Innovations in Managing Risk and Stochastic Simulation Modeling for Ontario Farming Sector


The success of the agricultural sector relies in part on its ability to manage the risks that are inherent to the industry.  The complexities involved in managing the uncertainties surrounding yield, price, financial leverage, exchange rate, intensive international competition, and domestic and foreign government policy have increased.  Not surprisingly, if these uncertainities are not properly understood or effectively handled, farm income and overall well-being may decrease substantially. This increase in volatility coincides with governments assessing the effectiveness of their current safety net programs and whether and to what extent they should continue to be involved. The inability to accurately quantify these uncertainities can lead to poor decisions and reduce the competitiveness of Ontario's agrifood sector.

The overall purpose of the project is to develop stochastic risk management model for the case of representative beef farms in Ontario, and to examine regional beef market integration. The research program will identify market based risk management strategies and government programs and assess the effectiveness of each strategy for mitigating the volatility.

The bioeconomic spreadsheet model will be used by OMAFRA (Agricorp) policy staff to assess and quantify the impact of risk management strategies and changes in the market place and changes in production techniques.

Project Leader: Getu Hailu

Economics of Farm Income and Farm Structure
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