Assessing expected utility and profitability to support decision-making for disease control strategies in ornamental heather production

Abstract

Many farmers hesitate to adopt new management strategies with actual or perceived risks and uncertainties. Especially in ornamental plant production, farmers often stick to current production strategies to avoid the risk of economically harmful plant losses, even though they may recognize the need to optimize farm management. This work focused on the economically important and little-researched production system of ornamental heather (Calluna vulgaris) to help farmers find appropriate measures to sustainably improve resource use, plant quality, and profitability despite existing risks. Probabilistic cost-benefit analysis was applied to simulate alternative disease monitoring strategies. The outcomes for more intensive visual monitoring, as well as sensor-based monitoring using hyperspectral imaging were simulated. Based on the results of the probabilistic cost-benefit analysis, the expected utility of the alternative strategies was assessed as a function of the farmer’s level of risk aversion. The analysis of expected utility indicated that heather production is generally risky. Concerning the alternative strategies, more intensive visual monitoring provides the highest utility for farmers for almost all levels of risk aversion compared to all other strategies. Results of the probabilistic cost-benefit analysis indicated that more intensive visual monitoring increases net benefits in 68% of the simulated cases. The application of sensor-based monitoring leads to negative economic outcomes in 85% of the simulated cases. This research approach is widely applicable to predict the impacts of new management strategies in precision agriculture. The methodology can be used to provide farmers in other data-scarce production systems with concrete recommendations that account for uncertainties and risks.

Agricultural market information: How much and who is willing to pay for it?

“…Thus, if we consider the AMIS as a hypothetical market service, farmers' WTP would be based on their expected utility. This is still a subject of research focused on farmers' decisions making (Ruett et al, 2022). Similarly, the decision to pay for the information (e.g., subscription) provided by AMIS can be influenced by the expected benefits, and mainly contains the farmer's characteristics, including cognitive aspects.…”