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Impact of perennial energy crops income variability on the crop selection of risk averse farmers

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  • Alexander, Peter
  • Moran, Dominic

Abstract

The UK Government policy is for the area of perennial energy crops in the UK to expand significantly. Farmers need to choose these crops in preference to conventional rotations for this to be achievable. This paper looks at the potential level and variability of perennial energy crop incomes and the relation to incomes from conventional arable crops. Assuming energy crop prices are correlated to oil prices the results suggests that incomes from them are not well correlated to conventional arable crop incomes. A farm scale mathematical programming model is then used to attempt to understand the affect on risk averse farmers crop selection. The inclusion of risk reduces the energy crop price required for the selection of these crops. However yields towards the highest of those predicted in the UK are still required to make them an optimal choice, suggesting only a small area of energy crops within the UK would be expected to be chosen to be grown. This must be regarded as a tentative conclusion, primarily due to high sensitivity found to crop yields, resulting in the proposal for further work to apply the model using spatially disaggregated data.

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  • Alexander, Peter & Moran, Dominic, 2013. "Impact of perennial energy crops income variability on the crop selection of risk averse farmers," Energy Policy, Elsevier, vol. 52(C), pages 587-596.
    • Handle: RePEc:eee:enepol:v:52:y:2013:i:c:p:587-596
    DOI: 10.1016/j.enpol.2012.10.019
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    References listed on IDEAS

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    4. Zafeiriou, Eleni & Petridis, Konstantinos & Karelakis, Christos & Arabatzis, Garyfallos, 2016. "Optimal combination of energy crops under different policy scenarios; The case of Northern Greece," Energy Policy, Elsevier, vol. 96(C), pages 607-616.
    5. Reidsma, Pytrik & Janssen, Sander & Jansen, Jacques & van Ittersum, Martin K., 2018. "On the development and use of farm models for policy impact assessment in the European Union – A review," Agricultural Systems, Elsevier, vol. 159(C), pages 111-125.
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    7. Zinnanti, Cinzia & Schimmenti, Emanuele & Borsellino, Valeria & Paolini, Giulio & Severini, Simone, 2019. "Economic performance and risk of farming systems specialized in perennial crops: An analysis of Italian hazelnut production," Agricultural Systems, Elsevier, vol. 176(C).
    8. Xue, Shuai & Kalinina, Olena & Lewandowski, Iris, 2015. "Present and future options for Miscanthus propagation and establishment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 1233-1246.
    9. Adams, P.W.R. & Lindegaard, K., 2016. "A critical appraisal of the effectiveness of UK perennial energy crops policy since 1990," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 188-202.

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