Risk, Utility and Stocking Rate*

McArthur, Ian; Dillon, John L.

doi:10.1111/j.1467-8489.1971.tb00073.x

Cited by 24 publications

(6 citation statements)

References 2 publications

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“…That both stocking rates and the use of inputs may be modified by considerations of financia! risk has been shown for sheep farming in Australia (MacArthur and Dillon, 1971;Anderson and Griffiths, 1981). However, it is difficult to derive a function which describes the willingness of livestock producers to accept lower expected incomes in exchange for a reduction in income variability.…”

Section: Quantifying Riskmentioning

confidence: 99%

The effect of stocking rate and fertilizer usage on income variability for dairy farms in England and Wales

Doyle¹,

Lazenby

1984

Grass and Forage Science

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A malhematical model of grass production and utilization on a dairy farm is described. Using the model an assessment has been made of the extent to which financial uncertainty arising from yearto-year variability in grass yields, coupled with a preference among farmers for minimizing risks. may explain the relatively low stocking rates and observed nitrogen usages on many dairy farms in England and Wales. The degree of risk has been equated with the probability of profits in a particular year being less than those required to cover the consumption needs and short-term borrowing requirements of the farmer. The results of the analysis indicate that a strategy of minimizing risks may lead to a significantly lower stocking rate than one of maximizing profits. Thus, considerations of risk may lead to stocking rates which are suboptimal from the viewpoint of economic and biological efficiency. However, there is no evidence to suggest that the comparatively low average usage of nitrogen on dairy farms in the UK is determined by risk considerations. On the contrary, increasing nitrogen usage lowers the apparent financial risk at a given stocking rate.

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Section: Quantifying Riskmentioning

confidence: 99%

The effect of stocking rate and fertilizer usage on income variability for dairy farms in England and Wales

Doyle¹,

Lazenby

1984

Grass and Forage Science

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“…The holding of large numbers of unproductive animals and overgrazing of public lands are often seen as risk-reducing devices. Conversely, Macarthur and Dillon (1971) illustrated how risk-adverse behaviour by private ranchers leads to understocking and underinvestment relative to socially optimal (i.e. risk-neutral) levels.…”

Section: Riskmentioning

confidence: 98%

1.3 Physical and economic constraints to intensive animal production in developing countries

Fitzhugh

Boer

1981

BSAP Occas. Publ.

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Intensive animal production systems are commonly associated with high income, industrialized societies. These systems are seen by many as indicators or even causes of a widening gap in living standards between developed and developing countries (Aziz, 1976; George, 1976). The controversial subject of resource competition between man and animals has been treated elsewhere (Byerly, 1978; Fitzhugh, Hodgson, Scoville, Nguyen and Byerly, 1978; Newcombe and Bowman, 1978; Svedberg, 1978). Much of the concern stems from the positive relationship between income levels and animal protein consumption (Barreveld, 1977; Weber and Gregersen, 1977). The underlying premise of this paper is that intensification is an appropriate means of increasing animal protein supplies and that these increased supplies could offer the best opportunity of favourably altering this relationship between animal protein consumption and income levels for the developing countries.

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“…However, alternative attitudes to risk by graziers are likely to influence their stocking decisions (McArthur and Dillon 1971). For instance, income uncertainty due to climatic factors may force risk averse graziers to adopt lighter stocking rates so as to reduce the impact of drought, while wool price uncertainty may encourage the risk averse grazier to increase stocking rates to extenuate the impact of lower wool prices.…”

Section: Risk Attitudesmentioning

confidence: 99%

“…Mills et al (1989), however, found that land condition did not differ significantly between the largest and smallest properties. Previously, McArthur and Dillon (1971) used a static utility model to show that increases in property size led to a fall in optimal stocking rates for the risk averse grazier. However, optimal stocking rates were not influenced by property size given a risk neutral attitude; that is, where maximisation of profits was the goal.…”

Section: Analysis Of Rangeland Degradation 135mentioning

confidence: 99%

Analysis of Rangeland Degradation Using Stochastic Dynamic Programming

Passmore

Brown

1991

Australian Journal of Agricultural Economics

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Degradation of arid rangeland, and efforts to control that degradation, have become topical issues. However, the inherent characteristics of the rangeland, and the intertemporal nature of the problem, complicate the analysis of degradation issues in the search for more appropriate rangeland policies. Stochastic dynamic programming is examined as one means of allowing for those complexities. Using the case of the Queensland mulga rangelands, optimal stocking rates are shown to rise with lower property sizes, higher discount rates, higher wool prices and declining risk aversion. Importantly, the analysis reveals that a strategy of high stocking rates with the potential for rangeland degradation is an optimal response to the economic and social factors that confront graziers and is not an intertemporal information problem alone.

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Risk, Utility and Stocking Rate*

Cited by 24 publications

References 2 publications

The effect of stocking rate and fertilizer usage on income variability for dairy farms in England and Wales

The effect of stocking rate and fertilizer usage on income variability for dairy farms in England and Wales

1.3 Physical and economic constraints to intensive animal production in developing countries

Analysis of Rangeland Degradation Using Stochastic Dynamic Programming

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