Abstract

Distributions of gross margins of breeding ewe, breeding cattle and plantation forestry enterprises were used in a linear programming model of a 651 ha Taranaki hill country pastoral farm to determine the mix of enterprises that maximised expected net farm revenue for given levels of downside risk. Risk was specified as the mean negative deviation of farm revenue from an assumed target income of $180,000. Animal performance variables used in estimating gross margins included (mean, minimum, maximum) (a) lambing percentage (92, 87, 99), (b) wool weight-kg per stock unit (5.4, 5.1, 5.8), (c) calving percentage (85, 83, 88) and (d) bull beef carcass weight-kg (229, 208, 247). The enterprise mix of 250 ha forestry and 3,791 stock units of bull beef yielded an optimum expected net farm revenue of $497,591 with little or no downside risk. Breeding ewe and breeding cow enterprises did not contribute to the optimum enterprise mix. Using a sheep/cattle ratio of 70/30 stock units, the expected net farm revenue reduced to $348,884. The optimum enterprise mix, with this ratio, was 310 ha forestry and 3,310 stock units of bull beef and sheep. The model predicted that it would be possible to increase the expected net farm revenue to a maximum of $362,923 by increasing the acceptable downside risk and the area allocated to forestry.

CKG, Dake

Proceedings of the New Zealand Society of Animal Production, Volume 54, , 399-402, 1994