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Investigation of factors affecting arable farming profit, crop complexity and risk under the single farm payment policy

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  • Ahodo, Kwadjo
  • Freckleton, Robert P.
  • Oglethorpe, David

Abstract

The paper investigates the effect of variations in soil type, rainfall, N fertilizer amount and crop prices on the objectives of arable farms operating in Nitrogen Vulnerable Zones (NVZs) and receiving the Single Farm Payment (SFP). Sensitivity analysis was carried out using a mixed-integer programming (MIP) arable farm model (farmR). The farmR model estimates the arable farming objectives of interest: farm profit, crop complexity and risk minimization. Applying the 2014 SFP flat rate and the maximum N limits (N max) values (prescribed in the NVZ guidelines) to each crop, N max was varied under different soil types and rainfall interactions. Crop prices were also varied to illustrate the effectiveness of the SFP under a scenario of high crop prices. The results showed that even though applying N above N max increases farm productivity under all soil and rainfall interactions, doing so and forgoing the SFP reduces farm productivity and increases risk. The SFP thus acts as a payment for the opportunity cost to farms for not being able to apply N above N max. However under a scenario of crop price increases, applying above N max and forfeiting the SFP could generate higher productivity than at the N max level.

Suggested Citation

  • Ahodo, Kwadjo & Freckleton, Robert P. & Oglethorpe, David, 2015. "Investigation of factors affecting arable farming profit, crop complexity and risk under the single farm payment policy," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204231, Agricultural Economics Society.
    • Handle: RePEc:ags:aesc15:204231
    DOI: 10.22004/ag.econ.204231
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    References listed on IDEAS

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    Keywords

    Agribusiness; Agricultural and Food Policy; Farm Management;
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