PR - RISK ANALYSIS AT BERRY FRUIT FARMS

Abstract

The paper presents a risk analysis for hypothetical farms focused on berry fruit production. The main objective is to analyse risk reduction efficiency on different farms and how it changes, considering the different strategies and production conditions. A linear program was developed to prepare an optimal production plan, while quadratic risk programming served to minimize the total variance as a measure of risk. We analysed three farm types, with different areas of land. Additionally, we analysed production planning on a small family farm under three different scenarios, focusing on how different sets of production activities influence the efficiency of risk management in order to (i) reduce the risk or (ii) at the given level of risk achieve better economic results. We found that on the small family farms decreasing SD by 1 EUR costs 3.06 EUR, while for a semi-large family farm it is only a bit more expensive, and for a large business farm it is 6% more expensive. The small family farm is most efficient in reducing risk with up to 42% decrease, but due to more available resources, semi-large and large farms have more opportunity for further efficient risk reduction. In all scenarios less capital and labour intensive productions of raspberry - Willamette and blueberry - Bluecrop where the most efficient risk reduction production activities.

Key words: berry fruits, production plan, risk reduction, hypothetical farms