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Article
Publication date: 1 November 2005

Calum G. Turvey, Cesar L. Escalante and William Nganje

This paper reviews various optimization approaches used to address a variety of issues related to risk in agricultural finance and farm management. The central focus is in the…

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Abstract

This paper reviews various optimization approaches used to address a variety of issues related to risk in agricultural finance and farm management. The central focus is in the Markowitz mean‐variance model, which represents the classical approach to balancing risk and returns in an optimization framework. We also review other models that have been used historically to solve linearizations of the mean‐variance problem including MOTAD and target MOTAD. Specialized optimization models such as Target semivariance and direct expected utility maximization are also discussed.

Details

Agricultural Finance Review, vol. 65 no. 2
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 1 April 2002

Sayed Hossain, Nik Hashim Nik Mustapha and Lee Tak Chen

Farming in Bangladesh is confronted with various types of uncertainties, which contribute to farmers’ income volatility over the years. As a result, cereal, mainly rice, which is…

Abstract

Farming in Bangladesh is confronted with various types of uncertainties, which contribute to farmers’ income volatility over the years. As a result, cereal, mainly rice, which is a less riskier crop remained dominantly planted in the current farm plan. But the return generated from rice cultivation has not been able to improve the livelihood of the poor, as rice profitability is low compared to some profitable but risky crops like jute and vegetables. To investigate the behavioral pattern of the farmers towards risk, Dhaka division, largely known as central region of Bangladesh, is selected. The prevailing farm plan of Dhaka division is compared with the efficient one at the current level of expected return in order to check whether the current farm plan is risky or otherwise. Quadratic and MOTAD as well as linear programming techniques have been employed for the analysis. The result of the study reveals that the prevailing farm plan in Dhaka division is risky compared to the efficient plan. Since the current return level is low, the study has recommended that more jute and vegetables should be planted to achieve higher remuneration.

Details

International Journal of Social Economics, vol. 29 no. 4
Type: Research Article
ISSN: 0306-8293

Keywords

Open Access
Article
Publication date: 29 September 2022

Arshad Ahmad Khan, Sufyan Ullah Khan, Muhammad Abu Sufyan Ali, Aftab Khan, Yousaf Hayat and Jianchao Luo

The main aim of this study is to investigate the impact of climate change and water salinity on farmer’s income risk with future outlook mitigation. Salinity and climate change…

Abstract

Purpose

The main aim of this study is to investigate the impact of climate change and water salinity on farmer’s income risk with future outlook mitigation. Salinity and climate change are a threat to agricultural productivity worldwide. However, the combined effects of climate change and salinity impacts on farmers' income are not well understood, particularly in developing countries.

Design/methodology/approach

The response-yield function and general maximum entropy methods were used to predict the impact of temperature, precipitation and salinity on crop yield. The target minimization of total absolute deviations (MOTAD)-positive mathematical programming model was used to simulate the impact of climate change and salinity on socioeconomic and environmental indicators. In the end, a multicriteria decision-making model was used, aiming at the selection of suitable climate scenarios.

Findings

The results revealed that precipitation shows a significantly decreasing trend, while temperature and groundwater salinity (EC) illustrate a significantly increasing trend. Climate change and EC negatively impact the farmer's income and water shadow prices. Maximum reduction in income and water shadow prices was observed for A2 scenario (−12.4% and 19.4%) during 2050. The environmental index was the most important, with priority of 43.4% compared to socioeconomic indicators. Subindex amount of water used was also significant in study area, with 28.1% priority. The technique for order preference by similarity to ideal solution ranking system found that B1 was the best climatic scenario for adopting climate change adaptation in the research region.

Originality/value

In this study, farmers' income threats were assessed with the aspects of different climate scenario (A1, A1B and B1) over the horizons of 2030, 2040 and 2050 and three different indicators (economic, social and environmental) in Northwestern region of Pakistan. Only in arid and semiarid regions has climate change raised temperature and reduced rainfall, which are preliminary symptoms of growing salinity.

