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,

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,

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,

Environmental Good Production in the Optimum Activities Portfolio of a Risk Averse Farmer

An analytical framework is proposed for analysis of environmental good production by farmers in the case of price uncertainty. Environmental good production contracted by means of agri-environmental agreements is treated as a risk less option in the farmer's production activities portfolio. Efficient frontiers were generated using mathematical programming farm level models of suckler cow farms in Monts du Cantal, in France. It was demonstrated that for a DARA risk averse farmer: 1) the agreement payment level is not without impact on the farming intensity on parcels not subscribed under the corresponding argi-environmental programme, 2) a lump sum payment matters under uncertainty, 3) the overall impact of the lump sum payment on environmental good production depends on the type of jointness in production of agricultural and environmental goods, and on the level of uncertainty.uncertainty, portfolio optimisation, biodiversity, agricultural policy, mathematical programming, Agricultural and Food Policy, Resource /Energy Economics and Policy, Q12, Q18, Q28,

Impacts possibles de la réforme de la PAC de juin 2003 et de ses différentes options d'application sur des exploitations d'élevages bovins allaitants

La dernière réforme de la PAC poursuit celle de 1992, elle-même confirmée par l'Agenda 2000, dans le découplage des soutiens directs à la production. Afin de voir les adaptations des exploitations d'élevage bovin allaitant, des simulations de différentes options d'application de la réforme ont été faites pour les principaux cas d'exploitations, plus ou moins intensives, naisseurs ou naisseurs-engraisseurs de taurillons ou de boeufs, avec plus ou moins de cultures, situées dans les 3 régions charolaise, limousine et Pays de Loire. Les tendances qui se dégagent, après adaptations à prix stables, soutiens globalement maintenus et à superficie constante, sont la faible incidence sur le résultat économique, la réduction des cultures au profit des prairies et du cheptel, l'augmentation du nombre de vaches après diminution dans la situation de référence, le maintien de la finition des femelles avec les rapports de prix entre catégories de 1998, et l'engraissement des mâles plus difficile mais maintenu dans certaines options dans les systèmes naisseurs-engraisseurs étudiés.

Environmental good production in the optimum activities portfolio of a risk averse-farmer

An analytical framework is proposed for analysis of environmental good production by farmers in the case of price uncertainty. Environmental good production contracted by means of agri-environmental agreements is treated as a riskless option in the farmer’s production activities portfolio. It is shown that agri-environmental agreements aiming at biodiversity competing with beef production are likely to increase management intensity on the non-enrolled land, and that the effect of the payments for these agreements on the number of hectares enrolled is ambiguous. It is also demonstrated that an increase in the output price variability and/or a decrease in the level of decoupled subsidies will induce an increase (decrease) in the area enrolled in agreements aiming at biodiversity competing with (complementary to) beef production. The obtained results are illustrated by means of efficient frontiers generated using mathematical programming farm level models of suckler cow farms in Monts du Cantal, in France.uncertainty, portfolio optimisation, biodiversity, agricultural policy, mathematical programming

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

Formation et répartition des gains de productivité en élevage bovin viande. Qui sont les gagnants et les perdants entre 1980 et 2015 ?

La méthode des comptes de surplus permet d’évaluer l’évolution de la productivité de l’ensemble des facteurs d’une entreprise (consommations intermédiaires, capital, terre, travail) et la répartition des gains de productivité entre les différents agents économiques. Les auteurs ont appliqué cette méthode sur une base de données de 164 exploitations bovins allaitants du bassin Charolais de 1980 à 2015. Sur la période de 36 ans – avec des différences par sous-périodes –, le surplus de productivité globale (SPG) cumulé s’accroît faiblement à un rythme de +0,17 %/an. Ce faible accroissement du SPG est lié à la constante augmentation de la productivité du travail, alors que la productivité des autres facteurs régresse. Les auteurs observent un difficile maintien du revenu des exploitants, une très légère baisse du prix des inputs, des fermages et des frais financiers auxquels s’ajoute une très forte augmentation des soutiens publics directs. L’ensemble de surplus économique cumulé a été capté à 64 % par l’aval de la filière bovine sous forme de baisse de prix et à 22 % par l’aval des autres filières (principalement céréales). Schématiquement on retrouve bien ici le principe de la réforme de 1992 (Mac Sharry) : un transfert du contribuable par les soutiens directs vers le consommateur via la baisse des prix. La stagnation du revenu des exploitants indique clairement qu’ils sont perdants dans cette répartition des gains de productivité malgré l’amélioration de la productivité du facteur travail.Thanks to the surplus accounting method, we measured the productivity gains and the combined effects of output and input price variation on Charolais beef cattle farmers’ income between 1980 and 2015. During this period, the total factor productivity has slightly grown at an average annual rate of 0.17% mainly due to a huge increase of labour productivity, while the productivity of all other factors decreased. We observed a stability of farmers’ income, a slight drop in intermediate consumptions’ prices, land rent and financial costs, and a high increase in public aids. Over the 36 years, with a share of 64% of the global surplus, the downstream of the beef sector appears as the main beneficiary of these productivity gains through a decrease in agricultural products prices. The stability of farmers’ income indicates that the farmers are the losers in the surplus distribution in spite of the improvement of their labour productivity