Stochastic utility-efficient programming of organic dairy farms

Opportunities to make sequential decisions and adjust activities as a season progresses and more information becomes available characterise the farm management process. In this paper, we present a discrete stochastic two-stage utility efficient programming model of organic dairy farms, which includes risk aversion in the decision maker’s objective function as well as both embedded risk (stochastic programming with recourse) and non-embedded risk (stochastic programming without recourse). Historical farm accountancy data and subjective judgements were combined to assess the nature of the uncertainty that affects the possible consequences of the decisions. The programming model was used within a stochastic dominance framework to examine optimal strategies in organic dairy systems in Norway.

[1]  Jitka Dupacová,et al.  Applications of stochastic programming: Achievements and questions , 2002, Eur. J. Oper. Res..

[2]  D. Pannell,et al.  Are we risking too much? Perspectives on risk in farm modelling , 1995 .

[3]  G.W.J. Giesen,et al.  CONVERSION FROM CONVENTIONAL TO BIOLOGICAL DAIRY FARMING: ECONOMIC AND ENVIRONMENTAL CONSEQUENCES AT FARM LEVEL , 1998 .

[4]  R. Freund.  THE INTRODUCTION OF RISK INTO A PROGRAMMING MODEL , 1956 .

[5]  David J. Pannell,et al.  Impacts of risk aversion on whole-farm management in Syria , 1998 .

[6]  Gudbrand Lien,et al.  Stochastic Efficiency Analysis with Risk Aversion Bounds: A Simplified Approach , 2004 .

[7]  Sushil Pandey,et al.  Farm Planning under Uncertainty: A Review of Alternative Programming Models , 1991 .

[8]  Ross Kingwell,et al.  Risk attitude and dryland farm management , 1994 .

[9]  Peter B. R. Hazell,et al.  A Linear Alternative to Quadratic and Semivariance Programming for Farm Planning under Uncertainty , 1971 .

[10]  Jack A. Meyer,et al.  Choice among distributions , 1977 .

[11]  K. Cocks.  Discrete Stochastic Programming , 1968 .

[12]  J. Dillon,et al.  Risk analysis in dryland farming systems , 1992 .

[13]  Gudbrand Lien,et al.  Comparing risk perceptions and risk management in organic and conventional dairy farming: empirical results from Norway , 2005 .

[14]  R. Huirne,et al.  Coping with Risk in Agriculture , 1997 .

[15]  M. Friedman,et al.  Theory of the Consumption Function , 1957 .

[16]  Jeffrey D. Apland,et al.  DSSP: A Model of Production and Marketing Decisions on a Midwestern Crop Farm , 1989 .

[17]  J. Hardaker,et al.  Whole-farm planning under uncertainty : impacts of subsidy scheme and utility function on portfolio choice in Norwegian agriculture , 2001 .

[18]  Ruud B.M. Huirne,et al.  The EU's Agenda 2000 reform and the sustainability of organic farming in Tuscany: ecological-economic modelling at field and farm level , 2004 .

[19]  Allan N. Rae,et al.  Stochastic Programming, Utility, and Sequential Decision Problems in Farm Management , 1971 .

[20]  K. M.,et al.  Comparing Risk Perceptions and Risk Management in Organic and Conventional Dairy Farming : Empirical Results From Norway , 2007 .

[21]  Javad Torkamani,et al.  Using a whole-farm modelling approach to assess prospective technologies under uncertainty , 2005 .

[22]  R. Wets,et al.  Stochastic programming , 1989 .

[23]  Javad Torkamani,et al.  A study of economic efficiency of Iranian farmers in Ramjerd district: an application of stochastic programming , 1996 .

[24]  K. Arrow,et al.  Aspects of the theory of risk-bearing , 1966 .

[25]  David J. Pannell,et al.  UTILITY‐EFFICIENT PROGRAMMING FOR WHOLE‐FARM PLANNING , 1988 .