SOUTHERN JOURNAL OF AGRICULTURAL ECONOMICS JULY 1991 INCORPORATING UNCERTAINTY IN THE ANALYSIS OF OPTIMAL BEEF-FORAGE PRODUCTION SYSTEMS

ABSTRACT ramifications for both the expected value and vari-A risk programming model was developed to ability of annual income. Identifying efficient for-evaluate the tradeoffs between risk and expected age-beef production systems for producers returns in beef-forage production systems. The characterized by alternative risk preferences is a specification represents nutrient and intake consid- necessary research priority. erations when allocating forage among cattle enter- Numerous studies of farm and ranch organization prises; it also incorporates the various sources of risk have been conducted. Most earlier studies employed facing livestock producers. Efficient ranch organiza- deterministic linear programming models to derive tions were derived for a representative eastern Okla- profit maximizing enterprise combinations for rep-homa ranch using MOTAD and Target-MOTAD resentative farms or ranches. Recent analysis have formulations. Diversification of forage enterprises, incorporated risk considerations through application introduction of cow-calf enterprises, and retained of quadratic programming, minimization of the ab-ownership of weaned calves were identified as im- solute deviations (MOTAD), and Target-MOTAD portant responses to reductions in acceptable levels formulations (Brink and McCarl, Zimmet and of risk. Results also indicated efficient ranch plans Spreen, Teague and Lee). Despite the large numbe