SIMULATION MODELS FOR THE SPECIFICATION OF FARM INVESTMENT PLANS

The implicit assumption of the methods currently advocated for the appraisal of investment plans on farms is that the main task is to choose the “best” course of action given a number of alternatives. The specification of these alternatives is a difficult task since there are many ways of performing farm operations because of the heterogeneity of fixed capital. It is proposed in this paper that investment opportunities may become more apparent by building simulation models of existing farming systems. Such models, it is claimed, should assist in identifying points where improvements can be made. The process of harvesting grain on U.K. farms is used to illustrate the suggestion. Some problems of using the simulation technique are also discussed.