On-farm weather risk management in suckler cow farms: A recursive discrete stochastic programming approach

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.Livestock Production/Industries, Risk and Uncertainty,

ASSESSING ECONOMIC AND TECHNICAL IMPACTS OF NON EXPECTED WEATHER EVENTS ON FRENCH SUCKLER COW FARMS DYNAMICS: A DYNAMIC RECURSIVE FARM MODEL

Weather variability can threaten French suckler cow farms which rely on rather extensive forage production. However, flexibility of the production system can help farmer to face crop production shocks. This study aims at assessing how crop yield shocks impact on farms outcomes when adaptive capacity is taken into account. Our objectives are to develop a dynamic model which enables us 1) to predict the optimal mix of production adjustments to face crop yield shocks, 2) to quantify how far the system moves from the equilibrium and how long it takes to return and 3) to measure impact of shocks on economic results when adaptive capacity is taken into account. An original dynamic recursive bio-economic farm model integrating detailed technical and biological constraints and coupled with biological sub-models has been built and calibrated to represent an average farm producing charolais finished animals. Crop yield shocks of intensities ranging between -60% and +60% of their average values are simulated in between average years. A preference for maintaining animal sales and animal live weight at the expense of crop products trade balance is found. Thought, when intensities of shocks get higher, forced sales and important variations of the area of pasture cut are observed. Essential of loss (or gain) of net profit is felt the year of the shock but can be remnant for several years. In addition, gains for good years do not totally compensate loss of symmetric bad ones. Consequently, farms capacity to face risk could be weaken over time. Minimum consumption needs, probability distribution of shocks and successions or combinations of shocks would have thought to be taken into account to assess real capacity of farms to maintain over time.livestock farm model, dynamic recursive model, crop yield variability, Livestock Production/Industries,

Estimating a production function under production and price risks: An application to the suckler cow farms in the French charolais production area

Suckler cow production in France relies mainly on a relatively extensive management of forage, implying that production risk may be enhanced by the sensitivity of those crops to weather variability. However risk exposure is supposed to be mitigated either through ex-ante decisions concerning pasture area management or through ex-post decisions concerning the purchase of feeds. This paper aims at assessing weather impacts on cattle production level decisions. Since farmers' decisions depend on farmers' behaviour regarding risks, which are namely production and price risks, we test constant absolute risk aversion, constant relative risk aversion and risk neutrality assumptions. We develop an econometric model encompassing an auto-regressive price function and a production function which allow inputs to affect independently mean and variance of the production. Weather indicators embodied by average regional forage production for current and past years are explicitely introduced as non controllable inputs. The estimation framework consist in conditions on the first and second moment of output production, output price and profit. Following, ISIK (2003), additional condition on each of both allocable inputs enable us to take into account risk aversion and both price and production risks in parameters estimation. We use the Generalized Method of Moments in order to make minimum assumptions regarding variable exogeneity and error distribution. We apply the model to an original panel dataset containing 65 individual yearly observations recorded over the period 1987-2005 on French suckler cow farms of the north of Massif Central. Because of the difficulties to find a relevant set of instruments, these preliminary results do not analyse weather impact on production mean. However we can advance that production decisions depend on price and production risks as farmers are found to be risk averse. Weather variability of the current year increase production risk whereas fertilizer level application slightly increased it. However we did not highlight that weather impact depend on production level.Production function estimation, GMM, weather impact, price and production risks, risk aversion, suckler cow farms, French charolais production area, Livestock Production/Industries, Production Economics,

Dynamiques régionales de la production laitière : France - Allemagne - Royaume-Uni

Depuis 1984, la production laitière est régulée dans l’Union européenne (UE) par un système de quotas. Ils correspondent à des droits à produire attribués à chaque pays selon leurs références historiques. Ces références ont ensuite été réparties entre les éleveurs ou, dans le cas du Royaume-Uni, entre cinq Offices de commercialisation du lait. Depuis 1992, les États membres disposent de plus grandes marges de manœuvre pour gérer les transferts de quotas entre les exploitations et les régions...

