Author(s): Michał Soliwoda, Joanna Pawłowska-Tyszko, Grzegorz Konat
Title: Weather Indices in the Profitability Calculations of Selected Crops at the Sectoral Level on the Example of Fodder Maize
Source: International Scientific Days 2018 :: Towards Productive, Sustainable and Resilient Global Agriculture and Food Systems :: Proceedings
Publisher: Wolters Kluwer ČR, Prague
PY, pages: 2018, 1426-1439
Published on-line: 2018-11-09
Abstract: The objective of this paper is to use weather indices to estimate the cost of production
risk in the profitability calculations of selected crops on the example of fodder maize.
The source of data are GUS secondary data (concerning, among others, yields) and
System of Collection of Data on Agricultural Products - Agrocosts (Agrokoszty) in
the Agricultural Accountancy Department of IAFE-NRI. The indicator analysis
method was used, taking into account measures and indicators used in the economics
of agriculture. The methodical approach to estimating the cost of production risk
that is proposed by authors is based on the use of so-called weather indexes (WI).
Methodology for estimating the cost of production risk for fodder crops is based on
the category of yield lost due to unfavourable weather conditions, as the difference
between yields potentially achievable in optimal weather conditions and real yield.
The cost of production risk corresponds to the monetary effects of the materialization
of unfavourable weather phenomena. The weather index as a synthetic measure
can take positive values. Green maize is the alternative (competitive feed) for clover
and alfalfa forage. Taking into account the cost of risk in total production costs reduced
the profitability index (including the cost of risk) of fodder maize only in 2014-
2015. The production of fodder maize was profitable in 2009-2013, which resulted
from the favourable price of fodder barley on the market. In the calculation of costs,
the cost of risk cannot be omitted because its omission leads to underestimation of economic and financial results, which in turn may lead to incorrect decisions at the micro level regarding, for example, agricultural crop portfolio, investment activities, and macro level too high support in the form of payments area (mainly, decoupled payment as remuneration for lost income.
Keywords: production risk, , profitability calculations, risk management, subsidies, weather index
JEL Classification: Q18, Q14
Rights:Open Access :: Creative Commons BY-NC-SA 4.0 International Licence
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