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Rationalizing apple growers’ decision making in Germany – a utility based whole farm programming approach

In: International Food and Agribusiness Management Review
Authors:
Maren B.K. Röhrig Research Associate, Center for Business Management in Horticulture and Applied Research, Institute of Horticultural Production Systems, Leibniz University of Hanover, Herrenhäuser Straße 2, 30419 Hanover, Germany.

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Bernd Hardeweg Researcher; Center for Business Management in Horticulture and Applied Research, Institute of Horticultural Production Systems, Leibniz University of Hanover, Herrenhäuser Straße 2, 30419 Hanover, Germany.

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Wolfgang Lentz Professor, Faculty of Agriculture/Environment/Chemistry, University of Applied Sciences Dresden (HTW Dresden), Pillnitzer Platz 2, 01326 Dresden, Germany.

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Open Access

Commercial apple production is exposed to various sources of risks. This paper presents a normative utility-efficient programming (UEP) approach, calculating optimal farm plans for apple growers in two different regions of Germany. It takes weather-related quality and yield risks, as well as price risks into account. It is based on risk attitude and risk perception collected from a sample of 134 apple growers. After combining subjective estimates of the apple growers with relevant historical data, input data for the UEP-model were derived from Monte-Carlo simulations. The UEP-model determines optimal portfolios, consisting of combinations of apple varieties and risk management instruments. The results indicate that the degrees of risk aversion affect optimum farming strategies only to a minor extent. They also provide evidence that farmers would benefit from a combined frost-hail insurance, whereas the absence of frost irrigation systems may cause high yield-losses in the northern part of Germany.

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