Estimating a Production Function under Production and Output Price Risks: An Application to Beef Cattle in France

This paper addresses the issue of agricultural production under both output level and output price risks, in a context of random climatic conditions affecting forage used in beef production. It contributes to the empirical literature by applying the framework proposed by Isik (2002) to derive estimating equations from a structural production model with two sources of risks. Flexible functional forms for risk preferences and production technology allow us to identify attitudes toward risk and compute marginal effects of inputs and climate on expected output and production risk. The model is applied on a panel of French cattle farms and estimation results suggest that cattle farmer exhibit strong risk aversion of the CRRA form, and that climate has a significant impact on the performance of animal feeding strategies

Estimating a Production Function under Production and Output Price Risks: An Application to Beef Cattle in France

This paper addresses the issue of agricultural production under both output level and output price risks, in a context of random climatic conditions affecting forage used in beef production. It contributes to the empirical literature by applying the framework proposed by Isik (2002) to derive estimating equations from a structural production model with two sources of risks. Flexible functional forms for risk preferences and production technology allow us to identify attitudes toward risk and compute marginal effects of inputs and climate on expected output and production risk. The model is applied on a panel of French cattle farms and estimation results suggest that cattle farmer exhibit strong risk aversion of the CRRA form, and that climate has a significant impact on the performance of animal feeding strategies

Potential of multi-species livestock farming to improve the sustainability of livestock farms: A review.

Diversified farming systems are proposed as a major mechanism to address the many sustainability issues of today's agriculture. Multi-species livestock farming, i.e. keeping two or more animal species simultaneously on the same farm, is an option that has received little attention to date. Moreover, most studies of multi-species livestock farming are limited, usually focusing on selected dimensions of farm sustainability and addressing lower organizational levels (i.e. within the farm) and rather limited time horizons (e.g. a few weeks in a grazing season). Thus, a comprehensive assessment of multi-species livestock farming in terms of farm sustainability is lacking. In this context, we outline and discuss potential benefits and limitations of multi-species livestock farming for livestock farm sustainability from existing literature and list issues on multi-species livestock farming requiring further research. We show that multi-species livestock farming has the potential to improve the three dimensions of sustainability reviewed - economic viability for farmers, environmental soundness and social acceptability by being respectful of animals and humans - as long as locally relevant farming practices are implemented, especially an appropriate stocking rate during grazing. If relevant practices are not observed, multi-species livestock farming may produce undesirable effects, such as competition for resource acquisition during grazing, parasitic cross-infection and more intense work peaks. Therefore, we identify four focal research areas for multi-species livestock farming. First, characterizing the management of multi-species livestock farms. To do this, we suggest considering the integration of production enterprises (e.g. cattle and sheep enterprises) within the farm from three perspectives: farming practices (e.g. grazing management), work organization and sales. Second, exploring the complementarity of livestock species on multi-species livestock farms. This is especially true for species combinations that have been largely ignored (e.g. ruminants and monogastrics), even though they may have potential due to complementary diet compositions and resource-acquisition strategies. Third, assessing the sustainability of multi-species livestock farm scenarios (current or alternative) according to the management practices and production conditions, which requires adapting existing methods/models or developing new ones. Fourth, characterizing conditions for success and obstacles for multi-species livestock farming along the value chain from production to consumption, considering stakeholders' objectives, work habits and constraints. Increasing understanding should help prioritize actions and organize them to scale up multi-species livestock farming

Environmental assessment of mountain grassland farms with mixed cattle systems: use of bioeconomic simulations

Management practices of cattle farming systems must be improved, particularly to increase the systems’ feed self-sufficiency, food production and environmental performances. In mountain areas of the Massif Central (central France), mixed dairy/suckler cattle systems enable farmers to use grassland resources better and cope with economic fluctuations. Our objective was to estimate levels of ecosystem services provided by mixed dairy/suckler cattle systems as a function of the degree of mixing, along with their greenhouse gas emissions and energy use when their operation is optimized on an economic basis. The hypothesis was that mixed dairy/suckler cattle systems allow for controlled use of biomass, with better environmental performances than specialized systems (pure dairy or suckler herd) by maintaining grassland ecosystem services. Five herd-distribution scenarios were simulated using the Orfee bioeconomic optimization model. Environmental performances of the five systems were assessed according to three functional units (i.e., per farm, ha and kg protein produced). Mixed dairy/suckler cattle systems, which enabled larger herds, had higher greenhouse gas emissions per ha than specialized systems. However, because dairy cows produce more protein (milk and beef) than suckler cows, specialized dairy systems had the lowest greenhouse gas emissions and energy use per kg of protein. Specialized dairy systems had less advantage when dairy cows had less access to grassland. For the production of both milk and beef, mixed dairy/suckler cattle systems favour more sustainable use of biomass and tend to maintain a better combination of levels of ecosystem services for livestock production than specialized cattle farming systems