Framework of stochastic gross margin volatility modeling of crop rotation with farm management practices

Jarkko Niemi


DP models with risk aversion through meanvariance
specification is already implemented in
Luke and applied in North Savo region

HOWEVER climate change, e.g. changes in mean and
variance of crop yiels, still not yet taken into account
– Recently, such crop modelling results have become
availble for wheat as well, not only for barley
– Still CC impact available for 2 cereals crops only, while
most farms cultivate more than 2 crops


Some early conclusions
• The suggested approach is consistent in terms of DP
principles and mean-variance approach and can provide
consistent results for farm scale risk analysis
• It is however hard to utilise the approach except assuming a
farm with only few crops (those with crop modelling / other
results of climate change effects on mean and (co-variance)
© Natural Resources Institute Finland
• Assuming no change in price (co)variability is a major
simplification results show farm level (or local) effects of
changes in mean yields and yield (co)variability only

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