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Risk management in agriculture is a major policy issue in current EU agriculture policy reforms. Public support systems may play two different roles, one as a device to deliver disaster assistance and another to enhance insurance for marketable risks. This paper contributes to the literature by analysing the trade-offs between providing catastrophic assistance and subsidizing insurance premiums. The goal of the study is to highlight policy options that are coherent in stabilizing income volatility while limiting distortions of public intervention. In this study, farmer incomes were first modelled using Monte Carlo simulation, and options were then ranked by applying the stochastic efficiency with respect to a function. The results suggest that, if catastrophic assistance is available, even higher insurance support is needed to make it a preferred option. The results highlight the fact that well defined and credible ex ante rules for the use of disaster assistance are essential to enable insurance markets to develop. One possibility would be to make a farmer's eligibility for disaster aid conditional on his or her participation in the insurance programmes. [ABSTRACT FROM AUTHOR]

This article estimates spatial correlation of growing degree days (GDDs), accumulation of rainfall and regional yields as well as the observed crop damage payments in Finland. The results suggest that the spatial correlations are the highest and the most persistent for the GDDs. The correlations are the lowest and they decrease quickly with distance for rainfall-based measures, as expected. Also, regional yields and the distribution of crop damage compensations have large regional heterogeneity and low spatial correlations that decrease quickly with the distance. Our results suggest, therefore, that the market potential, in terms of the relevant market area around each measurement point, would be the highest for temperature-based contracts and the lowest for rainfall-based contracts. The relevant market area around a single measurement point is estimated ninefold for accumulation of degree growing days as compared to accumulation of rainfall. Rainfall-based insurance contracts should therefore be tailored to a large number of measurement points, so that a potential buyer/seller could choose the most relevant measurement point in his close vicinity. Large spatial heterogeneity and low spatial correlation in yields further indicate that systemic behaviour might not be as dominant factor as expected in the breakdown of the private crop insurance market in the Finnish production environment. [ABSTRACT FROM PUBLISHER]

Abstract: This article explores long-term land improvements (lime and phosphorus application) under land tenure insecurity on leased land. The dynamic optimisation problem is solved by a stochastic dynamic programming routine with known parameters for one-period returns and transition equations. The model parameters represent Finnish soil quality and production conditions. The decision rules are solved for alternative likelihood scenarios over the continuation of the fixed term lease contract. The results suggest that, as the probability for non-renewal of the lease contract increases, farmers quickly decrease investments in irreversible land improvements and, thereafter, yields decline gradually. The simulations highlight the observed trends of decreasing land improvements on land parcels that are cultivated under lease contracts. [Copyright &y& Elsevier]

This paper estimates a sequence of energy-saving technology choices by Dutch glasshouse firms. The model allows for time-constant, firm-specific effects and serial correlation of errors and it is estimated on panel data over the period 1991–1995. The unobserved error sequences are simulated in the model in such a way that they are consistent with the observed choices. The results suggest that positive revenue shocks encourage adoption of new technologies. The choices also exhibit firm-specific persistency over time. An increase of the price of energy encourages the adoption of a highly efficient energy-saving technology. The probability of investing in energy-saving technologies also decreases with capital invested in structures (e.g. double glazing of glasshouses) and increases with capital in energy installations. [ABSTRACT FROM AUTHOR]

Eradication measures of a contagious animal disease may force farmers to keep ready-to-slaughter animals on the farm. As feeding heavy animals may reduce carcass quality and farmer income, farmers can adjust their feeding policy in order to decrease losses from delayed slaughter. The problem is interesting also from society's point of view because eradication measures can affect a large number of farms when a single farm is infected. A dynamic programming model is developed to study optimal hog feeding strategies when the timing of slaughter is restricted. The model takes into account carcass quality, its effects on timing of slaughter under given prices, and animal density on the farm. The results show that farmers suffer substantial losses due to delayed slaughter, and can minimize the losses by reducing energy feeding. The results give information on designing compensation schemes so that all farmers have economic incentives to implement preferred eradication policy. [ABSTRACT FROM AUTHOR]

This study estimated a conditional mean model for producer prices of fresh potatoes in Finland and for wholesale selling prices of fresh potatoes in the Netherlands. Unit roots were tested in the Finnish and Dutch price series. Then, an asymmetric error correction model with thresholds was estimated for potato prices between Finland and the Netherlands. Asymmetry was allowed both in short and long-run price transmission. The results suggest that the prices are cointegrated and the arbitrage system is functioning, but with a significant time lag between the Finnish and Dutch potato markets. The price response is also asymmetric in that the Finnish price moves towards a steady state equilibrium faster from above than from below the equilibrium. [ABSTRACT FROM AUTHOR]

Abstract: Feed and piglet are the largest variable cost items and important factors affecting the profitability of grow–finish pork production in most pork producing countries world-wide. Although a pig''s potential to utilize energy and protein depends on its weight, age and genetic line, grow–finish pigs are typically fed with only 1 to 4 diets during the grow–finish phases of production. The goal of this study is to examine whether there are differences in feeding patterns, the timing of slaughter and return on pig space unit between 1) multi-phase feeding in which the quantity and protein content of the feed and the timing of slaughter are optimized on a daily basis, and 2) two-phase feeding in which feed quantity and slaughter decision are optimized daily but feed composition is predetermined for a given weight range. A stochastic dynamic programming model was used to evaluate different scenarios. The model maximizes return on capital invested in production facilities, which is critical for the competitiveness of pork production. The bio-economic model explicitly characterizes the growth process of grow–finish pigs and optimizes the timing of slaughter and daily amounts of protein and energy used in the feed. The growth of lipid mass and protein mass in the pig in a grow–finish group are modelled separately. The results suggest that a switch from the two-phase feeding to the multi-phase feeding shifts feeding regimen towards increased protein inclusion in the diets. It increases annual return on the operation by €1.35–€1.88 per pig space unit. [Copyright &y& Elsevier]

This paper simulates pig producer and slaughterhouse income losses due to a classical swine fever outbreak in Finland. The analysis explicitly takes into account that an outbreak of a highly contagious animal disease can shrink export demand for pig meat. After having observed the disease and its impact on pig meat price, producers can optimize animal stocks thought insemination decisions, which affects the number of animals in a dynamic manner. The income losses of pig industry were estimated to be less than €30 million. The losses were mainly due to price movements caused by an export demand shock. The results suggest that if the outbreak causes distortions in meat trade, the disease can cause substantial losses to the industry even if it has directly a small impact on the number of animals on farms. We also found that the optimization could reduce disease losses significantly, even more than 50%. [ABSTRACT FROM AUTHOR]