On-Farm Weather Risk Management in Suckler Cow Farms: A Recursive Discrete Stochastic Programming Approach

Abstract

Currently France wants to introduce a weather risk management framework into its agricultural policy for livestock farming. The aim of this paper is to better understand how on-farm risk reducing strategies modify the production system and profit distribution of French suckler cow enterprises. We present in this paper an original bioeconomic model that takes into account both risk anticipation and risk adjustments and that details biotechnical relationships between the different components of the beef cattle production system and their dynamics. On-farm risk management strategies are endogeneized under weather uncertainty and tested on real observed weather sequences. We simulate four scenarios characterized by different risk aversions and feed prices. Results emphasized that production adjustments, particularly the adjustments of area of grassland harvested and the possibility to purchase substitutes to on-farm forage production, improve farmers profit under weather variability. However, limiting the amplitude of these adjustments helps decreasing profit variability. All simulated long term decisions associated to risk reducing strategies encompass a reduction of long term stocking rate and the constitution of feed stocks. The impact of hay feed price on the market has similar effects on the long term strategy.

Bio-economic modelling of decisions under yield and price risk for suckler cow farms

“…Even if the farmer does not have the possibility to purchase roughage at the market, what is known to be one of the best measures to mitigate variability of the income (e.g., Mosnier et al 2011, Kobayashi et al 2007 they still have the possibility to adjust the number of animals or to adjust feed stocks. In contrast to the results of Mosnier et al (2011), our model suggests that an increase of the stocking rate coupled with more intensive use of the grassland is an efficient strategy to reduce income variability. An increase in stocking rate is reducing the probability to generate income beyond a certain limit, because more animals can be sold if meat prices are low to keep the revenue at a constant level.…”

“…In contrast to other studies, e.g. Mosnier et al (2011) and Dorward (1999), states of nature are not modelled in discrete classes, e.g. yields under favourable, average and unfavourable weather, but discrete sets of realized yields and prices (drawn randomly) were used (see also section 2.4).…”

“…In the case of animal production that is addressed in this paper, an efficient and well-established risk-management strategy is for example to store fodder between years to survive unfavorable weather in a proceeding year (e.g. Mosnier et al 2011, White et al 2009. A further strategy to cope with risk is to choose herd sizes lower than in maximum possible which allows farmers to guarantee sufficient fodder production in bad years, and the selling of overproductions in good years (Parsch et al 1997.…”

“…Applying a system dynamic model Payne et al (2009) argue that beef cow operations in Texas face high uncertainties that can be reduced by changes in the calving season. Recent work of Mosnier et al (2011) (using an example from France) has shown, that there are different possible on-farm risk-management strategies available that are especially suited for suckler cow farms. The most important strategy highlighted in their study is the ability of farmers to purchase additional fodder and adapt the number of animals.…”

Addressing Antimicrobial Resistance: An Overview of Priority Actions to Prevent Suboptimal Antimicrobial Use in Food-Animal Production

“…Such behaviors have been described in a survey conducted in rabbit production, showing a negative correlation between income level and AMU (Chauvin et al, 2011). The influence of attitude toward risk was also evidenced in beef cattle farmers facing climatic hazard or decrease in meat prices (Mosnier, 2009). Since respiratory diseases are the key disorder in this line of production, beef farmers with a strong risk aversion are more likely using antimicrobials –including for prevention– limiting the probability of a massive respiratory outbreak.…”