soil pH and Olsen P

“…Sheep follow cattle in a grazing rotation as sheep graze shorter pasture than cattle and each animal class has different classes of parasites and parasitism is reduced as the parasite larvae of each class is destroyed by the grazing of the other. This farming system is heavily dependent on summer rainfall 2 of 18 that is quite variable, with higher rainfall on the West coast than the East coast of both islands [2,3], see Figure 1. Where summer rainfall allows grass growth to finish stock farm incomes are higher than on steeper, colder country, where in dry summers farmers are, forced to sell stock, unfinished as store, for others to finish on softer country with irrigation [2].…”

“…This farming system is heavily dependent on summer rainfall 2 of 18 that is quite variable, with higher rainfall on the West coast than the East coast of both islands [2,3], see Figure 1. Where summer rainfall allows grass growth to finish stock farm incomes are higher than on steeper, colder country, where in dry summers farmers are, forced to sell stock, unfinished as store, for others to finish on softer country with irrigation [2]. On the steeper country, the use of vehicular traffic is not possible, and fertilizer and herbicide applications are undertaken by aircraft [4].…”