PR - An Agent-based Simulation Model Of Western Canadian Prairie Agricultural Structural Change

Western Canadian prairie farms are commonly stereotyped as large-scale grain farms located on flat lands that stretch to the horizon, but this misrepresents the diversity of farm operators, the landscape and the prairie ecosystem. This diversity has a profound impact on farm structure and competitiveness. Of particular interest are economically transitional or marginal lands between use in annual crops, forage and pasture. The primary objective of this research is to assess transitional land use, beef cow numbers, farm structure and performance under alternative price scenarios. Individual and sector performance is simulated over a period of 30 years using an agent based simulation model (ABSM). A “synthetic†farm population of 600 individual farming agents is constructed based on statistical data and located on an existing landscape of 341,530 hectares. Important model features are 1) segmented farmland auctions consisting of a primary farmland purchase market and a secondary leasing market; 2) a formalized business and farm expansion model that takes into account farm size, asset lumpiness, machinery technology and replacement policy; 3) individual agent expectations based on prior experience and risk aversion; 4) two basic farm types: grain farms and “mixed grain-cow†farms and 5) farm succession. Individual farming agent land use, success or failure in farmland markets and business prosperity are tracked over 30 years and through 100 different price and yield time paths. These are consolidated into a database and sector population statistics and farm structure are analyzed. Past economic trends such as declining farm numbers and increasing farm size are projected to continue; these trends are robust as they are generated under many different time paths and scenarios. Beef cow numbers depend upon land use which is sensitive to agent farm type preferences and wheat-beef price ratios. Large grain price increases have a more dramatic impact on industry structure by creating large structural shifts towards more grain and eventually fewer mixed farms. However, large changes in livestock prices generate smaller structural shifts over time because of the many lags and difficulties in expanding beef cow production.