FURTHER TOWARDS A MORE DYNAMIC APPROACH TO FARM PLANNING: A COMMENT

In a recent contribution to the Jounal, Harle (1974) introduces a model of the farm firm based on the achievement of what he calls economic technical eficiency. The approach Is an attempt to reconcile recent interpretations of the farm planning problem with the author's own practical experience in farm management. The nature of the planning problem and the definition of economic technical efficiency are of central importance to the validity and usefulness of the model, and both demand further comment.     

TOWARDS A MORE DYNAMIC APPROACH TO FARM PLANNING*

The result of an attempt to reconcile practical experience with theoretical production economics, is the development of the view that a more dynamic approach to farm planning may better be achieved by a concentration on data production, rather than on data manipulation. This view is based on the belief that, in practice, the farmer finds himself involved with choice from a relatively narrow, and obvious, set of technically feasible, efficient farm plans. His main problem in the choice of a farm plan is seen as the estimation of the probability that the various possible financial outcomes will be achieved, since the possible effects of the latter on his future list of choices cannot be ignored. The type of data believed to be needed is described, and a line of theoretical analysis followed which is meant to underline the importance of this data, and to develop principles for use in its production.     

RISK EVALUATION IN FARM PLANNING* A STATISTICAL APPROACH

Economic planning implies decision-making based on the comparison of alternative courses of action, viewed against a background (in the real world at any rate) of uncertainty and imperfect knowledge. Successful planning is thus heavily dependent on the reliability of prediction which lea & inevitably to the domain of probability theory and its application to planning models. In spite of the considerable attention given to the application of mathematical models in farm management research work in recent times⁽¹⁾ to⁽⁹⁾ and ⁽¹⁵⁾ there is stilla paucity of applied work with respect to evaluating the nature of risk associated with planning projects at the individual farm level. In addition, very little published data is available on either a regional or production-type basis that gives a clear understanding of the nature of probability distributions for planning variables. This paper formulates a simple model which can be used in practical planning exercises and also demonstrates that with a new generation of statistically-processed planning data the application of the classical concepts of probability to routine economic planning is both practicable and worthwhile.     

THE 2002 US FARM BILL: A MORE POSITIVE ASSESSMENT

The 2002 US Farm Bill: A More Positive Assessment Recent experience in the US strongly suggests that, given political realism, price instability is now the over‐riding problem of agricultural policy. From this perspective, the re‐adoption of deficiency payment support in the 2002 Farm Bill seems sensible. To critics who claim otherwise, on the ground that deficiency payments are not decoupled, it is argued here that decoupling is an empty concept for which empirical evidence is lacking, at least in agriculture. Being fixed, decoupled payments are not stabilising. The 2002 Farm Bill would have been even better if its fixed PFC payment element, inherited from the 1996 FAIR Act, had been omitted. Recent US experience with farm policy holds valuable lessons for CAP reform, including the need to ensure that producers are backed by an adequate price stabilising instrument. La loi agricole américaine 2002: une interprétation plus positive Sauf à manquer de réalisme politique, ? experience recente des Etats Unis conduit à considèrer ? instabilityé des prix comme le problème majeur de la politique agricole. De ce point de vue, ?‘adoption ?’ un système de ‘paiements compensatoires’ (deficiency payment) dans la loi agricole 2002 n'est pas dépourvu de sens. A ceux qui, au motif que les paiements compensatoires ne sont pas découples, disent le contraire, on répondra que le découplage est un concept vide de sens, dont ? existence n'est attestée par aucune étude empirique, en tout cas en agriculture. De par leur flxité même, les primes decouplers ne peuvent contribuer a la stabilisation. La loi agricole 2002 aurait été encore meilleure si elle avait supprime les primes fixes ‘PFC,’ héritées du FAIR act de 1996. Pour la PAC, il y a beaucoup de le?ons à tirer de cette expérience que les Etats Unis viennent de faire avec leur politique agricole, notamment la nécessité? adosser les producteurs à un système adéquat de stabilisation. Das US Landwirtschaftsgesetz von 2002 Eine etwas positivere Die jüngsten Erfahrungen aus den USA legen es nahe, dass bei realistis‐cher politischer Einschätzung die Preisinstabilität heute das größte Problem für die Agrarpolitik darstellt. Aus dieser Sicht erscheint die Wiederaufnahme der Stützung durch ‘deficiency payments’ (Produktsubventionen) in das Landwirt‐schaftsgesetz sinnvoll. Den Kritlkern, die das Gegenteil behaupten, da es sich bei deficiency payments nicht um entkoppelte Zahlungen handele, wird hier entgegen gehalten, dass es sich bei der Entkopplung um einen leeren Begriff handelt, für welchen zumindest im Bereich der Landwirtschaft keine empirischen Beweise vorliegen. Da entkoppelte Zahlungen vorab festgelegt werden, wirken sie sich nicht stabilisierend aus. Das Landwirtschaftsgesetz von 2002 würde noch besser greifen, wenn die aus dem FAIR‐Gesetz von 1996 ubernommenen festgelegten PFC (production flexibility contracts)‐Zahlungen nicht mit aufgenommen worden wären. Aus den jüngsten Erfahrungen mit der Agrarpolitik in den USA ergeben sich wertvolle Lehren in Hinblick auf die Reform der GAP; unter anderem die Notwendigkeit, dass die Produzenten durch ein geeignetes Instrument zur Preisstabilisierung geschützt werden.     

GAME THEORY-AN EXTENSION OF ITS APPLICATION TO FARM PLANNING UNDER UNCERTAINTY

Current game theoretic models for farnt planning are limited in scope and restrictive in their assumptions. This paper reviews the current status of such models, compares them to the quadratic programming model, and then combines the desirable features of the game theoretic and quadratic Programming approaches by means of parametric linear programming     

ATTITUDES TOWARDS FARM DIVERSIFICATION: RESULTS FROM A SURVEY OF DEVON FARMS

Evidence from a survey of farmers' reactions to milk quotas suggests that there remains a fundamental divide between policymakers' views of the future farm and those of the farmers themselves. This paper examines this dichotomy in the context of one important milk-producing county, Devon. Here an emphasis at County Council level on non-agricultural diversification is found to contrast with the actions and intentions of sampled farmers. These favour instead an increase in farm self-sufficiency and an exploration of mainstream farming options, particularly an increase in beef and sheep enterprises.     

DYNAMIC PROGRAMMING: A TOOL FOR FARM FIRM GROWTH RESEARCH

This paper is concerned with dynamic programming as a tool for studying the process of farm firm growth. Studies of growth are restricted by characteristics of the analytical tools used. Dynamic programming provides a method for including added realism in conceptual and analytical growth models. This paper illustrates the formulation of a firm growth problem in a dynamic programming framework and discusses advantages and disadvantages of such models. The type of results obtained from dynamic programming is contrasted with that normally obtained from dynamic linear programming formulations.