Details

International Journal of Climate Change Strategies and Management, vol. 14 no. 5
Type: Research Article
ISSN: 1756-8692

Keywords

Article
Publication date: 2 January 2018

Lota D. Tamini, Maurice Doyon and Micheline M. Zan

The purpose of this paper is to document the level of risk in the Québec egg sector (conventional and specialty eggs) and analyze the optimal choices of Québec egg producers that…

Abstract

Purpose

The purpose of this paper is to document the level of risk in the Québec egg sector (conventional and specialty eggs) and analyze the optimal choices of Québec egg producers that must allocate limited resources to production of different types of eggs.

Design/methodology/approach

A quadratic programming approach applied to expected mean-variance models is used to analyze the impact of risk on decision to invest when the resources must be allocated to different type of production that have different risk levels. The model is calibrated using monthly data from 2009 to 2016.

Findings

Results indicated multiple uncertainty sources (technological, cost of production, price of eggs) that vary according to the types of eggs. Given risk aversion parameters, producer would favor production modes with the lowest producers’ price variance, which correspond to free-run eggs. Results also indicated that in response to a greater intensity of risk aversion, the course of action producers may choose is to increase the relative production of free-run eggs.

Research limitations/implications

The empirical limits of this research are found in the lack of quality data on producer prices and costs for specialty eggs. Future research could explore the relationship between the growing impact of egg for processing, which price is based on the US price, and its relationship with specialty eggs.

Practical implications

The findings of the study will be useful for policy makers and managers of eggs supply chain. This is important, given the recent announcement by Canadian’s large retailers and fast food companies to increase cage free eggs offering and, in some cases, eventually only selling these types of eggs.

Originality/value

This study adds to the understanding of the role of risk and uncertainty in the investment decision of egg producers and different mode of production, as well as in the development of the growing production of specialty eggs in Canada. It fills a gap in the literature regarding the impact of risk in Canadian egg production. This gap is likely explained by the perception of a lack of risk in this supply managed sector in Canada and its small size relative to other supply managed sector.

Details

British Food Journal, vol. 120 no. 1
Type: Research Article
ISSN: 0007-070X

Keywords

Article
Publication date: 6 July 2023

Jason Loughrey and Herath Vidyaratne

The purpose of this paper is to analyse the association between farm/farmer characteristics and unsubsidized farm insurance premium expenditure in Ireland. The distribution of…

Abstract

Purpose

The purpose of this paper is to analyse the association between farm/farmer characteristics and unsubsidized farm insurance premium expenditure in Ireland. The distribution of farm insurance expenditures is wide, and it is important to understand the extent to which individual factors influence demand for different levels of insurance premium.

Design/methodology/approach

The quantile regression approach and farm accountancy data from the Teagasc National Farm Survey are used to model the association between farm/farmer characteristics and farm insurance demand in Ireland.

Findings

Asset values (livestock, buildings and machinery) are positively associated with total insurance expenditure. Both forestry area and crop area are significantly associated with farm insurance expenditure with a stronger influence on the middle and upper part of the distribution. The interaction between farm income and farmer age is positively associated with insurance expenditure pointing to the importance of farm income protection.

Research limitations/implications

The research is mainly concerned with insuring against substantive risks, which are capable of threatening the asset base and continuation of the farm business. Future research can integrate questions in relation to farm safety and farmer health with research on the economic survival of the farm business.

Practical implications

Farmers in Ireland adopt unsubsidized farm insurance as a risk management tool. This situation is relevant to other EU member states including Belgium, Denmark, Germany and Sweden. The findings can be used to inform stakeholders and policymakers about the relative impact of different factors on insurance expenditure.

Originality/value

Previous research has typically focused on the linear relationship between farm/farmer characteristics and insurance demand without accounting for variability across the size distribution. This research is based on the quantile regression approach where the association between farm/farmer characteristics and farm insurance expenditure can be assessed at different points of the distribution.

Details

Agricultural Finance Review, vol. 83 no. 4/5
Type: Research Article
ISSN: 0002-1466

Keywords

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